New Buy to Let Boom Fuelled By Higher Rents

Percy1983

JonnyBravo wrote: »

How remarkable.

Well I've not "hoodwinked or such like" my tenants.

Its more a reference to how you believe I have conned my fiancee and you believe she has little intelligence.

As it is I could budget and did make a decision to run up debts, in short I had a very small income in my early career and didn't live a life of luxury but did decide to live now pay later knowing my income would catch up.

Cleaver wrote: »

I'm not sure you fully understand the concept of risk in relation to investments. The rule of thumb is that the more you diversify the more you reduce risk, so if you have £50,000 to invest and you invest it in any one asset then people would generally all agree that you have done something risky. I've been through the reasons,

I agree completely, I do agree to diversify investments is the best way, my point is currently there can be very large returns with next to no risk of a loss, yes maybe a risk of lessor returns.

Cleaver wrote: »

Do you feel as strongly about the moral aspect of renting a car? Or renting a spot in a restaurant to eat a meal? Or renting a suit for a wedding? Or renting a hotel room when you go on holiday? Or renting a taxi to take you home? All of these things are pretty similar as far as I can see. You have the option to buy or rent the service and in all of the above examples you might wish to rent rather than buy, but it comes at an increased cost. Are all of these businesses as bad?

Car/taxi, the said asset is worth less with every use, taxi is also somebodies time.

Suit, yet again will have wear and tear so has limited use.

Hotel room, somebody has to clean it, sheets/towels etc.

House... pretty sure it doesn't devalue while I sit here and watch TV.

As I say I think there should be more risk in housing or in short not as many profits. As I say rent caps should be in place, no I don't mean £100 a month but something which maybe less than the average mortgage, yes it may cost the landlord a little while the mortgage is going but still they get a free house at the end of it.

Cleaver

Percy1983 wrote: »

As I say I think there should be more risk in housing or in short not as many profits. As I say rent caps should be in place, no I don't mean £100 a month but something which maybe less than the average mortgage, yes it may cost the landlord a little while the mortgage is going but still they get a free house at the end of it.

Well, the rent cap they have in New York has always worked to keep property prices at an affordable level, so maybe we should give it a go.

heathcote123

Percy1983 wrote: »

As I say I think there should be more risk in housing or in short not as many profits. As I say rent caps should be in place, no I don't mean £100 a month but something which maybe less than the average mortgage, yes it may cost the landlord a little while the mortgage is going but still they get a free house at the end of it.

But how much profit is there?

Landlords are getting ayield on average of around 5 or 6% I think on current values - with inflation at 5%, they're probably only just breaking even in real terms - losing money if there is much maintenance to be done.

You're getting a bargain really.

marblesfound

Cleaver wrote: »

How much did that flat sell for? If it was recently sold then the BTL mortgage on that 1-bed flat would have been on at least 4%, and let's say with a 50% deposit. If the mortgage payments are £350 a week then the mortgage amount would be £65,000. If the deposit is around 50% then that means the flat was purchased for around £130,000.

What area are you in where you can buy a 1-bed flat for around £130,000 and then rent it out for £1,200 a month?

Do you really believe that all Landlords have BTL mortgages? I know many amateurs that have standard owner occupier mortgages - what is going to happen if they are caught? Will they go to prison? Why should they stop?

Even if they use a BTL mortgage the flat probably cost £230,000 or so. Say 60k deposit or more and they could be paying £500 a month and charging £1200pcm rent - still a massive monthly surplus and yes I still see that as state sponsored exploitation given that the we have a two tier interest rate economy - the interest rates set on mortgages and those set on other types of borrowing. What's the cheapest rate you can get on an unsecured loan, a secured loan or Credit card?

In addition my example above was an interest only mortgage - your figures look very wrong. Why on earth would you calculate a BTL mortgage on repayment terms. Surlely for BTL most use interest only

marblesfound

FTBFun wrote: »

It doesn't half annoy me when people make up figures to prove a point.

£1,200 pcm is the rent you'd pay on a flat in a decent part of London (like West Hampstead). You're looking at least £250,000 for a flat there.

In addition my example above was an interest only mortgage. Surley for BTL most use interest only.

It doesn't half annoy me when people don't think before they post.

Cleaver

marblesfound wrote: »

Do you really believe that all Landlords have BTL mortgages?

