Buy to Let is the British subprime

brit1234

Good BBC radio broadcast quoting the dangers of buy to let and second homes.


http://www.bbc.co.uk/worldservice/meta/tx/nb/analysis_thu_au_nb.asx

:eek:

Anyone else think buy to let is the weakest link in the housing market?

sarkin

had an enquiry yesterday, client has 3 btl with NR all stuck on SVR as the 2 bed newbuilds he bought 3 years ago have lost value and he cant remortgage away from NR, Mortgages now on 9% loosing £500 a month on each. His solution buy another property at auction to flip on, theres just no helping some people.

dopester

sarkin wrote: »

Mortgages now on 9% lo[STRIKE]o[/STRIKE]sing £500 a month on each. His solution buy another property at auction to flip on, theres just no helping some people.

You're so right. He sounds crazy.

Where is he getting the cash from to buy another?

sarkin

Equity from his residential
ha ha ha

sarkin

Forgot to mention, property was bought at auction on bridging finance, now he cant get his cash out of the deal as lenders have stoped day one remortgage's. I know I should not laugh, we all do silly things now and again but this is just crazy and I have aliving to make.

Treadmill

I think I know this bloke...

carolt

How amusing.

brit1234

sarkin wrote: »

Forgot to mention, property was bought at auction on bridging finance, now he cant get his cash out of the deal as lenders have stoped day one remortgage's. I know I should not laugh, we all do silly things now and again but this is just crazy and I have aliving to make.

This is why the buy to let sector is so vulnerable. Many investors just kept reusing their equity to get more properties effectively reduces a equity buffer unlike most other property owners (apart from the equity release crowd). This makes them far more susceptible to price falls than others. Also there isn't as much emotional attachment to properties with an investor compared with home owner, with the later far more likely to fight to keep their homes as they live in them.

SouthCoast

Am I allowed to vote for a tie for first place?

BTL because of the gearing.

Second/holiday homes as the MEW will have run out to enable the running costs to be met.

mystic_trev

SouthCoast wrote: »

BTL because of the gearing.

There were a number of people, posting on the Propery Forum last year, extolling the virtues of gearing. They couldn't understand that it worked both ways, and that they'd get shafted when prices went into reverse! We had the usual 'it's different this time' and 'shortage of property will keep prices increasing' and (of course) 'it's me Pension innit' There's been no great baleout of theBTL sector yet. Give it a few more months and we'l be hearing some real horror stories, with them (no doubt) trying to blame others for their mistakes.

sarkin

Ok Just phoned the client to let him know there are no mortgages avliable without 15% deposit assuming he can he hit the rental income required by the lender.

Client: This is crazy the goverment should do something about it, I am loosing money becasue the banks have been stupid, Its Northern Rocks fault not mine.

Me: Eh yeah, eh, Northern Rock Twatts, what do you think they should do sir.

Client: Drop the bloody interest rate, then lots of waffle about GB and the state of the economy. (well at least mr client was prudent)

Me: Have you thought about selling the flats

Client: Estate agent does not want them on his books at the mo, something to do with over supply.

Me: Ok have a good day, sorry cant help at the momment. But keep in touch if you get any other investment property you want us to have alook at.