Buy-to-let investors who fear they may be left homeless

Generali · 22 March 2008 at 10:25PM

bluejake wrote: »

The sheer stupidity of people never ceases to amaze when it comes to bubbles. Whether it is tulip mania, south seas, internet, or property the ability of people to blot out reality and be swallowed up by their greed fueled delusion is amazing. The same story over and over again...but this time it is different...the normal rules of economics don't apply, ignore the history of the market because this time special voodoo economics apply which means we just get richer and richer and it is all so easy. :rotfl:

Ah but the bubble message is particularly seductive.

You've got a few quid. You're no minimum wage slave and you haven't blown all your cash on plasma screen tellies and holidays. You work hard and fly straight.

You're a bright lad and canny too and with a bit of careful analysis can see that the future is in trading monopolies/the internet/houses/Turkish flowers popular with the Dutch (delete as applicable).

Your thrift, hard work and brains will now take you to the next level financially which is where you really belong.

That's the thing with the bubble message, it's even better than money for nothing because it flatters people so beautifully.

mystic_trev · 22 March 2008 at 11:37PM

Generali wrote: »

That's the thing with the bubble message, it's even better than money for nothing because it flatters people so beautifully.

..............and then all of a sudden............it goes..............pop!

m00m00 · 23 March 2008 at 12:07AM

no it doesn't

it's different this time

michaels · 23 March 2008 at 1:02AM

There seems to be a misunderstanding about bubbles - many people buy the upslope knowing it is a bubble because they think they will be able to get out a bit nearer the top, either on the way up or the way down. Its not that they don't know it is a buble it is just a matter of the timing. And many of the gloaters have got it wrong over the past few years forecasting the end of the bubble much sooner than it actually came. If you had sold to rent 3 years ago you would be much worse off now than if you had stayed in and sold today - yes the chance to sell at the peak has been missed but it is still much higher than 3 years ago. It is not hard to recognize a bubble and of course it is possible to stay out of the market but missing the up as well as the down is generally costly, the log term return on housing (or shares) beats cash hands down.

Dylanwing · 23 March 2008 at 1:21AM

Have I got this right? Two ordinary Joes can build a multi-million pound 'Empire', buying over-valued flats, with minimal personal investment, financed by loans. What on Earth were the Banks thinking? Or were they also blinded by greed?

mystic_trev · 23 March 2008 at 10:35AM

Buy-to-let investors across the UK are telling estate agents to offload their properties to take advantage of new tax rules. Chancellor Alistair Darling passed up the opportunity in his first Budget to go back on controversial changes to CGT, which means that, from 6 April, landlords will benefit from a much lower tax rate of 18 per cent when selling property.

http://www.guardian.co.uk/money/2008/mar/23/property.tax

That won't help the 'spring bounce' :rolleyes:

Kez100 · 23 March 2008 at 11:08AM

We thought of buying a second property a few years ago as wages are so low here we wondered if our children would ever be able to afford to move out of hom. In the end we didn't as we needed a 20k mortgage and didn't want to risk our own home in any way. That property is now worth 180k but I know we would have sold before now, probably when it was less than 100k, such is our risk adversity.

lynzpower · 23 March 2008 at 11:36AM

michaels wrote: »

There seems to be a misunderstanding about bubbles - many people buy the upslope knowing it is a bubble because they think they will be able to get out a bit nearer the top, either on the way up or the way down. Its not that they don't know it is a buble it is just a matter of the timing. And many of the gloaters have got it wrong over the past few years forecasting the end of the bubble much sooner than it actually came. If you had sold to rent 3 years ago you would be much worse off now than if you had stayed in and sold today - yes the chance to sell at the peak has been missed but it is still much higher than 3 years ago. It is not hard to recognize a bubble and of course it is possible to stay out of the market but missing the up as well as the down is generally costly, the log term return on housing (or shares) beats cash hands down.

I sold to rent in 2007 having put my place on the market in late 06. Everyone said I was mad. The sale price of the property was 100k more than what Id paid for it in 04.

I personally felt that the market would tip as lenders would be unable to offer the multiples that buyers needed to finance the purchase of ramping property.

If I was going to sell then that seemed the best time, as there was no rumblings at all in the media that the market was tipping. So I completed the sale in the January of 07. I had buyers falling over themselves to view and I got AP in 2 days.

Fast forward to March 07 when properties were going to sealed bids over the 250k mark for one bed ex-las and lo and behold surveyors were downvaluing then. So I got out of Estate agency as I could see that the options for getting properties sold were dwindling, buyers and sellers started pulling out.

Its a YEAR later when the press start talking about it. the credit crunch is blamed, but believe me when I say this has been happening for a while.

Flats in the development opposite mine were going for 295 one bed, now I see they are marketed at 245 one bed.... Will they get 245? Probalby not as buyers will offer 230... if they offer at all. I browse the EA windows and I can see the EAs sat there willing me to come in to stop them twiddling thier thumbs. In my area 3 estate agents seem to have closed down in 2 months.

Now on the same road 3 beds are going for the same price as 2 beds were. Properties are not shifting one bit. Regardless of whether anyone has 'made' you can only 'make ' if there are buyers. And they dont seem to exist.

There was nothing in the areas I was looking at under 215 one bed, now theres plenty at 160 not sold.

Where? London E3.

merlinthehappypig · 23 March 2008 at 11:44AM

Same here lynzpower.

We offered £440000 for a house back in mid-January and got completely blown out by the seller, so we walked away.

On Thursday we offered £400000, take it or leave it, on the same house (price has come down by £20000) and she 'wants the weekend to think about it'. I'd imagine that we won't get it for £400000, but we sure as hell won't have to pay £440000 now.

lynzpower · 23 March 2008 at 11:51AM

The other concern is that there are developers out there that simply cannot sell.

one developer I know of has a 20-odd strong development of 1 bed flats brand new that he has built in London zone 1, and has not sold one off plan. They are being marketed now with no interest.

I wonder what will happen?

Another developer I know of was marketing a terrace of premium period houses newly refurbed was selling 6 for 7 million. No joy or viewings for some months, so the parcel was split, again no joy, so they are now being rented.... work the yeild out on those! I would think that they could command no more than 3k per month....

Buy-to-let investors who fear they may be left homeless

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