BTL News

macaque_2

PasturesNew wrote: »

Don't forget hard-working older singles!!!
The overlooked group

You are quite right. The 'hard-working older singles' are equally deserving.

I made reference to families because I think they have been particularly hard hit by the BTL locusts. A family needs more space and the cost burden of bringing up a family is greater. The thought of people struggling to make a comfortable home for a family of four in an overpriced 2 bed flat disturbs me greatly.

boyse7en

neverdespairgirl wrote: »

Rents are on the downward path at the moment, though.

Rents are going down at the moment (on a general basis, some areas may vary;)) because of the sudden increase in the number of properties available to rent (due to unable-to-sell-so-will-rent-it-out-insteaders)

If they are forced to sell (either by their mortgage lender, or because they can't get a tenant) then gradually the number of rentable properties available will decrease - which in turn will increase rental prices.

Gorgeous_George

Conrad wrote: »

...I will not even consider a property unless its 50% cheaper than at peak and the longer this is taking the fussier I'm getting.

You should be considering the investment based on yield, risk and capital gains. House prices are only part of the equation.

So what if a property is available at 50% of peak prices? Another property that is 80% of peak may be a better investment.

GG

Gorgeous_George

The reluctant BTL LL will most likely prove to be a thoroughly unsuitable LL and his tenants may rue the day that they chose the cheapest quote.

This year, I will make more profit than originally planned (due to interest rate cuts) and will pay more tax accordingly. I have spent well over £1,500 improving the property's heating system. I had planned to increase the rent by almost 10% next year but I may reduce this to just 5% (still below market value). I am currently considering what improvements I can make to the property and will probably spend £2,000 in 09/10 which will not be offsetable against income tax.

If I was a tenant, I would not want to rent from somebody who would rather have sold but chose to hold onto a depreciating asset - because they could not afford to sell. Trouble is brewing for these tenants I fear. If prices recover, the LL will sell. If they continue to crash, the LL will probably go bankrupt.

I'd prefer a LL who chose to be a LL for sound reasons.

There are, of course, many LLs who thought it was route to riches and who do not look after their tenants. These people will be suffering.

GG

silvercar

There is always going to be a core group who need decent rentals, those that are never going to be in a position to get a mortgage and those for whom the credit crunch will mean that a mortgage is not an option. Many of these will be young families. To be totally concerned with house prices dropping to make homes affordable to buy, ignores the need for decent homes to rent for this group.

ad9898_3

Gorgeous_George wrote: »

You should be considering the investment based on yield, risk and capital gains. House prices are only part of the equation.

Yield - pathetic unless you have been in it for years.
Risk - higher than jumping from a plane with no parachute at the moment
Capital Gains - going in reverse faster than a ........ erm.....very fast thing:D

Gorgeous_George

silvercar wrote: »

There is always going to be a core group who need decent rentals, those that are never going to be in a position to get a mortgage and those for whom the credit crunch will mean that a mortgage is not an option. Many of these will be young families. To be totally concerned with house prices dropping to make homes affordable to buy, ignores the need for decent homes to rent for this group.

Every year more people become wannabe FTBers.

In the past, easy lending ensured that the majority of wannabe FTBers could buy a house of their own .

Nowadays, wannabe FTBers need to save a huge deposit - even with prices falling. I think the tenant supply pool will be around for some time to come.

GG

HelpWhereIcan

Without wanting to be difficult ...

dopester wrote: »

People with money. However prices are way too high. I've got money, but I'm not paying current prices. Let the professionals buy now if they so please, and if they can.

The 'professional' who always did their maths is still buying - they just have more to choose from and less competition.

dopester wrote: »

Banks aren't going to be more inclined to lend to professionals if all they have is wealth which is illiquid, with values plummetting, but the debts being real.

If they have a 25% - 30% deposit there is not a problem getting financing.

Most FTBs need a 10-15% deposit just to be able to buy. The amount they need to compete on price terms (income multiples available) and speed of completion is probably not far off the 25% mark.

Not automatically good for FTBs.

dopester wrote: »

You can laugh how FTBs need a stonking deposit, but that deposit becomes more
managable the more prices crash.

depends on the area I would guess.

I have a customer who I could have arranged 95% for last year.

He was looking at prices of no more than £130000 last year (but really wanted £110 ish and decided against due to concerns about the market) and therefore needed £6500 deposit and could have got a 5 year fixed for at around 5.79% meaning his mortgage would have cost around £780 pm max over 25 years.

He has recently had an offer of £97,000 accepted for a similar house with very motivated sellers so he is getting a 'bargain' even with market drops (for this area) taken into account.

This time he has a £15,000 deposit so qualifies for some of the best deals. However, he is struggling to get anything below 6.44% giving him a mortgage payment of about £555 pm.

Yes, he 'saves' about £225 pm maximum, but he has to use all his hard earned savings to cover the costs of buying and has not been able to look at properties that need a bit of work (as he did last year).

He will have to rebuild his savings as he goes along. At £225 pm, it will take a long time to rebuild the extra £8500 deposit he has had to put down.

The reason he has so little choice? Yes fewer lenders etc etc but also because those lenders that are still there are less likely to take a view on his income.

He has employed and self employed income. We are struggling to get more than 50% of his self employed income taken into account. Last year it was no prob due to being provable and long standing.

Add to that the fact that multiples have come down a little, his purchasing experience has been more stressful than it would have been last year.

The problem is not that the deposit required has gone up a little - they have gone up hugely. Coupled with falling multiples, less competitively priced deals and stricter underwriting that makes it harder for FTBs, not easier, almost irrespective of what happens to prices.

dopester wrote: »

So, a historic credit-crunch, worst economic outlook for 60 years (Darling), an once-in-a-100 year severe economic downturn (Greeenspan), banks failing, stricter lending/borrowing criteria, and mix in unemployment, fear of unemployment and pay-cuts. The perfect crash. All the HPI and more of the last 11 years... to be wiped out into nothing but memories.

Risky to assume that the HPI being wiped out is all good - especially if you are a FTB reliant on a mortgage and a job to pay it.

macaque_2

chucky wrote: »

That's why the Govt has had to bail out banks and many have had Rights Issues to raise cash to deal with their problems. It's because their awash with cash that they've had to do this. :rotfl: :rotfl: :rotfl:

banks were "reluctant to launch their sizeable recapitalisation lifeboat and start lending again to households and businesses".

http://www.guardian.co.uk/politics/2008/nov/21/economy-banking-mcfall

MissMoneypenny

Gorgeous_George wrote: »

In the past, easy lending ensured that the majority of wannabe FTBers could buy a house of their own .

Nowadays, wannabe FTBers need to save a huge deposit - even with prices falling. I think the tenant supply pool will be around for some time to come.

I think the 100% mortgages will return when the market has bottomed out. Mortgage lenders want buyers to put in a deposit at the moment, because the housing market is crashing and lenders would rather that the buyer lose their own money, instead of theirs.

I don't think we will see a return to the 125% mortgages for a very long time (if ever), too many lenders have got/are going to get, burnt fingers