Sunday, September 23, 2007
Buy-to-Lose everything!
My buy-to-let dream cost me everything
Soon the press will be filled with tragedies from the credit binge! "Mortgage Express told Financial Mail it had not yet launched bankruptcy proceedings to take possession of Anne's own home, but would not rule out doing so. 'We always maintain that buy-to-let is not without risk,' a spokesman said."
Posted by confused76 @ 10:02 AM (1373 views)
18 thoughts on “Buy-to-Lose everything!”
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paul says:
“Buy-to-lose” – very good.
“Over the next three years she was persuaded to buy four flats in three Glasgow developments. Tenants were hard to find. No flat ever achieved the rents promised by the valuers. And struggling to cover mortgage repayments, Anne racked up more debt on credit cards and loans. Even though the flats were new and their values questionable, she had no trouble finding mortgage lenders.”
Ewww. How many more like her?
planning4acrash says:
The valuers were probably the rental department of the sellers, an example of mis-selling? Poor novices don’t realise that rental is an estimation, this poor girl probably chucked in her pension savings, not realising that that she was infact throwing in the towel.
Justanotherfb says:
Not only stupid, but greedy and stupid – I have no sympathy whatsoever.
Who in their right minds buys *4* BTL flats, 100% ltv, new-build, off-plan, with no research to market value or potential rental returns?
Honestly, the mind boggles. How many more will we see like this?
enuii says:
P4C, I wonder how many of the valuers were members of RIC’s or were working under the direct supervision of Chartered Surveyors?
Cheekie Charlie says:
Wow this was 2002,2003 when she bought these properties when she should have won big time! I think some of these city centre appartments (flats) will be demolished or have there use changed, they cater for such a small niche of the market they won’t attract buyers at any cost! Especially in places like Bradford, Nottingham, Leeds, Manchester, Derby, Newcastle, Birmingham etc.etc…
confused76 says:
“Anne, not her real name, has been a taxi driver for most of her life. ‘Driving day after day is long, hard work,’ she says. So in January 2002, in a brave attempt to escape the daily grind, she parted with £6,000 of her precious savings to attend a three-day property investment seminar in London.
It promised to change her life – and it has. ”
… say no more!
Quiet Guy says:
It’s a tough story but I supect that there is a bit missing: greed.
So hard to stick to what you know and do the 9 to 5 while the media is full of stories about BTLer millionaires.
Let_the_crash_begin says:
This woman paid £6K for a three day seminar essentially to be told by VI’s that “it cannot go wrong”.
This woman wanted to make a quick buck sitting on her backside ripping off tennants.
The more BTL’ers like this woman that go to the wall the better.
Bring on the crash!
Kagiso says:
Leaving aside the personal tradgedy of the woman involved, the thing I found most interesting about this is that Bradford & Bingley are going to lose in the region of £200k due to their lending to this one woman – and that is at current house prices.
If a thorough, realistic assessment was done of the books of Northern Rock, Bradford & Bingley, Alliance & Leicester was done you would probably find that their current mortgage book is only worth two-thirds to a half of their quoted value. I suspect this is why nobody is willing to buy NR. If NR does wither on the vine, then at some point the BoE is going to have to sell of their mortgage book. Once the markets have repriced the mortgages, the rest of the banks are in very serious trouble.
su says:
The leaflet I had posted through my door recently from what I assume to be a similar company, tries to pursuade me to attend a seminar about buying “off plan”. The leaflet tells me I “would be in the enviable position of having a property with ready-made equity that (I) could easily rent out while (I) watch it increase in value.” The leaflet also tell me I “could benefit, whatever the property market does. For instance, even if the market were to slump … the impact could be cushioned be the substantail discounts (I’d) receive at the time of purchase.”
To be fair, there is a bit in small print at the end “We are not authorised by the Financial Services Authority to provide investment or financial advice…”
I can see how easily it would be for someone with no insight or knowledge to get swept away by the glitter. But again, the warning is there in black & white. If only people would read the small print!
inbreda says:
“In four years it was let only 70% of the time for an average £650 monthly rent. It was repossessed in June and is on the market for £128,900. ”
I have no sympathy for her. She is stupid. The banks lending her the money are evil, as are the conmen that got her into this in the first place.
The only person I feel sorry for is the tenant who has done nothing wrong – probably never missed a months rent – and still finds himself living in a property repossessed, on the market, and most probably forcing him to move. By rights he should be able to take ‘Anne’ to court and get a yeasr worth of rent out of her.
paul says:
“By rights he should be able to take ‘Anne’ to court and get a yeasr worth of rent out of her”
Well that’s an interesting point. They could actually sue the letting agent if there was no provision in the tenancy agreement – there is liability if the landlord breaks the agreement before it matures to the minimum period or if the notice is shorter than the minimum allowed, and that includes any costs of contingency arrangements such as hotels, short-notice removals etc. through the fast track small claims court.
The letting agent will deny the possibility of any recompense from the landlord or agent, but breaching a tenancy contract is against the law regardless.
Forced eviction is a criminal offense too!
su says:
But would it be worthwhile for any tenants to sue? 3 of 4 flats were being sold for less than mortgage price, and remember Anne has run up credit card debts. I would guess that perhaps she has remortgaged her own home to help cover losses on BTLs. In which case she would probably be penniless and may decare herself bankrupt. (Could she do that?) If there was any money left in her home, wouldn’t the mortgage company have first dibs on it?
To sue someone is a big step. The tenant may be out of pocket but may find it easier to “forgive” his landlord in the circumstances rather than run the risk of raised blood pressure/stress/anger as he chases perhaps non-existent compensation through the courts. It’s not always worth it to sue someone – from an emotional and health point of view.
tyrellcorporation says:
I agree Su, good point.
BTL will ultimately destroy the housing market as they are far more liquid than ‘normal’ home owners. I reckon we’re witnessing the start of a flood as the bad news stories pile in.
Value says:
I pity the fool.
Sentiment seems to be turning with the BTL…a little. Rosie in The Times almost seems resigned to her fate. Seems like she’s saying, “My money would be better off in the building society but I don’t care because I’m still clinging on the idea that house prices can only ever go up above inflation in the long term.”
Hard to sympathise with these people.
planning4acrash says:
Sure Su, but I would have thought that something like this would go through a small claims court and it would be interesting if you could take the letting agents to the cleaners!
su says:
P4AC Yes, that would be interesting. The letting agents would have made money out of any agreement. But I would have thought they would just be acting as the landlord’s representative. But maybe that is not the case… I dunno
crash bandicoot says:
Justanotherfb,
It’s worse than not researching the market, when she bought her fourth flat she had already owned two flats that had not made target rent for two years. Some people never learn.