The Wilsons are going under.

LydiaJ

Sounds grim for them, Pobby.

About houses being all the same... the 1930s street where I'm trying to buy a house was built with about 30 identical semis. They're not identical any more, though, because the majority have had some kind of extension done, and the extensions are all different.

I don't think the new build houses round here look bad. They're certainly a lot nicer than the stuff that was being built in the 1970s when architecture was having its love affair with concrete. But I wouldn't buy one because my experience of living in the one that I'm currently renting has given me the lowest possible opinion of their build quality. :mad:

dopester

There are a few things which puzzle me about that Guardian article, but I'm not going to raise them all here at the moment.

Have the Wilsons suddenly found new, more solvent tenants to replace all the ones who were struggling to make their rent payments. Few tenants benefit from falling mortgage repayment interest rates, and rents haven't dropped inline with what the Wilsons seem to be getting on their mortgage deals. Even if they rents have fallen, you'd expect a significant percentage of tenants to still be struggling to pay lower rents.

Or are quite a number of tenants still in Wilson houses, still struggling to pay, which allows Fergus to still proudly claim he doesn't have one house available to rent in Ashford, Maidstone, or Hawkinge.

Defaults by newly unemployed tenants jumped as the recession began to bite, and he admits October 2008 was the crisis point, when nearly 100 of his properties, 13% of the total, were occupied by tenants who were not paying all or part of the rent. "We asked for a meeting with our lenders. I said, if you think you can run the show better than me, you can have them all back. They said no.

But after Lehmans collapsed in September 2008, the Bank of England slashed its base rate to 0.5% and the Wilsons found on nearly all their loans they could revert to base rate plus a fixed percentage – typically 1.5% – at the end of the fixed period.

"We were going to be, to put it bluntly, stuffed. The reason we were saved was the drop in interest rates," Fergus says. He is now paying an average of just 2% interest. "I earn a yield from rents of around 5% and pay 2% in interest. The average mortgage cost is about £300 per month with £800 income. This gives about £300 per unit per month after paying agent and repairs etc. The renting game has never been better. I do not have one house available to rent in Ashford, Maidstone or Hawkinge."

dopester

Is this a sign that their controversial empire is crumbling? No, says Fergus Wilson, 61, who says the difference between his borrowings and the value of his properties "is around £180m, although it was as high as £225m". He adds: "Reports of my death are greatly exaggerated."

Another being my disbelief that bankers aren't imposing management fees, creditor charges of all types, in exchange for things like lowering interest rates on deals, allowing them to 'pay at the end of the month to help with cashflow'.

Even if they don't want to cause impact on the wider market by forcing a batch of sales, behind the scenes the bankers should be looking to impose charges and fees to feed on the Wilsons like starving wolves, if he/they really have anywhere near £180 million (supposedly) in difference between current market value and their borrowings.

And the bankers are really happy to allow them to keep up their racing pursuits with entries at Aintee next month? Bankers helping them with ways to manage their tight cashflow for repayments, whilst they go out spending their money supporting fancy lifestyles? Ridic. Unbelievable that they should keep their horse racing operations going, whilst they complain that rents weren't matching mortgage repayments.... as if they can't chip in money from elsewhere to make up the shortfall.

Cashflow is very important Fergus - get your head around that equation. You've been saved by the fall in interest rates, for the moment, but values still need to do some heavy crashing. Go on then.. enjoy the expensive racing high-life, whilst there is a big chance (imo) the taxpayer will have to pick up the tab for heavy losses your houses cause for already broken banks.

mystic_trev

Cunning Cliff on TMF sums it up nicely.

Just think about it for a second:

* £225m divided by 700 properties = £321k of equity per property

* Average sale price of 2-bed house in that area is roughly £160k

So, the Wilsons claim that their equity -- property values minus loans -- was £321k per household, or twice as much as the value of a typical property? Complete and utter hogwash!

To be worth anything near £225m, the Wilsons would have had to own a portfolio of, say, 5,625 properties with £40k of equity in each (with an average mortgage of £120k, for at an overall LTV of 75%). Yeah, right!

For a pair of mathematics teachers, their arithmetic is a complete joke.

kennyboy66_2

dopester wrote: »

There are a few things which puzzle me about that Guardian article, but I'm not going to raise them all here at the moment.

.

I like the Guardian, but that article seemed amongst the most un-critical I have read in a long time (in the sense that you would hope some journalist / editor would have picked holes in most aspects of the the piece).

It could have been written by a PR agency for Fergus.

lemonjelly

lostinrates wrote: »

Doesn't it feel a bit...depressing, that that is how similar houses are nowadays? Tile colour and drainpipes? Not...oh yes, that's Mr wilsons house...had it made with that grey water drain to the south side to more easily water his prize winning marrows, and the master bedroom window on the side with the view of the pub, so he could see when Mrs wilson was on her way home...or some such peculiarity of personality?

I agree wholeheartedly with this. Certain estates in my local area are referred to by some of us as "legoland" simply because of the identikit look.

poppy10_2

The reason we were saved was the drop in interest rates," Fergus says. He is now paying an average of just 2% interest. "I earn a yield from rents of around 5% and pay 2% in interest.

So he's on SVR for most of his deals - you can't get fixes that low.

That's going to burn once rates start rising

Graham_Devon

poppy10 wrote: »

So he's on SVR for most of his deals - you can't get fixes that low.

That's going to burn once rates start rising

He was on fixed, but got a special deal with the mortgage provider. The mortgage provider is as scared as the wilsons, if not more scared than the wilsons of them going under.

Better to cut their profit margins and keep the debt being repaid, than to have a default.

cogito

A very well known privately owned insurance broker breached its banking covenants a few months ago but renegotiated with a consortium of banks led by Lloyds. The banks agreed to charge no interest for one year despite being owed in excess of £500m. That's desperation and it's happening a lot.

They're called scuba loans I believe because they're basically under water.

Pobby

http://www.moneyweek.com/investments/property/investing-in-property-buy-to-let-uk-house-prices-01005.aspx

Moneyweek has a take on a recent interview with Wilsons.