Friday, February 29, 2008

Bye bye buy to let!! BTLetter goes belly up

Tenants at risk after collapse of buy-to-let firm

AHHA HHA HAHAHHAHHA. I m preparing to laugh very hard at the increasingly common stories of failed BTL ventures. From BBC: "A & A Property has been by hit by serious financial difficulties and administrator Grant Thornton has been called in. Michael Jones, director of the Michael Jones Estate Agents in Cardiff, said the news came as no surprise. "People who've bought at the top of the market and suddenly find that prices are falling, and of course there is a hole in their funding and the banks are starting to get very nervous about it" banks are getting nervous AHAHAH HAHHAH

Posted by confused76 @ 11:48 AM (1742 views)
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21 thoughts on “Bye bye buy to let!! BTLetter goes belly up

  • How can this be when the fundamentals of buy to let are solid and rent are ‘projected’ to jump 20% in the next 2 years? Ho ho.

    Has anyone told Stuart Law?

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  • Greenbay to the rescue with all his spare cash at the ready !!!

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  • Before I looked at this item I wondered what had happended to Greenbay…

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  • the sad thing here is that a lot of the tenants are only tenants because they cannot afford to buy, because immoral and greedy BTLers (Like Greenbay?) have priced them out of the market. Now that everything goes wrong it is the tenant that suffers the most. There is no end to the levels these BTL scum will go. When they all hand their keys back to the banks because the property value is falling, it will be the tax payers who bail them out. We need to organise ourselves to make sure tehy get whats coming. They were happy to take the smooth, now they need to be made to feel the rough.

    Hard work and prudence clearly don’t pay. I feel sorry for the tenants, and hope that the BTL really do get what’s coming to them.

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  • Maybe Greenbay owns A&A? If so I wonder what A&A could stand for? (I mean in the literal sense not the mission statement sense). I asked Greenbay to explain the banking system for me, as he had told HPwatcher (actually in no uncertain terms) that HPW didnt understand how banks work. Even more pertinent now “isnt it” – so could he please explain? Cheers GB!

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  • Anyway its ok because the retards at numbers 10 and 11 will just nationalise the firm…

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  • “However, it is likely other property firms will make approaches to take on the homes.”

    Like who? Donald Trump?

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  • C’mon guys homeless renters ain’t so funny – back to the days of Rachman & Von Wotsiname

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  • mark wadsworth says:

    That Michael Jones again, Cardiff’s most honest EA.

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  • theboltonfury says:

    People who’ve bought at the top of the market and suddenly find that prices are falling, and of course there is a hole in their funding and the banks are starting to get very nervous about it

    I bet this wasn’t something he warned about as the ink was about to touch the paper. Clearly, he knew it was going to happen as he explains above

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  • where is G.Bay??

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  • Seems like i have grabbed everyones attention…

    A & A are based in cardiff and is saturated with new build apartments, the majority of thier stock is new build apartment, and as i have always said i would not touch the majority of new builds they do not represent the housing market as a whole. Traditional 2/3 bed properties are the bread and butter no speculative new builds.
    Having said that the owners will have cashed in long ago by maximising thier LTV, they will have no personal liability attached to them believe me….

    From my experience when you have over 100 properties you have massive persuasive powers when moving from one mortgage company to another, i.e higher LTV’s and unrealistic valuations to benefit the portfolio owners, remember BTL is unregulated. I recently changed half my portfolio to BMS a realistic valuation was around £16 million but i quoted £17.5 million and after some deliberation i recieved a higher percent LTV and cashed in approx £3 million. Now if i done an A & A and called in recievers my £3 million will be untouched and i can wave goodbye the properties, its easily done which i guess A & A did, but i would rather retain the portfolio for years to come.

    Trust me A & A as a business were fine but picked the perfect time (current climate) to cash in…

    IMHO

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  • Speaking with someone yesterday who returned from a very informative seminar (economic overview with Invesco Perpetual) – the usual UK residential property debate came up – IP’s house view is that anyone who got into BTL in the past 2-3 years will be lucky to survive unless they have heaps of liquidity !

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  • Jack C,

    Have you thought Invesco Perpetual may have hidden agendas..

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  • hp watcher – hes in a meeting with Grant Thornton!