Of course not. In any industries there will be cowboys - plumbers doing cash in hand jobs, electricians without registration, builders who don't know what they're doing. They'll all be in the minority though, the majority of landlords will be on BTL / consent to let mortgages in the same way that the majority of gas engineers will be corgi registered.

marblesfound wrote: »

I know many amateurs that have standard owner occupier mortgages - what is going to happen if they are caught? Will they go to prison? Why should they stop?

It's up to any individual who runs a business whether they want to abide by various rules. If they don't then they pay the price if found.

If a landlord doesn't have a BTL mortgage or consent to let then their insurance is invalid and if found they could find themselves being asked to pay their money back, and if they can't find a mortgage they could lose the house. Which is good. Prison? No, I don't think it deserves prison.

marblesfound wrote: »

Even if they use a BTL mortgage the flat probably cost £230,000 or so. Say 60k deposit or more and they could be paying £500 a month and charging £1200pcm rent -

They could indeed. That's called a business though, so good luck to them. I don't have a moral issue with people making money out of propety though.

marblesfound

Cleaver wrote: »

They could indeed. That's called a business though, so good luck to them. I don't have a moral issue with people making money out of propety though.

Thats just the point - it's not a business like any other I know of. The odds are stacked in favour of the landlord at the moment with Government support. 0.5% interest rates were initially called emergeny rates - exactly how long does an emergency last? Without government assistance there would be no business - it's a joke!

As I said I don't blame the indiviuals - the Government has let the economy get to the point where economic policy is dictated by the housing market and the !!!!less are being bailed out at the expsnse of the prudent.

Cleaver

marblesfound wrote: »

Thats just the point - it's not a business like any other I know of. The odds are stacked in favour of the landlord at the moment with Government support. 0.5% interest rates were initially called emergeny rates - exactly how long does an emergency last? Without government assistance there would be no business - it's a joke!

You do understand that landlords having a cheap mortgage isn't the reason for 0.5% base rates? That there is a rather bigger picture here?

Businesses will all go through good or bad periods and I would suggest at the moment, in the short term, landlords are going through a good period because of low rates. However, it's my personal opinion that we won't see much capital growth on property for many, many years. Decades perhaps. So perhaps the wider economic picture isn't actually that helpful to landlords who haven't done their sums on rental yields and are relying on capital growth. The amateurs basically.

What specific 'government assistance' do landlords get?

marblesfound wrote: »

the Government has let the economy get to the point where economic policy is dictated by the housing market

No it isn't.

marblesfound

So why then are interest rates the lowest they have ever been?

Hint: The housing market had started to tank!

Percy1983

JonnyBravo wrote: »

It seems what you actually meant was "live now, get someone else to pay later". Very parasitic.

And my wife to be is doing the 'find somebody who earns more so I can live an easier life', how parasitic?

I know I have done this sum for you before but I never did put it in simple maths for you so here goes, yes I am will use rounded figures etc and of course th monthly payments are an average made.

So here goes, when we decided to clear everything together the debts where.
Me : £17000
Her: £8000

So total £25000

Ok we transferred all sorts between names to use 0% deals which meant an initial loading onto her and then loading back onto me, but the relevance of whose name it was under at each point means very little as there was no scam and none of us did a runner.

Ok so the payments we made off this combined debt where (targeting highest interest rates first of course).
Me: £950
Her: £700

So total £1650 a month between us, which of course means it will take 15.15152 months to clear.

So:
£950 x 15.15152 = £14393.94
£700 x 15.15152 = £10606.06

So yes to date she has paid £2606.06 of my debt. (approx I will add)

Now going forward I am contributing more to the deposit than her by around £250 a month so after 11 months of saving we will break even and I guess after that she will be better off as I will continue to contribute more to the saving/mortgage for as long as my income is higher which given our professions is highly likely.

Do I care I will be subsidising her life, does she care she subsidised mine while we cleared debt... no. Have we worked as a team and saved thousands in interest by playing credit shuffling between us... yes.

Are we both happy with the outcome... ecstatic! :beer:
I do prey the above sums make sum sense to you so you can finally move on and just be happy for a young(ish) couple actually getting somewhere.

I may actually let my October signature update out early this month as I already know the figure and its good news. :j