Selling Up and Bailing Out

Alan_M_2

I disagree with the comments about BTL being substantially responsible for HPI.

Professional BTL is a business, it is inevitable and necessary to service the rental market, HPI simply increases the amount of investment in this area. (historically more commercial property - but moving money into residential with signs of increased HPI).

Amateur BTL is a different kettle of fish altogether.

The increase of BTL (especially amateur) is a consequence of HPI not a cause, however at a certain point it becomes self fulfilling.

I'm reasonably sure (correct me if I'm wrong) that only 8% of residential homes in the UK are financed as BTL properties. 8% will not drive the market, the remaining 92% does.

I'm a renter by the way and don't own a BTL.

SerenaGoode

Alan_M wrote: »

I disagree with the comments about BTL being substantially responsible for HPI.

Professional BTL is a business, it is inevitable and necessary to service the rental market, HPI simply increases the amount of investment in this area. (historically more commercial property - but moving money into residential with signs of increased HPI).

I disagree. There were always landlords of course. However the changes to tenancy law in 1988 and 1996 made amateur BTL significantly easier and also for the first time lenders introduced BTL mortgages (old-style landlords didn't have access to these) - so BTL was a factor throughout this boom, and has become a mania over recent years. I don't know the proportion of property overall that is BTL though given that OO rates are far lower than 92% I think you must be misinterpreting the figures (and even 8% on BTL mortgages is a massiv increase from 0% ten years ago, considering that not all properties have changed hands in that time). But more significantly, recent levels of BTL on new mortgages have been as high as 35% of the market - so the continuation of the boom beyond historic levels has been significantly affected by BTL investors.

SerenaGoode

Gorgeous_George wrote: »

Supply and demand. It's the rental market that drives BTL. I don't think prices would be much different if BTL didn't exist. If immigration, kids having kids didn't exist there would be less people wanting a house to buy or rent. Relaxation of planning regs could accommodate everybody.

Sorry, but I don't think you really comprehend how demand works.

Demand in the housing market isn't about how many people want a home. It is about how many people are willing and able to buy a property at a particular price. BTLers have been willing (because of past profits and bubblemania) and able (because of loose bank lending) to buy at higher prices than FTBs can afford. The result has been HPI extended beyond the levels reached in past booms and property concentrated in fewer hands, increasing the level of inequality in our society.

PasturesNew

When I sold my house last year, I was laughingly discussing my life possibilities with friends and we realised that I could have rushed out and raised up to £2million and bought a whole raft of BTL flats to rent out.

The thought chilled me to the bone. Petrified me. That people 'like me' could just do that.

I banked my cash.

The concept of buying property, for which one is responsible. To have all those legal obligations and regulations. To be worrying about multiple roofs in the gales, worrying about multiple properties in the floods, worrying about multiple sets of maintenance .... AAARRGHHH!

Even if HPI had continued at the rate it had been going, it's still not a responsibility I'd want.

It's not in my skillset to be responsible for property at that level.

Alan_M_2

SerenaGoode wrote: »

I disagree. There were always landlords of course. However the changes to tenancy law in 1988 and 1996 made amateur BTL significantly easier and also for the first time lenders introduced BTL mortgages (old-style landlords didn't have access to these) - so BTL was a factor throughout this boom, and has become a mania over recent years. I don't know the proportion of property overall that is BTL though given that OO rates are far lower than 92% I think you must be misinterpreting the figures (and even 8% on BTL mortgages is a massiv increase from 0% ten years ago, considering that not all properties have changed hands in that time). But more significantly, recent levels of BTL on new mortgages have been as high as 35% of the market - so the continuation of the boom beyond historic levels has been significantly affected by BTL investors.

Amateur BTL would not exist without rampant HPI, therefore by definition it is an effect not a cause. No HPI, no value in personal investment and leveraged borrowing.

The ease of obtaining funding for BTL on a amateur level and relaxation of the laws is a result of increased investing on an amateur level, still effect, not cause.

Your statement actually confirms my opinion, you even use the phrase continuation of the boom.....it continues as a result of increased interest in amateur BTL and the ease at which funds are available. However, this is still effect and not cause.

macaque_2

Alan_M wrote: »

The increase of BTL (especially amateur) is a consequence of HPI not a cause, however at a certain point it becomes self fulfilling.

I can't agree with this. The majority of first time buyers were priced out of the market years ago. Since then the price spiral has been fueled by reckless lenders giving money to reckless BTL landlords.

pinkshoes

Having rented for 10 years, I can't put a price on finally having a home! I NEVER want to go back into rented!

Mortgage interest is less than renting the same apartment, and in 20 years time, I'll be mortgage free.

To the OP - if this decision is right for you, then good for you. Let's just hope that all your landlords-to-be aren't planning to sell their properties too, which would see you being turfed from house to house.

SerenaGoode

Alan_M wrote: »

Your statement actually confirms my opinion, you even use the phrase continuation of the boom.....it continues as a result of increased interest in amateur BTL and the ease at which funds are available. However, this is still effect and not cause.

House prices were bound to recover from the 90s crash to some degree eventually, and would have done so with or without amateur BTL. I use the phrase continuation of the boom to explain that BTL has (from about 96-97 onwards) contributed to and exacerbated the extent of that boom.

Alan_M wrote: »

The ease of obtaining funding for BTL on a amateur level and relaxation of the laws is a result of increased investing on an amateur level, still effect, not cause.

Sorry, but this is rubbish. The tenancy laws were relaxed in 1988 and 1996, the first BTL mortgages became available in about 1996-97. The boom started around 1996-97, and accelerated over time. Sure, there'd have been some increase in HPI without BTL, but it has been a very significant factor in the speed and degree of the boom.

And factually your statement is just wrong. The BTL mortgages and law relaxations preceded this boom, not the other way round.

brit1234

But to let and lax lending were the main reasons for house price inflation. I look at professionals and amateur landlords as the same thing. They all buy up almost all first time buyer properties with unfair tax advantages which first time buyers don't have.

It's so wrong and almost unbelievable, whole generations being priced out of housing because of greedy investors.

I hope they get badly burnt in this crash.:rotfl:

Alan_M_2

SerenaGoode wrote: »

House prices were bound to recover from the 90s crash to some degree eventually, and would have done so with or without amateur BTL. I use the phrase continuation of the boom to explain that BTL has (from about 96-97 onwards) contributed to and exacerbated the extent of that boom.



Sorry, but this is rubbish. The tenancy laws were relaxed in 1988 and 1996, the first BTL mortgages became available in about 1996-97. The boom started around 1996-97, and accelerated over time. Sure, there'd have been some increase in HPI without BTL, but it has been a very significant factor in the speed and degree of the boom.

And factually your statement is just wrong. The BTL mortgages and law relaxations preceded this boom, not the other way round.

Right so you think the HPI would have continued with or without BTL.

But you think BTL was the cause of it?

I agree it's compounded the problem, but it is certainly not the cause of it. It is an effect. The timing and changing of the laws made it possible and easier to obtain these loans....compounding the existing problem further, not causing it.

You're struggling with cause and effect here aren't you.