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It’s over for buy-to-letters
bulccp05laer
Posts: 25 Forumite
http://moneyweek.com/right-side-pubs-over-for-buy-to-letters-64310/
Some good points-
when interest rates rise, it’ll shine a light on the over-leveraged buy-to-letters; just as it did for the pubs in 2008.
For these landlords, there’s a delicate relationship between the interest on their mortgage and the rental income. If inflation continues to gain traction, then at some point interest rates will have to go up.
And if interest rates go up (to counter inflation) you could get skewered. Your costs could rise very quickly, and there’s no guarantee that rents will follow.
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This government (let alone the shadow government) are also getting increasingly vocal about not shelling out benefits that end up enriching private landlords. Already they’ve introduced a benefit cap which is bound to affect many a landlord’s take-home. As austerity bites, things will likely get worse.
And as the squeeze on government finance continues, it’s not inconceivable that there’ll be taxes to come. If not a straight tax, then it could well be through stealth. Maybe they’ll limit the amount of mortgage interest that can be offset against rental income? That would be an absolute disaster for over-leveraged landlords.
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We’ve also seen rent controls in the past… who knows, maybe again? Especially if inflation starts to bite. Politicians will look after voters before they worry too much about rich landlords."
this last one is a powerful point. Winning the votes of the majority as what matters and the way house prices are so high out of reach the majority will be renters soon.
Some good points-
when interest rates rise, it’ll shine a light on the over-leveraged buy-to-letters; just as it did for the pubs in 2008.
For these landlords, there’s a delicate relationship between the interest on their mortgage and the rental income. If inflation continues to gain traction, then at some point interest rates will have to go up.
And if interest rates go up (to counter inflation) you could get skewered. Your costs could rise very quickly, and there’s no guarantee that rents will follow.
-
This government (let alone the shadow government) are also getting increasingly vocal about not shelling out benefits that end up enriching private landlords. Already they’ve introduced a benefit cap which is bound to affect many a landlord’s take-home. As austerity bites, things will likely get worse.
And as the squeeze on government finance continues, it’s not inconceivable that there’ll be taxes to come. If not a straight tax, then it could well be through stealth. Maybe they’ll limit the amount of mortgage interest that can be offset against rental income? That would be an absolute disaster for over-leveraged landlords.
-
We’ve also seen rent controls in the past… who knows, maybe again? Especially if inflation starts to bite. Politicians will look after voters before they worry too much about rich landlords."
this last one is a powerful point. Winning the votes of the majority as what matters and the way house prices are so high out of reach the majority will be renters soon.
real50pcclub
0
Comments
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so is it over now, or do we have to wait for interest rates to rise first? when will that be?
i think we've seen the end of BTL about 50 times in the last couple of years already. i'm getting a bit sick of the end of BTL if i'm honest.0 -
chewmylegoff wrote: »i think we've seen the end of BTL about 50 times in the last couple of years already. i'm getting a bit sick of the end of BTL if i'm honest.
The interest point is factually correct. There's fatigue with the "recession", but the hard bit hasn't started yet. Lay your money on tax rises after the next General Election. Few options left .0 -
Thrugelmir wrote: »The interest point is factually correct. There's fatigue with the "recession", but the hard bit hasn't started yet. Lay your money on tax rises after the next General Election. Few options left .
It is factually correct but what we don't know is if there are any over leveraged buy to letters and if there are how many of them there are. It is possible for something to be both factually correct and inconsequential.0 -
PIMPS!!!
Where the hell have you been?0 -
It is possible for something to be both factually correct and inconsequential.
Like many of the literally dozens of bear memes we've had to date, there has been a grain of truth in many of them, but always blown out of proportion in terms of consequences.
The 'rising rates' meme is equally blown out of proportion.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Does anyone use the word "meme" in real life?0
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It is factually correct but what we don't know is if there are any over leveraged buy to letters and if there are how many of them there are. It is possible for something to be both factually correct and inconsequential.
Of course people are over leveraged. Called human nature.
Sensible money pulled out to invest in pastures new years ago.
Other than the stock market where else can you get 48% returns in a year. Tax free too as in an ISA.
BTL? No better than a bank savings account.0 -
bulccp05laer wrote: »
Very interesting, may thanks. My attention was drawn to this:I’ve seen figures anywhere from 20% to 70% over the top.
Simian Macaque ADHD
CEO and Life President of the 70% club0 -
Thrugelmir wrote: »Of course people are over leveraged. Called human nature.
Sensible money pulled out to invest in pastures new years ago.
Other than the stock market where else can you get 48% returns in a year. Tax free too as in an ISA.
BTL? No better than a bank savings account.
Where can you get 48% tax free returns in a year?0 -
"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0
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