FSA Warns of Dangers of BTL

Thrugelmir

An extract from an article in todays Independent that I found interesting:-

The existence of a large buy-to-let sector could, the FSA warns, lead to a "self-fulfilling" fall in property values, as "investment properties are more sensitive to expectations of property prices and rental yields than residential purchases. Weaknesses in the buy-to-let market, in turn, may have tended to reinforce the weaknesses in the wider residential market, and expectations of future house price falls could in turn become self-fulfilling".

It adds that mortgage lenders could be in a hurry to repossess properties before their value slumps still further, and that "appropriate firm practice in relation to possessions – recently reinforced by the Government's code of conduct – is therefore not only important from the perspective of treating customers fairly , but can have a macroeconomic effect".

eco-friendly_2

the FSA warns, lead to a "self-fulfilling" fall in property values, as "investment properties are more sensitive to expectations of property prices and rental yields than residential purchases



The FSA don't know the meaning of the word, WARNS!

ad9898_3

It seems to me quite obvious that a lot of BTL'rs who came into the market in the past few years are going to be in big trouble, buying and owning one house since 2004 and trying to sell now without the spectre of NE is bad enough, owning several could lead to disaster.

IveSeenTheLight

eco-friendly wrote: »

the FSA warns, lead to a "self-fulfilling" fall in property values, as "investment properties are more sensitive to expectations of property prices and rental yields than residential purchases



The FSA don't know the meaning of the word, WARNS!

They do say it could, not will, not has, but could

IveSeenTheLight

ad9898 wrote: »

It seems to me quite obvious that a lot of BTL'rs who came into the market in the past few years are going to be in big trouble, buying and owning one house since 2004 and trying to sell now without the spectre of NE is bad enough, owning several could lead to disaster.

Your assuming they want to sell.
As prices drop, rental yields are increasing.
I personally have had an average of 3.36 void days per property per year. Well within my planned budget

It's quite possible that BTL LL's will simply hold on to properties if they have good rentals on those properties.

ad9898_3

IveSeenTheLight wrote: »

Your assuming they want to sell.
As prices drop, rental yields are increasing.
I personally have had an average of 3.36 void days per property per year. Well within my planned budget

It's quite possible that BTL LL's will simply hold on to properties if they have good rentals on those properties.

I know most of the Btl'rs on this board are in a pretty good financial position (including yourself), however there are a hell of a lot who jumped on the bandwagon way too late, have a lot of debt and many more void periods than yourself. It's not about wanting to sell for them, they have no choice.

carolt

Plenty post on the mortgages/housing board about being over-indebted re their BTL's - rather than here. They want specific advice, rather than a general discussion of the economy.

ad9898_3

carolt wrote: »

Plenty post on the mortgages/housing board about being over-indebted re their BTL's - rather than here. They want specific advice, rather than a general discussion of the economy.

They also know that perhaps sympathy would be a bit lacking here.:D

carolt

Have no idea why.

We're a sympathetic bunch.

chucky

ad9898 wrote: »

I know most of the Btl'rs on this board are in a pretty good financial position (including yourself), however there are a hell of a lot who jumped on the bandwagon way too late, have a lot of debt and many more void periods than yourself. It's not about wanting to sell for them, they have no choice.

i'd add that their critical time is when they need to re-mortgage.
many BTL mortgage products are no longer freely available and if they are they have big fees - anything between 1.5% and 2.5% of the loan.
that's not as attractive as it was beforehand.

so it's not that they're forced to sell but could be in a position that it doesn't make sense to continue letting their previous flat for example. unless they can afford to hold on and run it with a lower profit or a small loss.

fatpig_2

Buy to Letters = Greedy boogers borrowing other people's money to gamble with. Despicable sorts.