FTB vs BTL

desperadoV2

Hello everyone,

As a FTB, I think the current property market is ridiculous! Property prices are not at all affordable these days for FTB. How long is it going to keep rising?

I'm losing hope as the day goes by. Property price are ridiculous. I can't compete with BTL's. Everytime I go and see a nice property there are atleast 3 BTL's competing for the same property.

So far I have been to see over 14 properties and I have put an offer on 5 properties the very same day I saw the property but a BTL put in an offer on a full asking price or over the asking price. I hear it over and over again. It has been snapped by a BTL.

The problem is, the properties which an FTB can afford is easily affordable for an BTL. So they are willing to give full asking price or even over the asking price. But we FTB put an offer on a property hoping to get it for 3-7K less then asking price because the only advantage we have is, there is no chain involved so we can use it to get less then asking price but we can't compete against BTL's.

The properties I have put an offer on, were the ones I feel what it is worth and what I can afford. I don't want to push myself in this volatile property market because of fear of property price correction. How long is this current trend going to continue?

It is very depressing! Today morning I went to look a property, it came onto the market yesterday afternoon and it is a perfect first-time buyer home. I put in an offer straight away but an BTL has put an offer on full-asking price. It is not the first-time I have heared it and I'm getting tired of it.

It sinks your heart!!! I'm sick and tired of it. I don't know what I'm going to do!!!

Alan_M_2

Continue saving and wait for the cycle to turn, it will eventually.

There's little point worrying about things that are beyond your control.

desperadoV2

I know there is no point in worrying about things beyond my control but it feels horrible when you search the web 4-5 times a day and find a property which you really like, put in an offer on the same day only for a BTL to snap it up by offering full asking price.

It doesn't end there, the EA agent then promotes similar property in the same area by putting it in the market for 10K more only for another BTL to snap it up for full asking price.

Its totally crazy!!! 2 bedroom terraced house going for 190K in south coast and NO I'm not talking about brighton. Brighton is totally out of reach for FTB like me. Studio flat in brighton are going for 150-160K.

How long is it going to go on like this???

Alan_M wrote:

Continue saving and wait for the cycle to turn, it will eventually.

There's little point worrying about things that are beyond your control.

Alan_M_2

It will continue until it's financially no longer possible for it to continue.

In the meantime, chill out, save what you can, and stop looking if it's winding you up that much.

Stand back a moment and realise it's your very attitude of "Absolutely must buy a property" that's actually fuelling the rises.

barnaby-bear

desperadoV2 wrote:

I know there is no point in worrying about things beyond my control but it feels horrible when you search the web 4-5 times a day and find a property which you really like, put in an offer on the same day only for a BTL to snap it up by offering full asking price.

It doesn't end there, the EA agent then promotes similar property in the same area by putting it in the market for 10K more only for another BTL to snap it up for full asking price.

Its totally crazy!!! 2 bedroom terraced house going for 190K in south coast and NO I'm not talking about brighton. Brighton is totally out of reach for FTB like me. Studio flat in brighton are going for 150-160K.

How long is it going to go on like this???

It annoyed me that the BTLers could outbid on the scummiest houses because they can claim VAT and tax relief on renovations whereas FTBers have to pay the tax on any work, plus BTLers can make a loss and offset especially if higher band tax payers so they don't really care about making a loss. Wear and tear can be offset - can't do that in your own home!

A lot of them are fiddling their tax but the inland revenue have made it very easy - one phone call and you can grass them up.

BobProperty

barnaby-bear wrote:

It annoyed me that the BTLers could outbid on the scummiest houses because they can claim VAT and tax relief on renovations whereas FTBers have to pay the tax on any work, plus BTLers can make a loss and offset especially if higher band tax payers so they don't really care about making a loss. Wear and tear can be offset - can't do that in your own home!

A lot of them are fiddling their tax but the inland revenue have made it very easy - one phone call and you can grass them up.

Do explain how please, there are a lot of generalisations in the above and you can only offset rental (investment) losses against other income of exactly the same type.

Guy_Montag

Find a nice property bought by a btl, negotiate a rent such that they are making monthly loss. Make sure their mortgage company & HMRC know what (s)he's up to. Save & wait until IRs push him or her into selling, then put in a BMV offer.

Mwaa haa haa haa ha <-- evil laugh

ollyshaw

I think Alan M's advice is very good. Just wait a bit!

Olly

zipwen1

just a couple of questions
is the price rise solely because of BTL investors?
what is going to be the reason behind the huge amount of people needed to have to sell up, in order for the prices to come down?
if prices do come down will it only effect the areas that have had massive increases in price, i ask this because prices in my area haven't shot up that much, you can still get a 3 bed semi in a nice area for £125,000 and two bed terraces for 85

F_T_Buyer

Throughout history, it has been more expensive to rent. People paid a premium to have someone look after maintenance, and have the freedom to move within a few months.

There has only been two periods when buying was more expensive than renting, that's during the peak in the last cycle (late 80s), before prices crashed in value, and now.

So why are people buying investment property? Look over a report today, and only a very few are in it for the income, i.e. the rent they receive. So, ultimately they are speculating on prices rising. Gross yields are just above 5%, accoring to ARLA and RICS, and RICS have stated net yields are now 3.25%. The figures simply don't add up unless prices rise.

Back in 2004, when everyone said it would crash, I suggested the best thing that could happen is prices stay still allowing incomes to catch up. But, since, it's apparant greed has overcome most buyers. What do you think will happen if prices do stop rising, and just flatten? If investors are not seeing rising prices, they would have to invest for the rental income, but unless they subsidise it, they will be losing money every month. So, who will buy? FTBs like yourself? Maybe, there's no hurry and currently you account for less than 15% of the market. So, who is going to support prices???

Look at it another way, If I were to invest now, I would expect a gross yield of at least 8-9% based on borrowing rates on current borrowing rates. So, for the average property to be suitable, the average price would need to fall by 37-44%.

Of course, rents should rise to soften that fall (supported by incomes), but how long would it take for rents to rise to make it a sensible investment? a decade maybe?

I know emotion come into this alot, but just rent a house similar to the one you intend to buy, and save the difference. Even if the bears, like myself, are wrong, and prices don't crash. I can guarantee they won't rise more than wage inflation over the long term.