Monday, Jul 06, 2015

A question of when not if there is a crash

Dailymail: £200billion buy to let timebomb

Buy to let makes no financial sense and as for long term...good luck if you leverage the loan
And if it goes pear shaped good luck with selling at anywhere near these Looney prices.
A timebomb to end all timebombs

Posted by taffee @ 11:27 AM (5908 views)
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1. mombers said...

They didn't mention the ENORMOUS political risk - the biggest threat/salvation IMHO. The 2020 government (and the current government in the run up to the election) is going to have to think carefully about how they formulate housing policy as the constituency of screwed over renters grows

Monday, July 6, 2015 11:38AM Report Comment

2. hpwatcher said...

Crash has been a long time coming though.

Monday, July 6, 2015 01:23PM Report Comment

3. cyril said...

@1 the problem is that all political parties are the same when it comes to housing policy (except the greens).
They've left interest rates too low for too long and now house prices have reached silly money we'll all be screwed if rates go up. Genius.

Monday, July 6, 2015 02:20PM Report Comment

4. icarus said...

DM says "It (BTL tax deductibility of mortgage interest) is, in effect, a subsidy to landlords which people just trying to buy a house to live in do not enjoy".

If I were a BTL landlord I might say - "Harmsworth/Rothermere, the DM owner has avoided oodles of taxes by using his fathers' French domicile status (itself acquired for tax purposes back in the 50s). This eased the offshore transfer of the DM (DMGT plc) to Harmsworth from his father, IHT-free. When he bought a new £40m house in Dorset (and later added wings to it in 2006) the purchase was funded by bank loans secured on the DMGT shares of his Bermudan company. This arrangement avoided taxes on the earnings he would otherwise have had to bring into the UK for the purchase. He sends £10m p.a. of his DM dividends into his trust companies in order to convert it to overseas income, not taxable unless remitted to the UK (see previous sentence) because he is a non-dom (despite being born and educated in the UK). (Other Fleet Street proprietors have similar arrangements, so don't expect an exposé of one by another any time soon.)"

But I'm not, so I won't.

Monday, July 6, 2015 02:56PM Report Comment

5. Laboudi said...

The governement will intervene. As with regards the effect of renters on election, the elite will use one of the magic cards (fear of terrorism, fear from the Scottish, risk of immigration) to get people to forget what really matters.

Monday, July 6, 2015 04:21PM Report Comment

6. Dharmin said...

I don't think any changes to UK Gov policy can bust the BTL bomb, it's the external forces can bust the BTL timebomb, such as foreign investors withdrawing all their investment from UK or Banks moving their HQ out of UK ( e,g HSBC) or GBP devaluates this will increases cost of living thus forces property prices down.

Monday, July 6, 2015 10:18PM Report Comment

7. taffee said...

Well the dotcom boom burst as did us housing bubble and credit bubble so proof that bubble often just
Burst under their own weight and nothing can be done that's the nature of them

Tuesday, July 7, 2015 01:26PM Report Comment

8. cyril said...

@7 Despite the ridiculous price of houses I think most BTLs are not in bubble territory because the capital cost can be financed from the rent (so the asset price is still grounded to its undelying value in terms of what you can earn from it) and the retirement fund comes from the capital gain when the properties are sold. However I think the mistake people are making is to base their calculations on current low interest rates (and void rates) so you could argue that they are bubble -ish.
Obviously there are some properties (e.g. in London) that are bought as pure investments at prices which bear no relation to anything - but these are not BTLs.

Tuesday, July 7, 2015 04:13PM Report Comment

9. taffee said...

But you assume rental market will always be buoyant....let's face it people don't like renting...the
Whole system is awful and Insecure.....if the market does fall/crash then fans will buy rather
Than rent who will then rent the 1.6 million btlets?...forcing landlords to offload creating a spiral
Downwards....the last 6-8 years has surely shown than anything can happen

Wednesday, July 8, 2015 07:31AM Report Comment

10. taffee said...

That's ftbs will buy rather than rent obviously

Wednesday, July 8, 2015 07:32AM Report Comment

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