Tuesday, January 27, 2009
Anne Ashworth smacks down the BTL amateurs
In the boom you decide that buy-to-let could be a profitable sideline and arrange mortgages to finance your portfolio. You snap up several inner-city flats, assuming that there will be demand from well-paid young professional tenants, although the area is already oversupplied with such accommodation, and salaries in the locality are modest. The gloss of prosperity you have observed in surrounding streets is financed more by credit cards than chunky salary cheques. The downturn hits and you lose your own day job. You use the dwindling sums you are receiving in rents (tenants are few and void periods grow longer) to finance your lifestyle rather than pay your mortgages. This scenario is far from fanciful. It is the typical tale behind many portfolios being repossessed.