Monday, October 1, 2007

HELL YEAH! – The truth about BTL starts to emerge – Where’s Landlords Association?

Buy-to-let crisis as new flat prices fall 40 pc

The buy-to-let market is in crisis as 40 per cent has been wiped off the value of new purpose-built investment properties in the past year, a survey by The Daily Telegraph has found. I wonder whether these guys are still going to bang on about 'being in it for the long term' when their investments are hemmhoraging cash month after month?!?

Posted by tyrellcorporation @ 09:19 AM (2137 views)
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37 thoughts on “HELL YEAH! – The truth about BTL starts to emerge – Where’s Landlords Association?

  • David Smith's Sub Prime. . . says:

    “…Many investors who have had their fingers burnt claim that they were duped into paying too much.

    Meanwhile, property experts warn that the problem could get worse, with local authorities granting planning permission for hundreds of blocks of flats each week and developers still offering generous incentives to potential investors….”

    This will get some interest!

    Boy oh boy…

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  • “Recent research also suggests that two-thirds of buy-to-let investors are not making enough from their rental income to meet their mortgage payments. ”

    Hahahahahahahahahahahahahahahahahahahahaha !!!!!!

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  • tyrellcorporation says:

    ‘Supporters of buy-to-let say most investors should not be hit by the mortgage squeeze because they are sitting on large profits made in the boom of the last couple of years.’

    So what they are saying is that investors have made a good profit over the last few years and are now happy to sit back and watch that profit disappear… what utter nonsense! Guys still left holding flats now are probably screwed; they should have sold them 6 months ago.

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  • I know a determined BTL landlady. She has moved from buying in Florida and 2 bed flats in Manchester and Nottingham in 2005 to buying 5-6 bed houses for multiple ocupancy in Horely.

    Presumably this is what “Inside Track” is telling their investors to buy as other sectors fall.

    Problem is – people only share in 5s and 6s because they can’t afford anything with less people. When 2 bed flats tumble by 60-70% by 2010 then she will surely find it difficult renting out her 5-6 bed houses bought at the top of the market.

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  • japanese uncle says:

    Congratulations on the fully-fledged HPC started after all. 40% is just the beginning. In some ‘hot’ zones, we will soon discover 70% or even 80% drop. It’s an inevitability.

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  • Flats are falling in price, local authorities are encouraging more flats to be built, there’s a shortage of social housing….
    Does anyone else see the possibility of local authorities buying these flats at rock bottom prices and claiming to have solved the social housing problem?

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  • tyrellcorporation says:

    Mmmm. interesting point Su. The State pretty much owns NR now and they’re probably thinking why not bail out the BTL sector with public money too, after all you can tax and tax and tax people without any care in the World.

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  • “Recent research also suggests that two-thirds of buy-to-let investors are not making enough from their rental income to meet their mortgage payments.”

    Hmmmm – so you have an “investment” that is going down in value, and you also have to pay for the priviledge of holding that investment – the gullibility of these BTL de-vestors truly astounds me. The truth about the great BTL scam is finally coming out – sub-prime, sub-prime, sub-prime.

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  • Well at least they have made a bit of money on the rent to offset these losses. What, they left them empty and unsoiled to increase the captial appreciation – oops!

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  • This is so funny watching piles of bricks and mortars reducing back to their true value as the highly leveraged BTL muppets get crucified. Endowment mortgage scam, pensions crisis, subprime and now the great BTL mortgage scam. This is excellent.

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  • “Many investors who have had their fingers burnt claim that they were duped into paying too much.”

    You couldn’t make it up if you wanted to.

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  • David Smith's Sub Prime. . . says:

    What Sub Prime?….

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  • David Smith's Sub Prime. . . says:

    “Many investors who have had their fingers burnt claim that they were duped into paying too much.”

    You couldn’t make it up if you wanted to.

    Hahahahahahahahahaha…. I think I have just soiled myself……..

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  • Before everyone starts celebrating too much, can I point out what is happening in Edinburgh:

    Edinburgh city council has come up with a scheme to benefit the homeless and the BTL community. The council gives landlords the opportunity to lease their property (3-5 years).

    Landlords receive their rent quarterly in advance. Rent is also paid even if the property is unoccupied…no agents’ fees and the property is guaranteed to be returned in good condition.

    http://www.sundayherald.com/business/businessnews/display.var.1708278.0.0.php

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  • David Smith's Sub Prime. . . says:

    Trust me, I’m a lawyer…….

    Hahahahahahaha

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  • I suppose we should temper our glee with the fact that many BTL investors face the misery of ultimately losing their own homes after the banks fail to recover loans following repossession of their BTL portfolio. These people were a little greedy, yes, but mainly foolish enough to be taken in by this scam. The brokers who have made fortunes out of it will be long gone when the poop really hits the fan.

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  • David Smith's Sub Prime. . . says:

    Su and Tyrell,

    I said this many moons ago…

    It was or would be used as a way of solving the new build social housing ‘problem’…

    If this was Crash’s big game then I take my hat off.

