Thursday, December 13, 2007

Bradford & Binge desperate turkey

Buy-to-let landlords in upbeat mood

Jeremy Law, head of buy-to-let at Bradford and Bingley said: “Over half of our landlords report that they have added to their portfolio this year, which is extremely encouraging, and indicates that the prospects for the sector remain positive in 2008. He said the social and demographic trends that had been driving the market remained strong, with rental demand robust." this is a desperate attempt by a company that is probably closer to call the cleaners in than we imagine

Posted by confused76 @ 08:35 PM (810 views)
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5 thoughts on “Bradford & Binge desperate turkey

  • dohousescrashinthewoods says:

    Nice one C76.

    “[And the other half of our landlords are…]”

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  • crash bandicoot says:

    “He said the social and demographic trends that had been driving the market remained strong”

    Apparently there IS one born every minute and you CAN fool some of the people all of the time. I think that these are the fabled fundamentals that have been underpinning the housing market for some time now.

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  • Do these “successful” landlords ever do repairs or fix damage or even suffer voids? They can’t have much left over after they have paid B&B…!

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  • It makes some sense for rental demand to remain robust, at least thus far. People stop renting a couple of months after they lose their jobs. Unemployment itself is a lagging indicator. Here’s how it will play out:
    1. Credit crunch makes it harder for companies to borrow, to remain solvent, to cover even short-term cashflow problems (such as a late-paying client)
    2. Companies freeze salaries, cancel bonuses, anything to make up for shortage of cash
    3. Companies start to make redundancies
    4. Unemployed tenant continues to rent for a couple of months, wondering what to do next
    5. Unemployed tenant moves out (to mum&dad’s house, to girlfriend/boyfriend’s house, wherever)
    I’ve probably missed a few steps – feel free to suggest some more! Right now we’re barely at step 1.

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  • These rental yield figures not only ignore voids, maintenance, insurance, legal costs & bad debts, not to mention letting and management agent fees (which reduce the headline rent by 40-50%) – they are also the inflated spurious rents that landlords claim they can get when applying for a mortgage.

    The true net yield on BTL is around 2.5% – which forces most landlords to make considerable top-up payments to cover the deficit between rental income and interest payments.

    In the past they have been able to cover this by re-mortgaging and releasing capital at the same time, but with prices falling, and lending criteria tightening, there will be a growing army of BTL investers who find themselves forced to sell property to liberate capital.

    Many of the BTL mob may well be in denial still – but it looks likely that 2008 will be remembered as the year that the BTL party came to an messy end.

    My money is still on 2009 as the year of the great property fire sale..

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