The Fall in Rise of Buy To Let

geneer

Loughton_Monkey wrote: »

Well, well, well. I'm very impressed. Thanks, Geneer, for the good news.

With the vastly mushrooming number of rentals going on, this is conclusive proof that all these BTL landlords are making so much money, they're now paying cash for them - or at least a lot of them.

Brilliant. Nice to know that enterprise is not quite dead in UK. And once inflation starts biting, all those tenants who saved up their £30K and want to buy will be frozen out even longer when houses start inflating £100 a day.

Then, eventually, the smart BTL'ers will sell up, on the high, to all those former tenants, and retire to Bali.

Gin & Tonics all round......

Not what I'd call a compelling argument LM.

the_flying_pig

Yeah, I mean BTL isn't booming like it was in the early mid noughties, clearly, but the drop off in transactions has not as big as for owner-occupiers.

ZIRP has clearly played a huge part in keeping BTL ticking along. I suppose it's possible that talk of public sector pension cuts has, too.

I'm not sure that I see continued expansion of BTL as a very terrible thing. If government wanted to push home ownership [I've no idea whether it does or doesn't] then I suppose that some sort of tax would be the way to go. Pumping more debt, with the effect of pushing prices up, would obviously not be.

IronWolf

People will soon realise that without rampant HPI, BTL is at best a mediocre investment. It only yields a decent amount initially due to the large leverage employed, yields just plummet after a few years when you actually have some equity.

There are much better opportunities on the stock market, without the risk of voids, mortgage repayments and all the dangers of using leverage.

heathcote123

geneer wrote: »

You're still paying rent then eh fubra.

Yes, its a bit of an odd situation with me.

I'm paying rent on c.85k's worth of equity, to the tune of 120 pcm.

I'm receiving rent on c.40k's worth of equity, to the tune of 475pcm.

Wierd huh?

Seriously considering buying another shithole at the moment. I'd feel a bit daft buying the other half of the house.

heathcote123

IronWolf wrote: »

People will soon realise that without rampant HPI, BTL is at best a mediocre investment. It only yields a decent amount initially due to the large leverage employed, yields just plummet after a few years when you actually have some equity.

There are much better opportunities on the stock market, without the risk of voids, mortgage repayments and all the dangers of using leverage.

Ah crapola.

To address your points:

1. It's not just the yield. You generally get (over a reasonable period of time) capital gains + the yield. Stock market you need to keep reinvesting the yield (whats the ftse yielding 4%?) to get any reasonable capital growth.
2. Reliability. Show me a stock that pays your bills month in, month out.
3. Believe it or not, you can buy a property without mortgage repayments or leverage, just like stocks. You can also buy stocks on leverage.

"It only yields a decent amount initially due to the large leverage employed, yields just plummet after a few years when you actually have some equity"

That bits just financially illiterate nonsense. Would you care to expand on your theory?

geneer

heathcote123 wrote: »

I'm paying rent on c.85k's worth of equity,

Thats quite a strange way of saying someone else owns half your home isn't it.

heathcote123 wrote: »

Seriously considering buying another shithole at the moment. I'd feel a bit daft buying the other half of the house.

Yet strangely you've not even bought the first half outright.


Sounds like a sweet deal though.
If only it was possible to rent out a whole house from the council eh.

IronWolf

heathcote123 wrote: »

Ah crapola.

To address your points:

1. It's not just the yield. You generally get (over a reasonable period of time) capital gains + the yield. Stock market you need to keep reinvesting the yield (whats the ftse yielding 4%?) to get any reasonable capital growth.
2. Reliability. Show me a stock that pays your bills month in, month out.
3. Believe it or not, you can buy a property without mortgage repayments or leverage, just like stocks. You can also buy stocks on leverage.

"It only yields a decent amount initially due to the large leverage employed, yields just plummet after a few years when you actually have some equity"

That bits just financially illiterate nonsense. Would you care to expand on your theory?

1. Oh Im including capital gains when I speak of returns being mediocre in the long run.
2. There are plenty of companies with very reliable dividends. BTL has risk of voids, professional tennants, maintenance costs
3. Without a mortgage its an even worse investment. The flat im living in now, if owned outright would yield 6.7% assuming absolutely no costs or voids. Of course there ARE costs, lets slash that to 6% and be generous. Hardly a ground-breaking yield considering it doesn't compound, and the asset is illiquid.


Its not a theory that leveraged investments produce higher yields on equity, thats a basic fact of business.

IveSeenTheLight

geneer wrote: »

Some fascinating figures from the CML, particularly if you look back further than conveniently selected by some. :rotfl:

2011- There are 1.34 million buy-to-let mortgages outstanding

2010- There were 1.26 million buy-to-let mortgages outstanding

2008 - There were 1.1 million buy-to-let mortgages outstanding

2007- There were 938,500 buy-to-let mortgages outstanding

2003 - There were 334,800 buy-to-let mortgages outstanding.


Between 2003 and 2007 outstanding mortgages increased by 180%.

Between 2007 and 2011 they increased just 42%.

2008 seems to have been a bit of a game changer for BTL eh.

Oh dear..........
Seems extremely desperate to get the word fall into the title when you are in fact simply saying "BTL is still rising, just not as fast as it was previously"

We'll duh!, if you look at all mortgages you could say the same.

That said, with mortgage rates being as low as they are, it's possible now to get some good remortgaging against staying on SVR.

geneer

IveSeenTheLight wrote: »

Oh dear..........
Seems extremely desperate to get the word fall into the title when you are in fact simply saying "BTL is still rising, just not as fast as it was previously"

But not as desperate as playing the "any increase is a win" game.
Taking the bullish position to its absolute extreme, 1 extra BTL every month would count as a "VICTOREEEEEEEEEEEEE".:rotfl:

Deeply silly.

geneer

Of course no one has yet explained why this concept of "no of BTL mortgages outstanding" since the BTL mortgage was created in the late 90's is paricularly meaningful.

Once can only presume that every single landlord that ever existing before the late 90's paid cash.


I wonder what CML has to say about the recent surge in BTL mortgages.

We have also reported a strong pick-up in BTL lending – up by a fifth in Q2 to £3.5 billion – although most of this increase reflected higher remortgage activity. While lending to support house purchase by landlords was its strongest for three years, levels remain very subdued compared with a few years ago and buying by landlords accounts for only about 12% of aggregate market activity.

:rotfl:



Besides. Theres a bit of semantic wriggling going on in the Bulls rendition of "So much for the death of BTL".

Nobody ever claimed that BTL was going to go away.
But it was fully expected that the kind of zero deposit highly geared by to let muppetry that played such a big part of the bubble (and resulting crash) was dead and buried.

And of course, it most certainly is.
Welcome to the new new landlord paradigm.
Not much different from the old paradigm.