BTLs, are you planning to sell?

macaque_2

A healthy rental sector relies on employment, prosperity and demand. Poverty, unemployment and excess supply are bad for the rental sector. So where do we stand?

According to the Telegraph, incomes are falling

The government have warned us to expect big tax rises to repair the damage of the property bubble. Rising taxes reduces disposable income.

The UK public sector have created heavy liabilities for the country in terms of wage bills, pensions and red tape. This is driving manufacturers abroad at an alarming rate. This not only costs manufacturing jobs but also wipes out companies that serve the manufacturing sector. We can expect unemployment numbers of 3 to 6 million within the next couple of years.

Despite all the spin, the UK has a million empty properties. Now the government are planning to compete with the private rental sector. http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=339290&re=5392&ea=174368

Interest rates are very low at the moment. There are two problems however. Many BTLs are getting hit with higher rates come renewal time. Secondly low interest rates will not last long. There are very serious inflationary pressures building up under the surface.

The real problems for BTLs have hardly started. We are living in denial as the government keeps the wolves at bay with unsustainable spending and unsustainably low interest rates. If I was a BTL today, I would use this opportunity to get out while I can. It is better to lose an arm than have the infection spread to the whole body.

Dithering_Dad

macaque wrote: »

We can expect unemployment numbers of 3 to 6 million within the next couple of years.

I've not seen any unemployment projections that are anywhere near these figures. Even during the worst of the 80s we didn't see anywhere close to 6M unemployed.

kennyboy66_2

macaque wrote: »

If I was a BTL today,

.

But you're not.

Dithering_Dad

macaque wrote: »

A healthy rental sector relies on employment, prosperity and demand. Poverty, unemployment and excess supply are bad for the rental sector. So where do we stand?

According to the Telegraph, incomes are falling

The government have warned us to expect big tax rises to repair the damage of the property bubble. Rising taxes reduces disposable income.

The UK public sector have created heavy liabilities for the country in terms of wage bills, pensions and red tape. This is driving manufacturers abroad at an alarming rate. This not only costs manufacturing jobs but also wipes out companies that serve the manufacturing sector. We can expect unemployment numbers of 3 to 6 million within the next couple of years.

Despite all the spin, the UK has a million empty properties. Now the government are planning to compete with the private rental sector. http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=339290&re=5392&ea=174368

Interest rates are very low at the moment. There are two problems however. Many BTLs are getting hit with higher rates come renewal time. Secondly low interest rates will not last long. There are very serious inflationary pressures building up under the surface.

The real problems for BTLs have hardly started. We are living in denial as the government keeps the wolves at bay with unsustainable spending and unsustainably low interest rates. If I was a BTL today, I would use this opportunity to get out while I can. It is better to lose an arm than have the infection spread to the whole body.

All this says to me is that more people will have to stay in rental accomodation because they won't be able to afford to buy a house. For those who are fearful of losing their jobs, any who are in rented accomodation will stay put and those who lose their jobs might sell up and rent. Your examples seem to point towards more people renting, putting pressure on the number of rental properties available and pushing rents up.

As far as your interest rate scenario is concerned. Current BTLers who are on variable deals will have seen a huge decrease in their mortgage rates, resulting in an increased rental income. There is a lot of evidence that BTLers (like other home owners) are salting this money like mad onto their mortgages because they know this period will not last. It's generally viewed that the BoE rates will stay the same until mid 2010, so plenty of time for BTLers (and home owners) to take advantage of low rates for debt repayment and to then arrange a long-term fixed rate mortgage to offer protection if interest rates climb.

If anything, your post is convincing me to look into BTL as an investment vehicle to compliment my current investment portfolio.

purch

If I was a BTL today, I would use this opportunity to get out while I can

I'm not....

Bought mine in 1991 & 1992 and I'm keeping em'

2 of them give me a yield of almost 60% on my initial investment !!!

bandraoi

If I was interested in BTL I'd be starting to look at the market carefully, talking to estate agents, looking for sellers in good areas who've hit the desperation point, looking for properties where good rent multiples are readily achievable.

Now is the time to get into buy to let, not the time to get out of it.

lostinrates

IMO you'd only sell BTL investments if you really were forced at this point...surely?

JonnyBravo

macaque wrote: »

The real problems for BTLs have hardly started. We are living in denial as the government keeps the wolves at bay with unsustainable spending and unsustainably low interest rates. If I was a BTL today, I would use this opportunity to get out while I can. It is better to lose an arm than have the infection spread to the whole body.

Granted there will be a lot more pain for some BTLers.
Equally there will be lots more who benefit from the low mortgage rates and low prices if they bought at a sensible time.

I hardly think that blanket advice of "get out while you can" is wise.
But then perhaps blanket predictions of 70% drops in house prices aren't wise either?

I'll stick with my one BTL house thanks. It's done great for me so far and I see no reason to change my strategy now.

Thanks for looking out for us all though, it's appreciated.

System

"please sell all your BTL's, it'll bring prices down even more "

the_ash_and_the_oak

Dithering_Dad wrote: »

All this says to me is that more people will have to stay in rental accomodation because they won't be able to afford to buy a house. For those who are fearful of losing their jobs, any who are in rented accomodation will stay put and those who lose their jobs might sell up and rent. Your examples seem to point towards more people renting, putting pressure on the number of rental properties available and pushing rents up.

As far as your interest rate scenario is concerned. Current BTLers who are on variable deals will have seen a huge decrease in their mortgage rates, resulting in an increased rental income. There is a lot of evidence that BTLers (like other home owners) are salting this money like mad onto their mortgages because they know this period will not last. It's generally viewed that the BoE rates will stay the same until mid 2010, so plenty of time for BTLers (and home owners) to take advantage of low rates for debt repayment and to then arrange a long-term fixed rate mortgage to offer protection if interest rates climb.

If anything, your post is convincing me to look into BTL as an investment vehicle to compliment my current investment portfolio.

Not sure about rents going up (at least in London) - seem to have stayed kinda tied to wages during the bubble and same for bust - not totally sure this will drive rents up (in short-mid term anyway) - plus lower interest rates means landlords can be a bit more competitive w rents. still seeing a lot of unoccupied flats around tho tbh.

Don't really think BTLs will sell off that much (prob should have done this in 2006 if they were going to) and hope they don't to be honest. Feel we do need a rental sector esp during uncertain times.

I see your date for IR increases is mid 2010. I know you advocate buying now - what is your opinion on a) price direction between now and then, b) what the rate increases will do to prices after that point?

purch

Not sure about rents going up (at least in London)

I have just renewed a Lease (Hampton Wick) at the the same Rent as previous (but then I am a nice LL :A)