Monday, December 3, 2007

More misery for mortgage sector but

Buy to Let continues to grow

Landlords are celebrating a tidy profit as the buy-to-let sector soars. According to Paragon's October Buy-to-let Index, strong demand for rented accommodation has pushed the average rental income generated by landlords to 10.2 per cent higher than a year ago.

Posted by little professor @ 03:23 PM (1950 views)
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25 thoughts on “More misery for mortgage sector but

  • Remember this is coming from a company that owes £280million.

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  • Yeah, yeah, and the Americans have committed suicide on the road to Bagdad…

    I hope the FSA does something about this unregulated sector

    But I guess no need to worry, BTL will be consigned to the dustbin of history in a matter of weeks

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  • Is that the Paragon that has “ceased to be” ?

    ‘E’s not pinin’! ‘E’s passed on! This Paragon is no more! He has ceased to be! ‘E’s expired and gone to meet ‘is maker! ‘E’s a stiff! Bereft of life, ‘e rests in peace! If you hadn’t nailed ‘im to the perch ‘e’d be pushing up the daisies! ‘Is metabolic processes are now ‘istory! ‘E’s off the twig! ‘E’s kicked the
    bucket, ‘e’s shuffled off ‘is mortal coil, run down the curtain and joined the bleedin’ choir invisibile!! THIS IS AN EX-SUB-PRIME LENDERT!!

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  • C'mon Correction says:

    “demand pushed the average rental income generated by landlords to 10.2 per cent higher than a year ago”.

    I doubt that very much, including capital gains in some parts of the country maybe. But not revenue, certainly not UK wide. The amount of un-let properties in south wales and in Bristol is increasing by the day, and has been all year.

    I expect another fudged figure by a V.I. giving weightings to a set of stats pulled from a well-performing area and reported as being nation-wide.

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  • dohousescrashinthewoods says:

    Sorry C76, but I am going to nick your laugh HA HA HA HEE HEE HEE HO HO HO, oh, please, stop it.

    Sure there are profits in the rear-view mirror, never mind the cliff you just hit.

    Try selling to realise those profits! HA ha ha

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  • I’m with confused on this one – you only need to take a look at Paragon’s business model (not vastly different to N Rock) and how quickly their share price has plummeted to put into perspective their “spin” on BTL. Lets see what they have to say in Feb 2008, which for them is “crunch time”

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  • I’d take Paragon’s figures with a pinch of salt; let’s not forget these are rear-view figures, rents could just as easily fall 10% next year if the economy hits trouble.

    That said, rents have actually stayed remarkably static over the past decade. This is partly because Buy-to-Let has increased the supply of rented homes available, thereby keeping rents low. If BTL investors start to sell-up en masse then we should expect rents to pick up.

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  • At first when I read this I thought “you must be joking”. But then when you think it through, as BuyToLosers try to sell there are going to be empty apartments up and down the country with FOR SALE boards outside and not TO LET. That will mean a squeeze on available properties to rent, and increased prices on rented apartments.

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  • Happy…
    I agree but the squeeze can only be temporary because the BTLosers will want to rent out again in the hope they can weather the storm

    the truly smart btletters have all exited the market this spring, what was the name of the Armenian guy?

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  • The X Y Y Man says:

    I never fully understood the term “spin.”

    I do now…

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  • Confused

    We could have a whole generation of tenants to the banks on interest only mortgages with little prospect of paying off the loan.

    We are seeing many world changes where financial institutions always win no matter what. Why do you think retail OTC brokers are allowing shorting of the market… They will take the other side of the trades.
    Do you want to live in a country where your ID can be sold online as I type. Get real guys. The games up.

    X Tough world.

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  • Do you think the ID blunder will effect your mortgage app.

    Call me a fool.

    X

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  • Rents in Abingdon are 20% or more up in just 6 months and availability is /way/ down. I think BTL might be getting out of the area.

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  • I got a plane to catch.

    X

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  • I never quite fully understood the term “spin”…

    Until now.

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  • New User 2007 says:

    As forecast, now that they cannot talk up house prices they are trying to talk up rents. I am not seeing it in my area at all, and given I do not believe such biased companies at the best of times, I am thinking they “tweaked” the numbers.

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  • ‘Buy to let continues to grow’; a bit like warts and verrucas then!

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  • “buy-to-let lending has held up well according to latest reports from the CML.” John Heron, Paragon’s Director of Mortgages

    Down 7.75 (5.53%) in a day.
    http://uk.finance.yahoo.com/q/bc?s=PAG.L&t=3m

    From 645.00 to 132.50 in one year, or 79% down in one year.

    Shouldn’t Paragon be talking to the investors instead of spouting VI rubbish. If they could sort out the fact they are tanking at the same rate as NR I might not be so mistrusting about their predictions for the BTL market.

    Sort out your own house Paragon.

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  • Why does x blogger continue to blow people kisses? He said he won’t be posting again, but now he’s back. Is he kissing everyone goodbye before he leaves?

    The article is long on idle opinion and very short on empirical facts. Probably with good reason.

    Bye! Got a bus to catch!

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  • Strange how the Office for National Statistics claim that rents have increased by 3.3% and Paragon say that they have increased by 10%. Is someone massaging the figures? Should one of these parties be held to account for getting it so wrong?

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  • For the facts.
    1) Paragon is one of the biggest BTL mortgage provider in the UK. So they have an interest in saying so.
    2) They reported the the stock market they need £280 million to continue business.
    3) They are as big a basket case as Northern Rock there share have also fallen 80.55%. It had fallen by 88.26% a few days ago.
    http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23337/twelve_month.stm

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  • crash bandicoot says:

    “Landlords are celebrating a tidy profit”

    This is only those who bought 3 or 4 years ago at reduced prices. Currently FTB’s cannot afford to buy – we know that. They also cannot afford to pay a high enough rent to pay a BTL mortgage. So with falling house prices meaning no long-term capital gains, and the landlord actually adding money to the tennents’ rent to pay the mortgage, BTL is now more of a hobby than an investment.

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  • “demand pushed the average rental income generated by landlords to 10.2 per cent higher than a year ago”.

    Ooohhh!!!! In another decade it might be profitable.

    Work it out for yourself x blogger – I don’t have time to explain, I have to go catch a submarine to the moon.

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  • x blogger – don’t worry, they’ve got the internet in Canada. Sadly.

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  • What the hell does this mean?:

    “average rental income generated by landlords to a record high, with rents hitting around £11,066 during the month, 10.2 per cent higher than a year ago.”

    Obviously, the average rent on a single property isn’t 11k per month!
    Is this the average annual rent on a single property? Or the average monthly rent on a portfolio of properties? I guess it’s the latter and the story is simply a story of BTLers taking on too many homes and the rents actually staying static.

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