"Experts" warn of 'buy-to-let-bubble'

New_Dude

experts warn that buy-to-let should be seen as a long-term investment. Speaking at the Council of Mortgage Lenders annual conference, Andrew Gold, chief operating officer at Mutual One, the building society auditor, said: ‘It’s a case of when, rather than if, first-time buyers will return to the housing market. When they do — the question is whether they will burst the bubble.’

http://www.dailymail.co.uk/money/mortgageshome/article-2067803/Buy-let-Landlords-continue-grab-cheap-mortgages.html

Darthvader

Something does seem strange when rents are so high above normal levels and borrowing is so cheap compared to normal levels. Be interesting to see what happens in the end.

MrRee_2

Of course, if renters all of a sudden want to buy then BTL properties will sit empty ...... but, property prices will increase because of the high demand and the BTL properties will come to the market.

BTL Landlords cannot, actually, lose at all ...... big rents OR big capital increases - I'll take either thanks very much!

andybenw

Darthvader wrote: »

Something does seem strange when rents are so high above normal levels and borrowing is so cheap compared to normal levels. Be interesting to see what happens in the end.

Actually rental yields are at an all time low. Admittedly due to the higher price of property at the moment. But like you say borrowing is cheap at the moment and that sort of cancels this out. At present nominal prices are remaining pretty steady and rents are creeping up.
If you expect this to continue then BTL would seem to be a good deal. If we continue on the same course as at present FTB will return but the supply/demand of rental properties will retain an equilibrium and rents should remain high.
Personally I think that to buy to let at present on a high LTV mortgage would be a risk compared to waiting due to the possibility of a euro blow up and possible lower rents in future not covering mortgage payments.
But if buying with low LTV or for cash I see no problem in buying at present if your opinion is that prices and rents will remain steady.
Personally I am looking to buy cash in a couple of years. I am hoping for house prices to have crashed by then but I seriously doubt it, and if things are in much the same state as now I will have no hesitation buying BTL.

nollag2006

Darthvader wrote: »

Something does seem strange when rents are so high above normal levels and borrowing is so cheap compared to normal levels. Be interesting to see what happens in the end.

Certainly been my view on why I piled back into BTL in 2009.

Its swings and roundabouts - house prices rise, rent yield falls and vice versa.

That's the theory. Although, from personal experience, my own portfolio has risen by 15% in that time, and I've managed to jack the rents up by over 10% too!!

One of my tenants STR'd in early 2009, which makes it all the sweeter

:T

nollag2006

New_Dude wrote: »

...It’s a case of when, rather than if, first-time buyers will return to the housing market. ...

I couldn't agree more

kabayiri

I suspect some people are moving savings out of other investments into BTL.

This is not driven by a love of property as much as disenchantment with other long term savings vehicles.

So why shouldn't this process continue? Is your private sector pension going to show double digit growth per annum in the next 5 years? This is increasingly unlikely if the Euro tanks or we get another bout of QE.

If your BTL underperforms by 10%, and your equivalent savings vehicles underperform by 25% which is still the better option !

Darthvader

kabayiri wrote: »

I suspect some people are moving savings out of other investments into BTL.

This is not driven by a love of property as much as disenchantment with other long term savings vehicles.

So why shouldn't this process continue? Is your private sector pension going to show double digit growth per annum in the next 5 years? This is increasingly unlikely if the Euro tanks or we get another bout of QE.

If your BTL underperforms by 10%, and your equivalent savings vehicles underperform by 25% which is still the better option !

Should you not be asking the questions what will happen if we do go through a decade of poverty and high inflation and unemployment, hell Mr Osborne is warning us of 6 years of pain so you can bet it will be far worse. Rents and house prices have a long way to come down, the only things going up are interst rates and the cost of borrowing, and unemployment.

Brian_Bullocks

kabayiri wrote: »

I suspect some people are moving savings out of other investments into BTL.

That's why it's called a 'buy-to-let-bubble'.

Jeanetteathome

Did anyone see the BBC2 programme **Money** last night? it delt with these *wealth creation gurus* that are popping up now - charging £200 - £500 for a seminar telling people how they can become millionaires. The main thing running through all of the people was that they made their fortunes on Property , either here or in the US, now they make their money selling books DVD and these seminars. It seemed to push the idea that millions can be made from buying and selling property. Terrible thing to get into right now I should have thought..

andybenw

Jeanetteathome wrote: »

Did anyone see the BBC2 programme **Money** last night? it delt with these *wealth creation gurus* that are popping up now - charging £200 - £500 for a seminar telling people how they can become millionaires. The main thing running through all of the people was that they made their fortunes on Property , either here or in the US, now they make their money selling books DVD and these seminars. It seemed to push the idea that millions can be made from buying and selling property. Terrible thing to get into right now I should have thought..

I watched it for about half an hour. I didn't hear the word property once. Fair enough, I didn't see the start but I hardly think the idea of the programme was to push property. It was more to ridicule these seminars.