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  • David Smith's Sub Prime. . . says:

    Su,

    That is Edinburgh, where they use (all their own) finance to benefit their population. It may be UK money as a whole that they shortly won’t be getting when they are ‘independent’, but there we are…

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  • @ su – public authorities of one sort or another might buy up the empty flats for affordable housing, but that’s assuming the service charges aren’t too high. Unsold houses would be a better deal because no service cahrges and easier management.
    But the govt can’t afford to invest any public money in housing. That’s why they are so keen on people getting that “first rung on the housing ladder”. In fact the govt has been cashing in it’s invetsment in housing ever since they introduced the Right to Buy about 30 years ago.

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  • @Cyril. If they’re already starting to rent such flats from private landlords, surely it is just the next step to buy them out completely – assuming the price drops low enough.

    As far as I’m aware, houses are not in short supply, but flats are and they’re dropping in price.

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  • Where will these councils get the money from to buy all these flats?

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  • “Where will these councils get the money from to buy all these flats?”

    Your council tax

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  • Interesting article on the PSL scheme in Edinburgh – I was wondering who was buying up all these new-builds and how they were getting tenants. Now I know: BTL landlords renting them out via the council to homeless families! It warms the heart to hear of such selfless charity on behalf of the owners. I love this landlord in particular:

    “Whitelaw said that he was attracted by “the fact that there is no agency fee to pay. As an experienced landlord, I know the problems that can come with rental voids and tenants who fail to pay.”
    He added: “Through the PSL scheme, I am guaranteed secure rental income for five years and, while it may be a little less than market yields, it is well worth the stability while my property accrues value in capital growth.”

    Did I mention that his investment property is in Wester Hailes? He’s wildly optimistic if he thinks he’ll get any capital growth from that if he’s buying now and planning to sell in 5 years.

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  • Councils don’t need money when they have “Empty Property Management Orders”

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  • Still-waiting says:

    I work for a council in the South of England and we have a leasing scheme via a local housing association similar to the Edinburgh one. Not all properties will be considered though only ones that are suitable. This doesn’t cost much to run – it is cheaper than actually building affordable housing. If prices fell really low, we would buy properties from BTL landlords. If prices fall really low, then that would also be cheaper (and therefore cost the taxpayer less) than building social housing. At the moment, it is cheaper for councils to build a new house than it is to buy one on the open market. If we did buy cheap flats and let them out at subsidised rates, we wouldn’t be “claiming to have solved the social housing problem”, we would just be claiming to have done something to help those who can’t afford to rent or buy to get a decent home. What’s so wrong with that?
    Cyril’s right about the Right to Buy though – that is what’s behind a lot of our housing problems. The government (both Tory and Labour) has been selling council houses at a discount for years, but only about half of the money has been reinvested in social housing. This has helped to push prices up even further, because those who would have rented from the council now have to rent privately, and people prefer to buy rather than rent privately.

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  • Yoss. Good point. The rent the council is offering is below normal. The council may offer even lower rates in the future and thousands of landlords could be faced with the choice of accepting low rent from the council or having their empty flats taken off their hands. Sneaky!

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  • I think Su’s point, at comment 14, is a very interesting point. If the Council pays rent a quarter in advanced, then those Landlords won’t go bankrupt and so, won’t sell their properties. This is another ploy to prop up the housing market. Councils will get the funds through Council Tax.

    Perhaps I am sounding too much like JU, but I firmly believe this Government will do everything and anything it can think of to prop up the housing market.

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  • An Bearin Bui. Wester Hailes? I visited there once. Bits of my car were missing when I left!

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  • Su…

    The practice that you refer to of social landlords leasing properties for say 3/5 years, is not new. I know a landlord who has been doing this in Redbridge with either the council (or it may be the local housing association) for several years. It may be that it is now growing in popularity.

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  • dbnazz1. So it’s not just Scotland then? (I assume Redbridge is in England) That is interesting!

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  • Just for info, most councils in the country rent PSLs on similar schemes and it’s been going on for years so (a) not exclusive to Edinburgh (b) any effect it has on the housing/BTL market will have already have happened. You see, most council’s have a (legal) duty to house homeless persons and gave away their own council hosuing stock years ago, so this PSL route is the only option left to have a gauranteed stock of props to farm the homeless out to. My loacl council has had PSLs on a scheme like this for at least 3 years already.

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  • surely it doesn’t matter as to who these properties are rented, if the rental yield does not cover the mortgage payments they’re stuffed!

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  • So if councils use this kind of housing for the homeless then there is no incentive for them to build new social housing. All that is necessary is a constant supply of available private housing. But if the value of the housing drops and the arrangement is no longer viable for landlords… then what?

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  • David Smith's Sub Prime. . . says:

    The Association of Residential Letting Agents, which represents buy-to-let mortgage lenders, said 67 per cent of all landlords were making rental returns of five per cent or less in August – much lower than the very best buy-to-let mortgages of 5.5 per cent.

    Is this after voids and repairs then or what?

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  • David Smith's Sub Prime. . . says:

    And another thought,

    “Supporters of buy-to-let say most investors should not be hit by the mortgage squeeze because they are sitting on large profits made in the boom of the last couple of years.”

    Are these the paper profits that have now at least in reference to this article evaporated?

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  • Ladies and Gentlemen don’t get too excited I predict Crash Gordon will set up some sort of Taxpayer funded Bail Out Package for these clowns. I can see the Headlines now BOE MUST act to save the Buy To Let Sector, vital to our nations prosperity..

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  • People were making a big deal a few months back about all the former council properties having been bought under Right to buy and then rented back to Councils – fantastic use of tax payers money – aargh!

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