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  • Theboltonfury says:

    From my experience when you have over 100 properties you have massive persuasive powers when moving from one mortgage company to another, i.e higher LTV’s and unrealistic valuations to benefit the portfolio owners, remember BTL is unregulated. I recently changed half my portfolio to BMS a realistic valuation was around £16 million but i quoted £17.5 million and after some deliberation i recieved a higher percent LTV and cashed in approx £3 million. Now if i done an A & A and called in recievers my £3 million will be untouched and i can wave goodbye the properties, its easily done which i guess A & A did, but i would rather retain the portfolio for years to come.

    i simply don’t believe any of this. As a general, real multimillionaires don’t gloat in such a crass style. I think I could genuinely respect you if you dropped the ‘considerably richer than you’ piffle.

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  • theboltonfury says:

    From my experience when you have over 100 properties you have massive persuasive powers when moving from one mortgage company to another, i.e higher LTV’s and unrealistic valuations to benefit the portfolio owners, remember BTL is unregulated. I recently changed half my portfolio to BMS a realistic valuation was around £16 million but i quoted £17.5 million and after some deliberation i recieved a higher percent LTV and cashed in approx £3 million. Now if i done an A & A and called in recievers my £3 million will be untouched and i can wave goodbye the properties, its easily done which i guess A & A did, but i would rather retain the portfolio for years to come.

    I just don’t believe you – blah blah blah
    drop the ‘considerably richer than you’ stuff, it kills any credibility you have/had

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  • Interesting point GB – infact thats about the most coherent posting I’ve seen from you. Ok so if we take what you say at face value, arent we saying that for BTLs that have been involved for a long time they can weather the storm. For example clearly if you have a portfolio that dates back a long while then your price would give you a good yield. However at some stage had you continued to amass properties your average LTV would increase (assuming you continually remortgae) which would raise the gearing reducing the amount by which the positive yield is positive. In addition if you kept purchasing using an inverse triangle – ie. you buy a small amount low down and use that to facilitate larger numbers at ever increasing prices then the shape of the triangle is unstable. This is called pryamiding in trading circles. OK so far so good. Now what you say is also no doubt true – if you are a professional then clearly you are likely to have the assets and liabilities ring fenced via a company. And at some stage yes you can drawdown some capital from that vehicle. All well and good.

    As I said before the abandonment of directly Public sector funded means that its a good thing to have BTL if thats regulated properly with companies rather than the odd loters. SO as i also said the – ok shall we say correction so that we can agree – is a good thing for “professional” BTLs / Private landlords because it removes the amateurs and will (all other things being equal – ie. no recession etc – again debatable) support higher yields. Of course it may not be a good thing though depending on the gearing.

    However I take your point re this company (of which i have no knowledge) the point is though if they (and companies like them) “do a runner” then surely that leads to excess supply. The administrators (who are only there to secure the best deal for creditors) will simply sell these properties on to the highest bidder, and the bids must undercut the market leading to a downward spiral. Now it may then be that these sales will create a quicker return to reasonable asset values than before. If you think this analysis is flawed then in what way is it?

    i note your point with Bed and Breakfast. A relation of mine used to do that in London he had his own portfolio plus he used to manage others and supply the “value cornflakes” to the peeps. Now the council stopped that a few years ago – so his income was impaired from the management side but from the side he owned he merely converted to lettors. The point is though thats a zero sum game – he just rented them to a different set of people, so there was no new demand created, so i didnt understand the relevance of your point.

    Lastly your attitude doesnt make any sense – i mean one minute you are Mr ya boo sucks – you suckers type and the next minute quite concilatory. Its fine to be wealthy, I have no problem with that but i really am confused as to your agenda. Very puzzling and a bit scary!!!

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  • Green,
    Everybody with over 100 properties is in a big mess right now. Mortgage rates can only go up and struggle to pass the extra cost to the tenants. Void periods are going up as well. Inland Revenue getting nasty. Lots of solicitor and accountant bills. Maintenance charges up. Floods, earthquakes push insurance premia up. no hopes of capital gains for the next 4 years. Non doms leaving london… should I continue? are you crying? sorry mate. good weekend!

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  • However, no knowing anything about BTL as i have no real interest – dont they insist on some personal involvement in the mortgages themselves. IF thats the case – and i profess to a lack of knowledge here then how can you call in the receivers – without any personal liability attaching?

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  • Greenbay I don’t quite understand, are you saying you have refinanced and taken £3m out in cash? I always thought that profit could only be made when something was sold. Sounds to me as if you’ve just increased the value of your property in a market that’s tanking and you’ll be personally liable.

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