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

dopester

Alan_M wrote: »

That's probably closer to the mark.

I'd hazard a guess (based on nothing more than a hunch) that Mortgage Equity Withdrawal equalled or exceeded the total value of BTL mortgages. I wonder if there is any way of producing a stat on that but I doubt it?

Availability of funds drives everything including prices, and that's it.

Blindly blaming BTL'ers as the evil wrongdoers and cause for everything is just so far off the mark.

Wrong - although it sure adds to all the problems, and did power consumption.

Only one thing can push up house values.

People agreeing to buy homes at ever higher prices. Year after year. And having the finance to do so.

MEW for consumption does not buy property at ever higher values.

House values rise by what happens at the margin, as people each year buy at higher values than the month before, the quarter before, and the year before. That is the only way values rise.

Including for people who did nothing but just owned there homes, as the values of their property rises too. It is all done by those buyers at the margin.

dopester

Of course the same is true on the way down.

Even small numbers of sellers lowering their asking prices, or accepting lower offers on the month / quarter / year value before, brings down prices and values for the majority.

What happens at the margin. Learn it.

Thrugelmir

dopester wrote: »

Wrong - although it sure adds to all the problems, and did power consumption.

Only one thing can push up house values.

People agreeing to buy homes at ever higher prices. Year after year. And having the finance to do so.

MEW for consumption does not buy property at ever higher values.

House values rise by what happens at the margin, as people each year buy at higher values than the month before, the quarter before, and the year before. That is the only way values rise.

Including for people who did nothing but just owned there homes, as the values of their property rises too. It is all done by those buyers at the margin.

Property developement was as prevalent as BTL. What people failed to realise though was that they hadn't actually added value to the property. The market had risen in general. Even if they hadn't of borrowed to improve their home it would have increased in value anyway. With house prices constantly rising improving a house seemed a no lose bet. All with the aim of one day downsizing.

The BTL investors in a sense took over the FTB market forcing up prices of high demand easily rentable property. Thereby underpinning the whole market by allowing people to trade up the ladder.

ukcarper

We have had booms before without BTLs perhaps BTLs pushed this one higher but the boom would have taken place anyway.

econo_2

ukcarper wrote: »

We have had booms before without BTLs perhaps BTLs pushed this one higher but the boom would have taken place anyway.

Exactly. Can all the great BTL bashers with super knowledge to everyone else please explain how we have had previous booms then? E.g. the last great housing boom? No BTL on mass then.

Anyone want to blame those with 2.4 kids or couples for jumping on the house price inflation band wagon then or now? Course not because that would be most of us. And it's not us -just the bad old BTL mob that have caused all the worlds ills.

I'm still waiting for the head of the World Bank or IMF to get up and make a speech on how the UK's quoted 8% BTL market caused the 2nd great depression.:rotfl:

In addition:

Government with reckless monetary policy gets the usual pass.

Government with non-existent immigration policies (illegal or legal ) gets a pass so the huge housing pressures that has and continues to cause also gets the usual pass.

Roll up roll up let's here it................................................

RabbitMad

carolt wrote: »

Oh go on - buy buy buy!

I highly recommend all would-be landlords buy now!

After all, those who did it 2 years ago are so clearly onto a good thing.

Can't fail.

:rolleyes: Sarcasm is the highest form of wit. Well as prices have (on average) dropped between 20-25% then yes it probably is a good time to buy. However it all depends upon finding the right property where the sums work, and taking a personal feeling as to whether house prices have bottomed out in the area you are looking at. If they don't its going to fail. If they do then it will probably work. But as somebody said don't invest more than one can afford to lose.

Anybody that bought 2 years ago if the sums added up probably are ok, however I bet very few of them actually had a plan other than relying on HPI.

carolt

RabbitMad wrote: »

Well as prices have (on average) dropped between 20-25% then yes it probably is a good time to buy. However it all depends upon finding the right property where the sums work, and taking a personal feeling as to whether house prices have bottomed out in the area you are looking at. If they don't its going to fail. If they do then it will probably work. But as somebody said don't invest more than one can afford to lose.

Anybody that bought 2 years ago if the sums added up probably are ok, however I bet very few of them actually had a plan other than relying on HPI.

I agree with the rest of your post but can see no rationale behind the assertion in your first sentence here.

Just because prices have fallen 20-25%, that is no guarantee they won't fall another 20-25%, say, or more or less.

Caveat emptor.

RabbitMad

Well where I am the 20-25% drop in house prices means the sums are starting to look ok. I personally feel that the market has a bit further to go down, it could be another 20% or then again it might not.

I think any decline is now likely to be modest, with 4 to 5 years of stagnation in house prices.

But I am not yet putting my money where my mouth is. That may come later.

carolt

Ah, well I'm with you there.

Biding my time too.

Not in BTL terms though you understand; just a family home. Different kind of sums.

RabbitMad

My first home (the one I sold in 1997) cost less on a repayment mortgage than the rent. That is where I think the market will bottom out, and when I find a property that has a PCM rent that would cover a repayment mortgage with an interest tate of 7.5% I think I'll be buying.

Obviously I was fairly lucky in when I bought originally, and by both me and OH being in good jobs and over paying our mortgage. One thing we haven't done is MEW for a holiday or a flash car so we are sitting pretty in our current house with about 75% equity.