Wednesday, July 16, 2014

Well, can’t say I haven’t heard this before…

Buy-to-Let Inflating Real Estate Seen Perilous: Mortgages

Shahram Kordestani, who owns seven U.K. rental homes, has advice for investors eager to join the swelling ranks of landlords: Do so at your peril.

Posted by peter rocker @ 11:18 AM (4137 views)
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9 thoughts on “Well, can’t say I haven’t heard this before…

  • Great article. Unwittingly explains everything most of what is wrong with this country.

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  • No lack of supply….just in the wrong hands…..7 properties?….crazy

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  • ‘The loan-to-income cap that Bank of England Governor Mark Carney introduced last month to cool Britain’s housing market does not apply to buy-to-let — the fastest-growing type of mortgage by value.’

    ‘Buy-to-let lending is climbing as Britons rent properties for longer periods [and landlords buy up ever more flats, forcing tenants to carry on renting for longer periods].’

    ‘The proportion of amateur landlords — those who supplement their salaries with rental income — reached a record 72 percent of the buy-to-let industry in the first quarter after rising by 10 percentage points in the two years through March… There are 1.7 million residential landlords in the U.K., the group said.’

    ‘Lenders provided 2.2 billion pounds ($3.8 billion) of private-landlord mortgages in April, a 57 percent increase from a year earlier’

    ‘Lenders “who aren’t into it want to go into it; those that are there want to expand,” said Richard Sexton, a director at property appraiser e.surv. “It’s a different pool to fish in.”’

    ‘The rules, which don’t apply to buy-to-let mortgages, require borrowers to prove they can afford to make payments even if interest rates rise.’

    ‘In London, buy-to-let investors took out more than 750 million pounds of mortgages during the first quarter, which had more than 10 times the impact on prices compared with the government’s Help-to-Buy lending assistance program…’

    ‘”Almost half of the new homes bought in the city last year were buy-to-let, asset manager London Central Portfolio Ltd. estimates.’

    ‘The small-landlord market could climb further from April 2015 when changes to government policy will give pensioners control over how they spend their retirement savings. […] That’s “freed up potentially a large flow of additional funds to go into the housing market,” some of which may go to buy-to-let…’

    ‘Since the loan-to-income rules exclude buy-to-let mortgages, there has been an increase in buyers trying to skirt the measures by pretending to be landlords…’

    BTL is literally the biggest problem in the housing market, which is the biggest problem facing this country and Osborne and Cameron only ever seem to add fuel to the fire. Which is hardly surprising, since they’re both BTL landlords.

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  • landofconfusion says:

    I live quite close to London and during the last, aborted crash I saw loads (and I mean LOADS) of cheapish BTL properties being sold with tenants in situ.

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  • BTL is literally the biggest problem in the housing market, which is the biggest problem facing this country and Osborne and Cameron only ever seem to add fuel to the fire. Which is hardly surprising, since they’re both BTL landlords.

    Due to the cost of housing, for the new BTL’ers yields have virtually collapsed.

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  • bidin'matime says:

    A major part of the problem, which no one seems to notice, is that more and more people think they don’t have to work hard (or at all), because they’ve ‘got a couple of buy-to-let properties’. They see headlines that say they are making more on capital growth than they could ever make by working, and they start to rely on the rental profits (based on artificially low interest rates). So instead of developing skills or building up a business, they become gradually more useless to the economy.

    Multiply this up enough times and you have both a collapsing productivity base and a whole generation of people who will need supporting once they realise that BTL is not the golden goose it currently appears to be.

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  • Bit worrying from a public who’s finances on all.levels are a disaster…we still borrow £2 billion a week just
    To pay the bills in th gov and have record personal debt

    What’s the end game here….Greece?

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  • @5 I wouldn’t worry. The politicians, property pornstars and journalists bought in long ago, so the BTL pyramid scheme is yielding them all more than ever.

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  • letthemfall says:

    I am constantly being surprised at the people who are involved in BTL, quite often because they move and don’t sell the old house – people you’d never believe would be into that. Round where I live the majority seem to be at it.

    Goes to show the housing demand is not so much a shortage of houses for the population but the constant demand of BTL supported by cheap money. And of course at base this is all the result of govt policy at the behest of the plutocrats.

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