BTL: "... a ticking time bomb."

*MF*

Louise Cuming, head of mortgages at moneysupermarket.com, says: "The credit crunch has killed off the majority of buy to let deals. Because banks view buy-to-let borrowers as riskier than normal customers, the deals that are still available require an extra large deposit.

"The buy-to-let mortgage market is like a ticking time bomb; the uncompetitive nature of the products on offer does not reflect the the need in the market from current landlords, and if nothing changes, this is a sector of the market that will continue to suffer."

More here:

http://www.mortgagestrategy.co.uk/cgi-bin/item.cgi?id=185925&d=403&h=401&f=402

PasturesNew

Anybody know what the current SVR is likely to be on average on a BTL mortgage?

I know my LL couldn't remortgage. This place is already 21% less than he paid 3 years ago. If he'd had a 90% back then he'd need to stump up another nearly £25k to get a remortgage on it.

IveSeenTheLight

PasturesNew wrote: »

I know my LL couldn't remortgage. This place is already 21% less than he paid 3 years ago. If he'd had a 90% back then he'd need to stump up another nearly £25k to get a remortgage on it.

Ah but PN, you dont know if your LL could re-mortgage.

You say IF he had a 90% mortgage, but for BTL a 10% deposit is insufficient, meaning he is likely to have had at least a 20% deposit

You also dont know for how long his initial mortgage deal was for.
It could be 5 years, meaning he still has two years to go.
It could have been only 2 years and now he has already re-mortgaged for a longer period.

You also don't know what type of mortgage he has i.e fixed, discounted, tracker etc.

You also dont know if your LL has overpaid in the last three years to the mortgage.

A lot of things you don't know but yet you still say he will need to stump up £25k to get a re-mortgage (if he indeed needs one)

In essence you are summising the worst conditions that your LL might be facing

P.S. Are you absolutely sure that his place is 21% than he paid for it? I know each area is different and also property types are affected. Are you referring to this level of detail or just going by a blanket UK wide stat?

ad44downey

BTL was a sleazy business at the best of times so it's good to see lenders wake up to this fact at last.

PasturesNew

IveSeenTheLight wrote: »

Ah but PN, you dont know if your LL could re-mortgage.

You say IF he had a 90% mortgage, but for BTL a 10% deposit is insufficient, meaning he is likely to have had at least a 20% deposit

You also dont know for how long his initial mortgage deal was for.
It could be 5 years, meaning he still has two years to go.
It could have been only 2 years and now he has already re-mortgaged for a longer period.

You also don't know what type of mortgage he has i.e fixed, discounted, tracker etc.

You also dont know if your LL has overpaid in the last three years to the mortgage.

A lot of things you don't know but yet you still say he will need to stump up £25k to get a re-mortgage (if he indeed needs one)

In essence you are summising the worst conditions that your LL might be facing

I do know, because he told me his financial position once when he was round fixing stuff. His pension had gone completely to the wall and he bought 4 BTLs.... so I'd guess he was maxing out when he did it.

IveSeenTheLight wrote: »

P.S. Are you absolutely sure that his place is 21% than he paid for it? I know each area is different and also property types are affected. Are you referring to this level of detail or just going by a blanket UK wide stat?

I was basing my figures on what he paid, what two sold for last year, what one has gone onto the market for last month. So the figures are correct for this actual flat.

Alan_M_2

ad44downey wrote: »

BTL was a sleazy business at the best of times so it's good to see lenders wake up to this fact at last.

A builder freind of mine started his "BTL Pension" back in the early 90's just after the last great pop. It wasn't exactly fashionable back then and the best deals he could get were 10 year commercial mortgages which is what he did.

He now owns 15 buildings (some of which are 8 or more flats)....and has no mortgages at all.

He will be wholly unaffected by any of this crash......all his properties are occupied and these aren't exactly what you'd consider "Executive apartments".....

He's what I consider a professional landlord or BTL landlord.

I once heard a cab driver talking about the stock market, He had a stock broker in the back of cab previous fare t me...the stock broker said "when members of the general public are piling into the stock market, it's time for the professionals to get out"...same applied to BTL.

Many professionals started offloading a couple of years back.

I somewhat understand the dislike of amatuer BTL landlord in the context of these forums, but I feel the number that will truly be effected is overstated and certainly not a catastrophic amount in it's own right, really its only those that bought near peak highly levarged and relying on HPi that will suffer.

As a percentage of properties bought with mortgages I'd be surprised if that was much more than 2-3%...which means 97-98% should be just fine.

Sure I'm all for house prices adjusting to a sensible level, but I feel the bias given towards non professional BTL's is overstated in the grand scheme of things

Pobby

Excuse me being a bit uninformed. If a buy-to-let investor bought at say £100k, comes to the end of a fix and the property is now worth £70k do they just get transferred to the svr or do they have to come up with extra cash to bolster up the equity. Daft question.

neas

landlord bought my flat for 50k... 12 years ago..... he makes a profit on my rent and he even told me so :P.

He was getting a bit !!!!ed about forking out repairs but lets say my rent covers his BG plumbing and central heating expenses plus mortgage.

Hes a winner from this :O, altho agreed it would have been better to sell 2 years ago to maximise profits etc.

ad9898_3

Alan_M wrote: »

A builder freind of mine started his "BTL Pension" back in the early 90's just after the last great pop. It wasn't exactly fashionable back then and the best deals he could get were 10 year commercial mortgages which is what he did.

He now owns 15 buildings (some of which are 8 or more flats)....and has no mortgages at all.

He will be wholly unaffected by any of this crash......all his properties are occupied and these aren't exactly what you'd consider "Executive apartments".....

He's what I consider a professional landlord or BTL landlord

I disagree, I think he was a very lucky speculator, just because someone is lucky, doesn't necessarily mean they are professional......... not by a long chalk.

silvercar

Pobby wrote: »

Excuse me being a bit uninformed. If a buy-to-let investor bought at say £100k, comes to the end of a fix and the property is now worth £70k do they just get transferred to the svr or do they have to come up with extra cash to bolster up the equity. Daft question.

If he got a "normal" BTL mortgage, it would more than likely be a 25 year mortgage so the same rules apply as residential mortgages ie the fixed deal ends and the mortgage then goes on to the lender's SVR. Some lenders have a higher (by 0.5%-1%) SVR for BTL.

Of course some people bought BTLs by taking mortgages on their own home, so they would have a normal mortgage, others invested their own savings so have no mortgage. Some invested pension payouts and the like.

Same problem faces BTLs as residentials: if you had a high LTV and your deal ends, as house prices have fallen, the mortgage options to you are more limited so you may have little option but to go on your lender's SVR.

With low interest rates, the lender's SVR isn't a bad option. So IMHO it will be in 2 years time that problems will occur when the SVR is high and the rent won't cover the mortgage.

*MF*

One million more individuals are forecast to purchase a buy-to-let property in the next four years, turning a once-rare practice into a £68bn-a-year mass market.

Research published today says the number of people buying property for investment will double by 2011.

Concerns about the reliability of pensions, a rising student population, higher divorce rates and immigration are raising demand for rental properties, according to the analyst Mintel.

One in 10 mortgages is now for buy-to-let investors - increasingly, affluent amateur landlords with a small portfolio; 58 per cent have two properties or fewer.

Advances for buy-to-let mortgages are expected to rise from £38bn last year to £68bn in 2011. In 1999, the total was £3bn.

From here:

http://www.independent.co.uk/life-style/house-and-home/property/number-of-buytolet-investors-will-double-within-four-years-446265.html


Yep - check the date of the article!


- how the world looked to some only two years ago


- how things change!