BTL landlords flourish as FTB's struggle

angela110660

paulmapp8306 wrote: »

RE building more homes - this needs a complete retjhink, from all parties.

Currently builders use traditional construction - which takes tiome and is costly, hence the price of new homes. There are other methods that are far quicker to build (so less labor costs) and also using cheaper materials. There not uncommon either as their used a lot in the US and on the continent. However, builder wont build taht way - why?

Secondly the lenders - Im not sure where they lie on this, but I get the feeling a mortgage for a building that isnt "bricks and mortor" but rather "wooden construction" of "flat packed2 (not prefab as we know it - but the newer designes) then getting a mortgage is much harder.

Thirdly - the people who will live in it. There seems (again though I may be wrong) a reluctance for people to buy timber framed, flat packed homes.

i dont know - but these packs cost half as much as a traditional build for a bigger home. There more eco friendly in general, and are just as substantial - certainly over a hundered hears or so. Seems to me if borrowing against such homes was easier, and the willingness to build and buy them was higher then the housing issue could be solved remarkably quickly.

Seem to recall a friend of mine in the mid 80s having probs raising a mortgage on a timber framed built property of which there were loads being built locally. When you saw all the "pieces" laying around in the rain before being fixed together - it did make you wonder how they would fare in a year or two.
Eco houses being built now by Housing Societies etc for social housing and using Govt money are set very high standards. General house builders don't have to perform to such high standards, and often have less per square metre living space in their properties and yet charge inflated prices which FTBs struggle to achieve.

DervProf

HAMISH_MCTAVISH wrote: »

The inevitable result of mortgage rationing.

Inevitable if you "ration" mortgages (I'd call it changing lending criteria) for FTB's without "rationing" mortgages to those who compete against them in the property market.

Maybe if banks were just as strict with BTL mortgage lending (I'm sure it has probably tightened up since 2007, but obviously not with the same consequences for FTB's) as with FTB lending, then it would be a more level playing field. Of course, that would lead to an even more subdued property market, or would it ?

paulmapp8306

angela110660 wrote: »

When you saw all the "pieces" laying around in the rain before being fixed together - it did make you wonder how they would fare in a year or two.

The same way they survive in the US, or in Tudor houses still standing, or as trees in a forrest I guess.

Wood is a much better building material once treated than bricks/mortar. it wouldnt surprise me if the move to that medium wasnt sparked by fire risks - BUT with todays methods and materials that is no longer an issue.

The_J

DervProf wrote: »

Inevitable if you "ration" mortgages (I'd call it changing lending criteria) for FTB's without "rationing" mortgages to those who compete against them in the property market.

Maybe if banks were just as strict with BTL mortgage lending (I'm sure it has probably tightened up since 2007, but obviously not with the same consequences for FTB's) as with FTB lending, then it would be a more level playing field. Of course, that would lead to an even more subdued property market, or would it ?

The only criteria that has changed significantly for FTBs is deposit. Now 10% is required in most cases.

BTLs require twice as much deposit and even at that amount the rental income has to be very strong indeed to support it. 25% deposit is generally accepted as the minimum.

Credit scoring is much tougher on BTLs. You can't have any credit issues. Most of the time they require a solid residential mortgage history and if it's a new property the deposit required soars to 35-30%.

There is no competition. With the same deposit a FTB will get a mortgage easier, cheaper and faster than a BTL landlord.

If BTL landlords only have the deposit because of MEW (I just learnt what that meant so I thought I'd get it in here) then they are taking a risk on house prices retaining their value. If they don't, they are in trouble.

CLAPTON

angela110660 wrote: »

Seem to recall a friend of mine in the mid 80s having probs raising a mortgage on a timber framed built property of which there were loads being built locally. When you saw all the "pieces" laying around in the rain before being fixed together - it did make you wonder how they would fare in a year or two.
Eco houses being built now by Housing Societies etc for social housing and using Govt money are set very high standards. General house builders don't have to perform to such high standards, and often have less per square metre living space in their properties and yet charge inflated prices which FTBs struggle to achieve.

The collapse in the timber framed market was caused by the Sunday Times running a scare story that almost destroyed the builders (Barretts I think as I recall).

The houses had very very good insulation value and very very inexpensive to heat (my sister had one I always had to ask if I could open the windows as it was too warm) even though her heating bill was half mine.

It is a standard way of building house in the US and was eventually given the OK by the government building research establishment but by then it was too late and noboby would buy them.

Great shame as it was a real eco friendly low enegy house.
But that's the power of the press for you.

paulmapp8306

We should just shoot journalists as a job lot as far as Im concerned. There just the commercial equivocation of gossiping housewives behind twitching curtains and serve no real purpose in todays world. well some do, but not the press, and CERTAINLY not the tabloids.

the_flying_pig

The_J wrote: »

The only criteria that has changed significantly for FTBs is deposit. Now 10% is required in most cases.

BTLs require twice as much deposit and even at that amount the rental income has to be very strong indeed to support it. 25% deposit is generally accepted as the minimum.

Credit scoring is much tougher on BTLs. You can't have any credit issues. Most of the time they require a solid residential mortgage history and if it's a new property the deposit required soars to 35-30%.

There is no competition. With the same deposit a FTB will get a mortgage easier, cheaper and faster than a BTL landlord.

If BTL landlords only have the deposit because of MEW (I just learnt what that meant so I thought I'd get it in here) then they are taking a risk on house prices retaining their value. If they don't, they are in trouble.

yeah.

IMO if anything ZIRP plays a much bigger role in favouring BTL over residential [which still accounts for the vast majority of new ones].

if the tedious landlords & wannabe landlords on here genuinely believed that "mortgage rationing" materially favoured them they'd keep shut about it in the way they do about low interest rates [not worrying about the impact on poor little savers], rather than squealing about how unfair it all is on poor little FTBs.

IveSeenTheLight

macaque wrote: »

Many may have said it before but they were wrong. An asset bubble cannot be repaired with more loose credit.

At no point did I say that HPI needed to continue.
Simply that restricting the credit availability has reduced the opportunities for would be home owners.

The price can remain the same i.e. £160k, but it's harder to get a 20% deposit (£32k) as opposed to a 10% deposit (£16k) as opposed to a 5% deposit (£8k)

macaque wrote: »

Globalisation has put a cap on UK wages and house prices have maxed out on affordability rather than need.

Mortgage Interest payments as a percentage of household income is at a historically low level.
It's not maxed out.

macaque wrote: »

Much as I disagree with him most of the time, Hamish is right on this. The only solution is to build a million more houses. It may not be a green and pleasant land afterwards but that is the only humane solution.

Of course, with the population increases, we need more properties just to sustain current levels.
That does not necessarily mean that there will be more owner occupancy levels, especially if credit remains hard to come by.