200,000 buy-to-let investors lose up to 90% of their cash

mewbie_2

Gearing is great on the way up, not so much fun on the way down.

lewt

PasturesNew wrote: »

No they didn't... they borrowed that money, by MEWing. It's all magical money that doesn't exist but is going to make them a millionaire.



And, where the BTL houses are, there's no crash. No, the crash is for silly people who over-extended themselves. It's not for clued-up, financially-savvy BTLers. Oh no.

i agree with that..... if people can afford to hold on to their propertys then they will be no loss in the long run. is that what your saying ?

obsessed_saver

Megatimbo wrote: »

Hello geoffky interesting article on property, as far as i understand negative equity is only an issue when a person for what ever reason has to sell in a crash or down ward market,otherwise it has no effect on the person who owns the property,as values can vary widely,this happened to my sister in the 90s crash,she just rode it out until markets picked up again.

But how did your sister feel during that time? Did she feel like she was locked in a prison? Stressed and worried if she couldn't keep up with the payments?

People always forget the effects of being in negative equity even though they can keep up the repayments. They are locked in and can't move, constantly worrying. You become a slave to the bank, working and paying interest to add to the bank's profits.

mewbie_2

It's not just BTl's and serial mewers who are affected by the down turn in prices. It's every houseowner who has, subsconciously or not, felt 'richer' as prices rose, and will now feel 'poorer' as they fall. It may make no real difference to actual spend money available, but psychologically may add to the tipping point for recession.

WTF?_2

obsessed_saver wrote: »

But how did your sister feel during that time? Did she feel like she was locked in a prison? Stressed and worried if she couldn't keep up with the payments?

People always forget the effects of being in negative equity even though they can keep up the repayments. They are locked in and can't move, constantly worrying. You become a slave to the bank, working and paying interest to add to the bank's profits.

Worse, at a time when the economy is also likely to be tanking negative equity means you may well find yourself trapped and at the mercy of your employer.

Forget about standing up and demanding a wage rise or better conditions. Most people will feel lucky to have work to be able to pay the mortgage as the alternative is repossession and maybe bankruptcy. Give up your aspirations of something better and make do with what you have.

I fully expect employers to take advantage of this situation and any worker who hasn't got extremely in-demand skills or the power of collective bargaining behind them is going to be shafted.

Frankly, that aspect of it is what would most bother me. Luckily I have a decent sized wodge of savings (currently targeted for a house purchase when the time is right) so if the worst came to the worst, I could deal with unexpected redundancy or walk away from a job I didn't like.

Gorgeous_George

Time for a new acronym:


BTL squared (how do I do a superscript '2'?)

or Bought Too Late Buy To Letter.



GG

Snooze

You're all toast.

Rob

Gorgeous_George

Just toast...

GG

tomstickland

Gorgeous_George wrote: »

Time for a new acronym:


BTL squared (how do I do a superscript '2'?)

or Bought Too Late Buy To Letter.



GG

No, no, no that's so outdated. It's:

Brought Too Late Buy To Letter.

Generali

!!!!!!? wrote: »

Yep - although accurate it's somewhat misleading as it's worded to give the impression that the property value had fallen 90%.

Also, this means that leverage has not actually kicked in yet to multiply their losses - once they've burned through their deposit they are facing >100% losses (potentially up to a limit of 1000% of their investment assuming a 10% deposit) if they are forced to sell at a loss.

The most annoying thing about the bubble has been that at least 50% of the people that have bought a house to live in (or even 2 or 3 to rent out to students or 'professional sharers') seem to think they're the next Warren Buffet, the Sage of Godalming or something presumably.

The most annoying thing about the bust is going to be bankrupted landlords bleating on about how hard effing done by they are, how it's all someone elses fault that they didn't realise that they were risking more than their deposit and how they want me to pay their losses.

You remember those 2 bed terraced houses in I]Northern Hell Hole[/I that were going for £5k in 1997, !!!!!! old fruit? The ones that are now selling for £90 or £100k? Yup those ones. Well guess what? They're still not worth any money because they're horrible houses in horrible places, it's just that people in their madness have bid up the price 20x. Well those same idiots are going to be clogging up the message boards and Watchdog on the TV moaning about how nobody told them that I]Northern Hell Hole[/I was a Hell Hole.

Did they never see that graffiti on the A1? A stark warning to all Southerners about what faced them.

"It's Grim Up North"