Tuesday, June 3, 2008

Some nice numbers from B&B

The buy-to-let boom goes bust

The first signs of a collapse in Britain's buy-to-let property market emerged yesterday as Bradford & Bingley, the UK's largest lender to private landlords, revealed a 50 per cent jump in arrears on its mortgage book over the first four months of the year. B&B, which represents 20 per cent of lending across the British buy-to-let sector, said the number of landlords who were three or more months behind on their mortgage payments had leapt by more than 52 per cent between January and the end of April, to more than 1.5 per cent of its total buy-to-let customer base. The picture was much worse within one of its books of business – which it acquired from the US lender GMAC-RFC in 2005 – where buy-to-let arrears were up almost 80 per cent to 3.5 per cent of the total.

Posted by quiet guy @ 09:06 AM (724 views)
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6 thoughts on “Some nice numbers from B&B

  • Yesterday I spent a couple of hours going through rental property on rightmove in Bucks, Berks, Surrey and Hants. Dull I know but hear me out.

    I am gob smacked at the prices being asked for rental properties quite frankly.

    Looking at 4 bed houses it’s difficult to get less than £1250 per month (which I grant you is cheap when compared to the amount of money property owners are loosing each month) but frankly quite expensive and not sustainable long term.

    On retiring you’d need something like 3-400k invested just to cover rent – index linked. (I know you’d get a flat if you retired – but they’re 8-900 in reasonable areas) still 250-300k invested index linked to cover rent.

    I also noted an incredible amount of properties available.

    I’m convinced, if not yet, there will soon be flexibility on prices being asked for.

    I see no reason for property price falls to stabalise for some time and as prices fall so will renters start to buy (12-18 months time). This is going to leave a big hole in the rental sector and I think force the hand of alot of landlords which by that time will have little if any equity left.

    Have any of you currently got any any anecdotal evidence of haggling down rental rates ?

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  • 1.5% arrears. Hardly that bad surely

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  • I think rent will come down because there is a lot of under occupied property at the moment. Second homes and that sort of thing. It’s economic scuicide to leave these empty now.

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  • “In stark contrast to a relatively upbeat trading statement from the bank only six weeks ago – where it claimed the outlook for the buy-to-let sector was robust – yesterday’s announcement from B&B was gloomy, predicting that the current difficult market conditions would prevail for the rest of the year.”

    should publicly listed companies not be investigated when they have made clearly misleading (ramping) statements about the health of their business, when it becomes apparent that the statement is genuinely misleading and inaccurate?

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  • Rents were rising in Hampshire at the start of the year but the deluge of unsold houses now on the rental market has started to drive prices down in the past few months.

    Our BTL landlord threw us out to sell our home and we moved recently. Between ordering us out and putting the property on the market, prices locally have fallen and there are now several unsold and better properties in the village and our landlord isn’t going to make the money she thought. She will sell it easily but not for the silly money she could have got last August!

    We were looking for a place to rent while the market corrected it’s self and were braced for a rent rise. In the end we found that the market is awash with unrented houses and if you look carefully there are plenty of bargains. There are also lots of “for rent or for sale” properties that have been sitting empty for months.

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  • @Maddison

    “1.5% arrears. Hardly that bad surely”

    I suppose we have to find a baseline for comparison. here is a quote from

    “latest figures from the Council of Mortgages Lenders (CML) for the first quarter of the year show that while there has been a slight increase in the number of landlords failing to keep up with their loans, the numbers remain low.

    Just 0.9% of investment landlords are in arrears of three months or more, up from 0.73% during the previous quarter and compared with 1.1% across the wider mortgage market during the second half of 2007.

    Only 0.15% of the more than 1m investment properties with a mortgage were repossessed during the first quarter, up slightly from 0.12% during the previous three months.

    The CML’s Sue Anderson said: “There has been some worsening in defaults, but no worse than we would expect and from a very low base.

    “We still see buy-to-let performing pretty well, and we are not seeing any evidence that that is not the case.”

    You might argue that although B&B arrears are somewhat higher than the national norms, it isn’t really so bad because it’s still only 1.5% The problem is, of course, that the trend is steadily rising arrears – up 52% in B&B’s case. If the numbers are indicative of a trend then they’re bad. If the arrears peak not much higher or fall then I’d be inclined to agree with your comment.

    Let’s just say my savings are not with B&B.

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