Saturday, June 21, 2008

Buy to dept

Word on the street

Johnny-come-lately property investors will find it tough out there. By Edmund Conway Recent weeks have confirmed what many of us suspected for some time: that buy-to-let would be Britain's own subprime crisis. In an eerie echo of the United States experience, it was the collapse of one relatively small part of the property market that helped to trigger a full-blown fall in nationwide prices. The only difference is that whereas the main US epicentre was sub-prime - the mortgages of poor families - our Achilles' heel was the comparatively more middleclass world of private property investment.

Posted by housebear @ 12:49 PM (2249 views)
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4 thoughts on “Buy to dept

  • “Given the current bloodbath, it is easy to assume that buy-to-let should now be consigned to the scrap-heap. The fact that the country’s biggest specialist lettings mortgage companies have closed or half-closed their books to new customers only compounds this suspicion.

    But this is wrong: the buy-to-let bandwagon will re-emerge – perhaps even sooner than the rest of the property market recovers. Much as I have been sceptical about the most recent performance of this sector, there is little doubt that, in the long-run, buy-to-let will remain not just a source of good investments, but also a real growth industry.

    The point is that homeownership trends are changing in the UK. The number of people owning their own home has plateaued in recent years, while the number of private landlords has risen gradually higher. There are good reasons to expect the number of landlords to increase further in the coming years.

    The Government’s policies are partly responsible: whereas the tax system tended previously to favour owner-occupiers, it is more skewed these days in favour of investors. The recent reform of the capital gains tax system will cement this, since it cuts the amount landlords who sell up will have to pay the Exchequer.

    Similarly, the credit crunch means banks are discriminating against those with only a little cash to put into their mortgages (in other words first-time buyers) and looking more favourably on those with hefty deposits. Much as it will frustrate the youngsters who have been waiting for this moment to get on to the ladder, they may well be beaten to the door by the next wave of cash-rich property investors.

    That said, the comeback will take quite some time to materialise. Until the mortgage markets recover, lenders will be highly reluctant to hand out money to any prospective homebuyer, and the specialist buy-to-let sector has been particularly hardhit. Likewise, there is always the chance that the Government will initiate a clamp-down on landlords, perhaps taxing them more fiercely, though I think this is unlikely in the midst of a falling property market.

    The property slump has much longer to run yet, but it certainly won’t be the end of the world for the amateur property investor.”

    No Edmund no! you are so funny
    AH HHAH HAAHHAHHAHA HHAH AHAH HA H HA
    AH HHAH HAAHHAHHAHA HHAH AHAH HA H HA
    AH HHAH HAAHHAHHAHA HHAH AHAH HA H HA
    AH HHAH HAAHHAHHAHA HHAH AHAH HA H HA
    AH HHAH HAAHHAHHAHA HHAH AHAH HA H HA
    AH HHAH HAAHHAHHAHA HHAH AHAH HA H HA
    AH HHAH HAAHHAHHAHA HHAH AHAH HA H HA

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  • This guy really gets on my nerves. His articles are always so two faced and scared. ” On the one hand we have this…. but also we have this…. so I think that actually it wont be that bad in fact it just might be ok”
    Always hedging his bets the slimy worm.

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  • letthemfall says:

    The old rear-view mirror thing again. This journalist still thinks everyone will ride the same bandwagon because that’s what they’ve been doing the last few years. People didn’t jump back into dotcom shares; and they won’t do so with houses – until they forget of course. The unthinking man’s journalist.

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  • To get an idea of the most likely outcome look at the previous Bubble: Technology Stocks.
    Are people ploughing back into them or are they still a dirty word? You probably know the answer.

    The next Bubble will be something different. If it is property related it will have a different name and structure.

    Something that surprises and annoys me is how difficult it is for people to invest in property without buying a whole
    house. How much residential property do the pension funds hold. Not a lot I suspect for the same reasons.

    What is the model in other countries (e.g Germany) ? Is rented property there owned by individuals, corporations or councils !

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