BTLs, are you planning to sell?

the_ash_and_the_oak

purch wrote: »

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

Out of interest how has the rent changed on this since say 2000 (In the time I've rented I haven't really noticed any change up or down in general)

Thrugelmir

lostinrates wrote: »

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

So if you held say shares in a Company whose share price was falling. Would you hang onto them on the basis that they would possibly recover and rise in the future?

A good investor knows when to cut their losses ( as well as knowing when to cash in their gains).

bandraoi

Thrugelmir wrote: »

So if you held say shares in a Company whose share price was falling. Would you hang onto them on the basis that they would possibly recover and rise in the future?

A good investor knows when to cut their losses ( as well as knowing when to cash in their gains).

If they're still paying a good dividend and the company has good long term prospects then yes I'd hold onto them. In fact if I believed in the long term viability of the company I'd start buying.

*Chattie*

No..........

themanbearpig

Thrugelmir wrote: »

So if you held say shares in a Company whose share price was falling. Would you hang onto them on the basis that they would possibly recover and rise in the future?

A good investor knows when to cut their losses ( as well as knowing when to cash in their gains).

The problem with the BTL brigade is that they are not savy investors. Most of them are just a bunch of average people that jumped on the band wagon, because of easy finance and promises of future wealth.
Those that entered too late are in a world of trouble, but are isolated from the real problems due to the low interest rates.
Given the housing market is a just a ponzi scheme, those that invested earlier on have been making capital gains through the losses of those the entered later.

Dithering_Dad

the_ash_and_the_oak wrote: »

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?

It's not really my date, but a consensus date pulled together from industry 'experts'. Whether they're right or not remains to be seen, but it sounds about right, and it'll fit into my personal plans really well if they are correct (I am stuck in my current mortgage deal until next April).

I'm not really advocating 'buy now', I simply remarked that house buying is not the same as car buying and can take a suprisingly long time - my first (vacant posession) home took about 5 months all told to go through and so people should bear this in mind when trying to time the market.

My message is that if someone is looking to buy in the next 18 months (and naturally, 'looking to buy' means they have the necessary deposits, etc. in place) then in my opinion they should get the ball rolling right now - start identifying properties, negotiating prices/making offers - with a view to being in their house in about 6 - 9 months time.

Sorry about all the preamble and caveats, but as I have found often on this board, you have to prepare this type of post as if you're putting together a legal document. Any ambiguity is jumped on and used as battering ram against you! :rolleyes:

To answer your actual question...

a) Prices will continue to plateux (even have very small gains) and then drop, but nowhere close to those steep drops we have already seen. This could continue for anything up to 3 years.

b) Forgetting inflation for a moment, people have become accustomed to low interest rates of around 5% and view these as the 'norm'. They are not, they were a result of the availability of extremely cheap credit that we will not see again for a generation. I think that 'normal' interest rates will be around the 7% to 8% mark. Couple this with inflation that could get out of control while the government try to stimulate the economy, I think interest rates could easily reach double digits, and remain there for a lengthy duration.

A lot of people won't remember the ERM, but when that failed we ended up with 15% interest rates. Falling out of the ERM (and the costs incurred therein) is a drop in the ocean compared to the near collapse of the global economic system and the trillions of dollars being thrown at the problem.

dgl1001

themanbearpig wrote: »

The problem with the BTL brigade is that they are not savy investors. Most of them are just a bunch of average people that jumped on the band wagon, because of easy finance and promises of future wealth.
Those that entered too late are in a world of trouble, but are isolated from the real problems due to the low interest rates.
Given the housing market is a just a ponzi scheme, those that invested earlier on have been making capital gains through the losses of those the entered later.

clearly you know very little about a) the average btl investor and b) ponzi schemes

Dithering_Dad

Thrugelmir wrote: »

So if you held say shares in a Company whose share price was falling. Would you hang onto them on the basis that they would possibly recover and rise in the future?

A good investor knows when to cut their losses ( as well as knowing when to cash in their gains).

Depends on how much further you think the shares will fall. To have bought the shares in the first place you will have paid a fee to the broker and stamp duty on the percentage value of the shares. If you sell the shares you will again have to pay a brokerage fee. If you then re-buy the shares, you will once again pay brokerage fees and stamp duty. In order to make any money on the transaction, you will have to re-buy the shares at a price that factors in two purchases and one sale, plus a percentage gain that's high enough to make all this worthwhile.


The same is true for housing. Anyone who STRs in order to re-purchase an equivalent house for less money needs to be very sure of his calculations and factor all of the estate agency, mortgage redemption fees (if any), mortgage arrangement fees, legal fees, removal costs, rental fees, rental agency fees, etc., etc. or he could end up buying an equivalent house for more than he sold his STR one. At the very least he could make such a poor profit that it wasn't worth the hassle in the first place.

A good investor is one who knows when to hold. Anyone can panic and sell their stock/house for a loss.

the_ash_and_the_oak

Dithering_Dad wrote: »

I think interest rates could easily reach double digits, and remain there for a lengthy duration.

what is your opinion of what double digit interest rates would mean for the amount of money a new borrower would be able to acquire? (I agree w your point about continued smaller falls over a longer time period than the large monthly figures we have been seeing - tho admittedly the large falls have been based on significantly reduced transaction figures)

I agree about the 15% rates that were had last time around but I'm kinda feeling comparatively they weren't that high given that rates had often been north of 10% as far back as 1984 imo

purch

Out of interest how has the rent changed on this since say 2000

The rent went up about 15% in 01 or 02 I think, but has remained pretty much the same ever since.

Supply of quality Apartments/Flats has increased loads in that area over the last 7 years, and whilst leasing hasn't been a problem you have to take into account your competition, and brand new will always attract a premium.