'BTL Landlords go long'

EdInvestor wrote: »

No, what will happen IMHO is as follows:

The BTL speculator groups will get their fingers well and truly burnt.

The professional landlords (the largest group by far) will continue in the normal way and expand their portfolios where they see value.They will be unaffected by the crunch as they have low LTVs and profitale businesses.

The smaller investors who are actually running a letting business, not speculating, will be fine because there is a boom in tenants and rents are going up, which should cover extra mortgage costs. They might face a period of higher mortgage costs if they don't have much equity, but that should be affordable.

It's really important to separate in your mind the people in the residential letting business from the geared-up speculators, if you want your analysis to be correct.
The former will be fine and the latter will be in deep doodoo.But the latter are in the minority and will tend to be involved in the inner city new-build flats disaster.That particular flame-out shouldn't affect anyone else.

Thanks for your detailed reply.

However, it's the amateur 'speculator' type BTL LLs that I'm talking about when I have a go at BTLers. They have been the ones propping up the market for the last few years as most sensible professional landlords stopped buying long ago (excluding genuine bargains).

Their hallmarks have been not only buying overpriced, financially-underperforming properties but often also rapid expansion of their 'property portfolios' by leveraging on existing gains in value.

There are a lot more of these sorts of people than you seem to think. Enough I believe, to have had a very marked impact on the market over the last 3-4 years. And the burning of this chaff is going to have a marked effect on the market.

IveSeenTheLight wrote: »

I guess I fit into your category as an amateur BTL LL.
I Only have two BTL's, 1 bought 4 years ago and the other 16 months ago.
However I know my figures and they do stack up.
One is 29% LTV the other is 27% LTV
You maybe need to re-look at your sterotyping of people.

Obviously I'm not claiming to describe every single case when I make a statement that amateur BTLs are going to get absolutely reamed in the coming 'correction'.

But I suspect that you are very much in the minority of having done your sums. For the last couple of years, amateur BTL (with MEWing of existing property to get deposits) has displaced FTBs as the underpinnings of the market in my part of the country. Profiting from capital appreciation on a 'portfolio' has been the name of the game with tenants seen as an inconvenient necessity to help subsidise the mortgage repayments.

BTL has been the way to 'get rich quick' and those with an early advantage (a bit of cash or equity) have been voraciously snapping up and bidding up property and pricing buyers out of the market.

The places in the UK where it has actually remained possible to buy property at a price that makes sense for BTL are few and far between - and mostly in the NE of England as far as I can tell.


The downfall of these amateur BTL planks is going to be what really makes the difference to the dynamic of the 'correction'. They are going to be the UK's version of the US sub-prime NINJAs who got in over their heads.

HammersFan wrote: »

If you want to buy a city-centre new-build at its proper market value (not the developer-inflated one) then you might be in luck. But I can;t see may BTL'ers who let out decent family homes and solid 2-beb terraces helping you out. I always think relying on someone else coming a cropper is a limited strategy. I guess time will tell.

Round my way, would be BTL magnates were snapping up all kinds of housing, not just the city centre 'luxury apartments' that appeal to the exceptionally greedy/gullible sort. Not only BTL 'investors' but out and out speculators who were trying to flip properties.

As such, regular families faced taking out massive 'lifetime of crushing debt' mortgages to buy a typical house or were just priced out of the market.

Looking around today, next to nothing seems to be shifting. The market has been stagnant since last summer/autumn.

!!!!!!? wrote: »

Round my way, would be BTL magnates were snapping up all kinds of housing, not just the city centre 'luxury apartments' that appeal to the exceptionally greedy/gullible sort. Not only BTL 'investors' but out and out speculators who were trying to flip properties.

As such, regular families faced taking out massive 'lifetime of crushing debt' mortgages to buy a typical house or were just priced out of the market.

Looking around today, next to nothing seems to be shifting. The market has been stagnant since last summer/autumn.

I suppose if lots of BTL'ers who have good properties become forced sellers thing will change. I can't see it though really - most landlords know that in 10, 15, 20 or whatever number of years they decide to sell, will have done OK. I don't have any evidence, but I suspect its mainly professional landlords who flip as part of an overall strategy - I reckon they will have stopped that now and quite a few are ready to still battle it out any FTB'ers for properties that come on at a good price.

Some people do find paying the mortgage a struggle - but owning outright by paying over 25 (or even 30 years) beats paying rent for a lifetime (IMO).