What are the BTLs going to do?

Generali

From what I can see, 2 bed flats, especially in new builds are the high risk places to BTL, especially in sub-prime towns and suburbs.

Places like Docklands (especially the far end where you're living cheek-by-jowl with the worst the East End has to offer) seem to be stuffed full of 2 bed flats bought by city traders and estate agents to rent to youngsters starting out in London after uni. Their tenants are fleet of foot and the service charges on those places can be pretty high making the sums even worse.

Rick62

When you take a mortgage you will normally take it for a long term, eg 20 years but with a Fixed rate for, say, 3 years, then reverting to the lenders standard variable rate (SVR). Since the SVR is normally 7% plus most people remortgage at this point, either with their existing lender or a new lender to get a new product. However your lender would be entitled to say, sorry, you don't meet our criterior for this new Fixed rate, but they would then leave you on their SVR.

All the BTLs I've done in the last year, I think, have been on an interest only basis.

Generali

Rick62 wrote:

When you take a mortgage you will normally take it for a long term, eg 20 years but with a Fixed rate for, say, 3 years, then reverting to the lenders standard variable rate (SVR). Since the SVR is normally 7% plus most people remortgage at this point, either with their existing lender or a new lender to get a new product. However your lender would be entitled to say, sorry, you don't meet our criterior for this new Fixed rate, but they would then leave you on their SVR.

All the BTLs I've done in the last year, I think, have been on an interest only basis.

That's interesting - the classic way for a bubble to burst (tulips, Florida land, Wall St 1929) if for people to be forced to sell because they can't refinance their positions. That clearly won't happen as they revert to the SVR.

I think my numbers still add up though - rising interest rates should just create a drag on family finances. It'll be interesting to see how many 'in it for the long haul' are prepared to pay out month after month to hold an asset that isn't appreciating as quickly as it was.