The Buy-to-let boom is back

Thrugelmir

Financial information service Moneyfacts says that a year ago there were 295 buy-to-let mortgages available. Today the figure is 481. In fact, there are more buy-to-let mortgages available than at any time since the summer of 2008, before the world financial crisis went into overdrive.

Yet there's no lender who is prepared to fill the void left by the departure of Bradford and Bingley from the BTL lending market. So the credit lines available are relatively small.

the_flying_pig

chucknorris wrote: »

I'm not sure which part of SW London you are in. I have 4 flats in Battersea and I have never had an unwanted void since buying them, I bought the first one over 20 years ago. The only voids I have experienced are when I have chosen to refurbish a flat between tenancies.

SW12. By "void" I don't mean huge periods without a whiff of a tenant, I mean a week [or two or three or four] per year when, as you say, you're decorating, or inbetween tenants, or waiting for the last member of your HMO to move in... If you've got a £350k mortgage on a 2-bed flat then this kind of thing really matters!

abaxas

BTL can be quite a good idea. But when things go wrong, the costs are immense.

Providing you can budget for 6-12 months of no rental income as the worst case. No reason why it cant be a long term investment. The real issue comes if you get problem tenants or personal cashflow.

BTL is a business, but most appear to think it isnt.

COOLTRIKERCHICK

abaxas wrote: »

BTL can be quite a good idea. But when things go wrong, the costs are immense.

Providing you can budget for 6-12 months of no rental income as the worst case. No reason why it cant be a long term investment. The real issue comes if you get problem tenants or personal cashflow.

BTL is a business, but most appear to think it isnt.

this is why we are looking at properties at 50k, and yes there are some nice properties around, that just need re-decoration etc and make lovely homes..

we have decided not to look at higher priced houses, as if things go a bit pear shaped we can still afford the interest only mortgage and the other costs of the house if it has long voids.. plus we can get hte same rent for a 50k house as a 80 - 90k house in the same area

we will be going through a very well locally known estate agents, which has a good letting side to their business

If there is a b.t.l boom, then it must be the right time to buy...for the B.T.L market...

abaxas

COOLTRIKERCHICK wrote: »

this is why we are looking at properties at 50k, and yes there are some nice properties around, that just need re-decoration etc and make lovely homes..

we have decided not to look at higher priced houses, as if things go a bit pear shaped we can still afford the interest only mortgage and the other costs of the house if it has long voids.. plus we can get hte same rent for a 50k house as a 80 - 90k house in the same area

we will be going through a very well locally known estate agents, which has a good letting side to their business

If there is a b.t.l boom, then it must be the right time to buy...for the B.T.L market...

Nail head.

Volume of !!!!!! is better than a small amount of good. But be prepared for the tenants to rip the places to bits.

chucknorris

the_flying_pig wrote: »

SW12. By "void" I don't mean huge periods without a whiff of a tenant, I mean a week [or two or three or four] per year when, as you say, you're decorating, or inbetween tenants, or waiting for the last member of your HMO to move in... If you've got a £350k mortgage on a 2-bed flat then this kind of thing really matters!

That's what I assumed you meant. I can confirm no voids in 20 years except every 4/5 years per flat when redecorating (or more substantial works).

I also owned a 3 bed terrace house in SW12 (Dagnan Road) for 12 years, nice area just a few mins walk from Clapham Common. No voids there either, except for a couple of months between just before exchanging contracts and completion when I sold up in 2003.

nollag2006

the_flying_pig wrote: »

I must admit that I briefly considered buying just one BTL last week given all the bad news about pensions etc. Figured I'd look close to home so that I'd be able to carry out any maintenance etc myself. Calculated gross yields for my street (SW London). A shade over 3%. Nearer 2% after maintenance, voids, and letting agent fees. looked at BTL mortgage best buy tables. Realised that, even with a big deposit and on interest only I'd be paying an awful lot into it every month. The whole thing would only stack up given a prolonged period of (1) high inflation; and (2) central bank inactivity, keeping rates below inflation. Decided I didn't particularly want to gamble on that. BTL for cash (or mostly cash, or a short hefty repayment driven mortgage) rather than leveraged, might be better but like most people I could not afford that (without skimping or overborrowing massively on my primary residence, which would be much the same thing). There was a good opportunity there 10 years ago, a great one at the end of the 90s. But not now.

2-3% does seem quite low. Are you going in for something very high end?

In my experience, the yield tends to decline as you move up towards more expensive properties. In SW London, proximity to tube and rail links is also key.

Personally, I bought a couple of BTLs in W5 in early 2009, for a little over 200k a piece, and they both yielded 5% immediately.

One of the the current tenants has just moved out, and I've been able to put the rent up almost 20%.

Add that to the big jump in house prices since the nadir of the crash in early 2009, and its been a very lucrative experience all round

:T

macaque_2

Sibley wrote: »

Heart warming post. Thanks for putting it up

A popular catchphrase with the bulls is "be careful of what you wish for". Perhaps that would be a suitable warning for them in this thread.

House prices and a tight rental market has creating housing problems and acute financial difficulties for many people. The background to this has less to do with market economics than political will. A policy decision made outside the UK on capital lending ratios has turned the economics of house purchse on its head. A political decision by the UK government on letting laws, interest rates or immigration will do the same to house prices.

The government is faced with the choice of another bank meltdown or the redistribution of housing debt to BTL and wealthy buyers. This has been a necessary brake on making necessary changes to (immigration, rent laws, interest rates etc). When the banks are solvent again, however you can be sure to see some changes. What chance to they have of re-election if two generations of voters are priced out of affordable accomodation.

Cleaver

nollag2006 wrote: »

In my experience, the yield tends to decline as you move up towards more expensive properties. In SW London, proximity to tube and rail links is also key.

Personally, I bought a couple of BTLs in W5 in early 2009, for a little over 200k a piece, and they both yielded 5% immediately.

One of the the current tenants has just moved out, and I've been able to put the rent up almost 20%.

Add that to the big jump in house prices since the nadir of the crash in early 2009, and its been a very lucrative experience all round

None of this is real though, is it?

nollag2006

macaque wrote: »

... What chance to they have of re-election if two generations of voters are priced out of affordable accomodation.

No government wants a house price crash during their term in office.

The electorate heavily penalised the Tories for the crash in the early 90's, and booted Labour out for the crash of 2008.

Like it or not, the government will do all it can to strengthen the housing market.