Banks shut of BTL lifesupport.

nearlynew

Turnbull2000 wrote: »

Rapidly rising rents.

Plus expectations of future prices rises, disillusionment with poor interest rates, disillusionment with pensions and property generally perceived as a safe bet.

So, have you bought a house or what?

doire_2

nearlynew wrote: »

So, have you bought a house or what?

Of course he has. He never shuts up about BTL and low IR so i bet he owns about 20 houses. Probably sealing the purchase of number 21 as we speak

IveSeenTheLight

Thrugelmir wrote: »

The BTL boom was built on rapidly increasing property prices. Not on the profitability of rental income.

I tend to think there was a few more significant factors.

1) Social housing was sold of by the government.

2) As a result of this and to assist the private market to fill the gap caused by the government, the AST lease was introduced. This ensured that private rental could evict tenants within certain terms whilst providing security to the tenants for the duration of the AST.

3) Because a gap was created and legislation was changed it allowed the private markey to partially take up the gap created by the loss of social housing

4) Lenders could see a profit from lending to BTL, by marketing them at higher interest rates than normal residential properties and also having a higher "arrangement fee"

Incidently, we've had this coversation before where I have shown that a BTL without HPI still provides a better return over a 25 year period than placing the deposit in a savings account.

BTL does not need HPI to succeed. It's just an additional benefit.

Thrugelmir

IveSeenTheLight wrote: »

Incidently, we've had this coversation before where I have shown that a BTL without HPI still provides a better return over a 25 year period than placing the deposit in a savings account.

BTL was born in 1998. So a few years to go to reach the 25 year period.

Thrugelmir

IveSeenTheLight wrote: »

4) Lenders could see a profit from lending to BTL, by marketing them at higher interest rates than normal residential properties and also having a higher "arrangement fee"

Nothing new. Pre the BTL boom. Lenders charged 1% to 1.5% above SVR on commercial residential mortgages.

IveSeenTheLight

Thrugelmir wrote: »

BTL was born in 1998. So a few years to go to reach the 25 year period.

Ah, your being pedantic because you can't argue with the theory I showed you .

Nevermind, I understand.

IveSeenTheLight

Thrugelmir wrote: »

Nothing new. Pre the BTL boom. Lenders charged 1% to 1.5% above SVR on commercial residential mortgages.

Maybe, but it was not so well marketed to the general public.

Thrugelmir

IveSeenTheLight wrote: »

Maybe, but it was not so well marketed to the general public.

Marketed? The rise and demise of the demutualised Bradford and Bingley in a time frame similar to that of Northern Rock. Sums up the poor quality lending business that was taken onto the books. Not just of B&B either.

Thrugelmir

IveSeenTheLight wrote: »

Ah, your being pedantic because you can't argue with the theory I showed you .

Not pedantic. You are quoting a 25 year time frame. Yet in 1998 there were only 30,000 (BTL) commercial loans. So what changed to make it such a great investment between then and 2007? Taxation policy didn't change. So the jury is still out in my mind.

The art of successful investing is knowing when to take a profit (and equally a loss). Markets gyrate up and down. There is no smooth upward trend.

IveSeenTheLight

Thrugelmir wrote: »

Not pedantic. You are quoting a 25 year time frame. Yet in 1998 there were only 30,000 (BTL) commercial loans. So what changed to make it such a great investment between then and 2007? Taxation policy didn't change. So the jury is still out in my mind.

The art of successful investing is knowing when to take a profit (and equally a loss). Markets gyrate up and down. There is no smooth upward trend.

I quoted a 25 year timeframe as that is the standard time a mortgage is taken over.

What changed? I explained before, legislation put in place by the government to ease concerns over private residential letting.

Fact remains though that property out performs a standard savings account even without HPI