my buy-to-let dream cost me everything

Moorepart

!!!!!!? wrote: »

Nope, Britain has a strong sustainable economy with a thriving property market built on sound fundamentals. :rolleyes:

Remember the ten years of continuous growth is simply as growth in debt, not manufacturing output or mineral production, or increases in foodstuffs, just more debt. Debt is not economic growth...regardless of what Golden Gordon might say.

Debt increases threer fold, and house prices increase three fold.

I think you should stick to preaching to the afflicted mate, cos you sure as hell are not a chancellor, and you are certainly not prime minister material.

Gordon Brown the Labour Party Clown:rolleyes:

BobProperty

!!!!!!? wrote: »

Well, it was the US and UK governments who pursued a policy of low interest rates, increasing the money supply and allowing less regulation of money markets so in large part, they bear a great deal of responsibility for the way things have gone in the last 5-6 years.

And the markets have exploited it and made money. Now, to use Warren Buffett's analogy, the tide is going out. The government didn't knock NR's share price to below £2 or say, Countrywide's to below $20, the markets did. Governments can change the rules of the game but the markets will always win out.

I agree with the rest of your post. I've been calling G Brown "boom and bust" Brown for some time. He's just managed to put off the bust bit. He will likely call an election before it happens this time but he won't be able to keep the economy going well through the 4-5 years that follow the election.

Running_Horse

dannyboycey wrote: »

Many BTL'ers are on interest only mortgages for obvious reasons. The recent run of rate rises has wiped out their profits and many are now subsidising their tenants!

They are not susidising their tenants, they are paying the mortgage on the properties they bought. The tenant is subsidising the landlord's purchase. There is no legal link between the tenant and mortgage.

WTF?_2

Moorepart wrote: »

Remember the ten years of continuous growth is simply as growth in debt, not manufacturing output or mineral production, or increases in foodstuffs, just more debt. Debt is not economic growth...regardless of what Golden Gordon might say.

Debt increases threer fold, and house prices increase three fold.

I think you should stick to preaching to the afflicted mate, cos you sure as hell are not a chancellor, and you are certainly not prime minister material.

Gordon Brown the Labour Party Clown:rolleyes:

Ummm, you appear to actually be agreeing with me. Looks like you missed the sarcastic smiley in my original post.

Generali

Running_Horse wrote: »

They are not susidising their tenants, they are paying the mortgage on the properties they bought. The tenant is subsidising the landlord's purchase. There is no legal link between the tenant and mortgage.

I think this is an analagy, not meant literally.

It's because the rent is lower than the interest that would payable on the full value of the house.

WTF?_2

Running_Horse wrote: »

They are not susidising their tenants, they are paying the mortgage on the properties they bought. The tenant is subsidising the landlord's purchase. There is no legal link between the tenant and mortgage.

You aren't going to win any prizes for business acumen.

The OP mentioned interest only mortgages. These are quite typical for BTL properties.

None of the outstanding debt is being repaid. The landlord is essentially subsidising the housing costs of the tenant in the hope that the house will rise in value enough to generate a huge profit a few years down the line.

That's a great strategy if prices go up 10-15% year on year but a completely idiotic one if prices are stagnant or falling.

Running_Horse

Generali wrote: »

I think this is an analagy, not meant literally.

It's because the rent is lower than the interest that would payable on the full value of the house.

I know what the poster meant. But it is a lazy form of thinking which leads to the assumption that BTL is a risk free deal where happy eager tenants will mean you never lose, and prices only ever rise...as the woman in Glasgow found out. Every investment carries risks.

Running_Horse

!!!!!!? wrote: »

The landlord is essentially subsidising the housing costs of the tenant in the hope that the house will rise in value enough to generate a huge profit a few years down the line.

Again, the landlord is not susidising the costs of the tenant. Rents are determined by supply and demand. If a landlord chooses to take out a loan which cannot be serviced by the rental income, that is nothing to do with the tenant. They are not being subsidised.

Doozergirl

I could have an interest-only mortgage on this house if I wanted to. I don't because the rent is cheaper than the interest portion of the mortgage and any interest I would lose for it not being in a savings account or other. Put it anyway you like but in my current situation, my LL is definately subsidising my lifestyle. It allows me to put my money to other things and get a better return on it. I'm using his debt to live here instead of my own.

If property rises remain the same or fall and a landlord is paying extra into the mortgage each month, they are subsidising the costs of the tenant. There's nothing particularly clever about paying extra into the mortgage each month. He may succeed in his goal over the long term, doesn't mean he isn't helping me right now!

WTF?_2

Running_Horse wrote: »

Again, the landlord is not susidising the costs of the tenant. Rents are determined by supply and demand. If a landlord chooses to take out a loan which cannot be serviced by the rental income, that is nothing to do with the tenant. They are not being subsidised.

They effectively are being subsidised.

If they wanted to live in the same sort of house as an owner/occupier they'd pay a lot more. They'd also be liable for rates, maintenance, buildings insurance and a host of other things. The Landlord is taking a financial hit to provide a home for the renter (for much less than the renter would pay to buy it) based on a risky financial gamble.

Buying property to let out with a huge loan and no real way to cover it other than hoping that the capital value of the property appreciates enough to cover all costs and make a decent profit at time of sale, is business hari-kari.