Why the bad news for landlords is just beginning

chucknorris

economic wrote: »

true however a portfolio of london properties isnt diverse either. i would have thought by far the biggest reason to sacrifice income by moving to equities is the hassle factor in owning properties.

Less hassle is a factor and that's why we have (are) selling 2 properties.

Yes London properties aren't very diverse, but I think they are better to hold than the ftse 100, and more to the point we've already got more than a £1m in the ftse 100 (so it isn't as if we are diversifying by investing in it).

economic

chucknorris wrote: »

Less hassle is a factor and that's why we have (are) selling 2 properties.

Yes London properties aren't very diverse, but I think they are better to hold than the ftse 100, and more to the point we've already got more than a £1m in the ftse 100 (so it isn't as if we are diversifying by investing in it).

yes makes sense. hold onto some london property for diversification and have letting agents deal with running them.

GreatApe

Windofchange wrote: »

NUMBER 1

Except that 37% of renting London households moved in the last year alone:

http://blog.shelter.org.uk/2016/02/renting-families-move-so-often-they-are-nearly-nomadic-new-research/

Where do you get your supposition that people stay put for decades in rental properties?

NUMBER 2

But buy to let has already collapsed / is falling and do you think that this going to reverse given the changes in tax coming?

http://www.telegraph.co.uk/property/house-prices/revealed-extent-buy-to-let-market-collapse/

NUMBER 3

What data are you drawing on when you state most BTL is either paid for or has very little mortgage left? Did you take into account a lot of BTL is held on interest only mortgages? Have they been paying down their capital?

NUMBER 4

No big sell off in 2008 because it was bailed out and there were no changes to the fundamentals of the market. With the tax changes there will be A LOT of people thrown into uncertainty at best, debt / who knows what at worst.

1: If 37% move in a year, and I do not trust shelter as a reliable source, that means people move about once every 3 years

2: you link does not suggest or show a shrinking rental sector, it says an estate agent say the year on year landlord purchases had fallen, from a record year previously

3: its always been the case that most rentals have no mortgage at all. The total stock of debt on BTL mortgages is some £200 billion for some 5 million rental properties worth some £1.1 trillion. So overall the sector has a £200 billion mortgage on a rental market worth £1,100 billion or less than 20% LTV

More importantly if you look at the CML data BTL purchases have crashed but still the most recent data for Jan 2017 shows 5,900 BTL purchases using mortgages (the number purchased outright is not included in this 5,900). Dec 2016 was 6,400 purchases.

The new norm looks around 70-80 thousand BTL purchases annually using mortgages

https://www.cml.org.uk/news/press-releases/january-2017-monthly-lending-trends/

Of course there will be sales too so the net number is more impoprtant however the purchases using mortgages have only crashed towards 2012 levels

4: Yes there are additional taxes and some people will sell however landlords are still buying with mortgages and it looks like this year they will purchase some 80,000 units using BTL mortgages

2008 or 2009 or 2010 was actually much worse. For instance in Q4 2009 landlords purchased 14,760 units using BTL mortgages. The same Q4 but for 2016 landlords purchased 19,300 units using BTL mortgages. So the bears frothing at the mouth that the big crash is finally here as landlords have stopped buying is just any bear myth spread by bears to keep other bears poor

chucknorris

economic wrote: »

yes makes sense. hold onto some london property for diversification and have letting agents deal with running them.

Diversity is very important, we (as a couple) never intended to sell everything anyway, we will be holding one 3 bed Victorian house in Tottenham Hale for the very long term (circa 20 years), and we also planned to hold a 3 and 4 bed house in Hackney for the medium term (circa 12 years). What we were going to dispose of in the short term (over the next few years) was 4 flats in Battersea (2 x 2 bed and 2 x 3 bed) plus a 4 bed house in Hackney. I'm now seriously thinking of stretching out the short term disposal plan over a few more years than we originally thought.

After the short term disposal, which would be our initial retirement portfolio, it would look something like this:

35% Shares
29% Property
15% Corporate bonds
13% Fixed pension (DB and state pensions)
8% Cash

That would be our combined portfolio, our separate portfolios would be different as my wife (as an individual) would be holding much more property than me.

I'm happy enough with the overall diversity of that portfolio, although something that we need to address is ensure that we have much more diversity than we currently have within our share holdings. We can easily do that without incurring CGT, if we do this when we invest the property equity.

AG47

Element47 wrote: »

Not surprising all the perma prop bulls jump on the offensive :rotfl:

Not surprising at all.

The perma prop bulls would have to admit that property can't always be permanently going up.

As the article says, when the number of ownership goes so low there is something wrong, prices have to correct.

When the number of renters exceeds the number of owners, there is more votes to be gained from the ones wanting lower prices.

chucknorris

AG47 wrote: »

Not surprising at all.

The perma prop bulls would have to admit that property can't always be permanently going up.

Where do you get these crazy notions from, that bulls think that property always goes up? Property has never permanently gone up, it goes up over the long run, but cyclically! There were significant crashes in the early 70's, late 80's/early 90's and 2008, property prices history is there for everyone to see. It shouldn't be a surprise to anyone that property prices occasionally crash.

System

Did he just reply to his own alias?

Windofchange

GreatApe wrote: »

1: If 37% move in a year, and I do not trust shelter as a reliable source, that means people move about once every 3 years

2: you link does not suggest or show a shrinking rental sector, it says an estate agent say the year on year landlord purchases had fallen, from a record year previously

3: its always been the case that most rentals have no mortgage at all. The total stock of debt on BTL mortgages is some £200 billion for some 5 million rental properties worth some £1.1 trillion. So overall the sector has a £200 billion mortgage on a rental market worth £1,100 billion or less than 20% LTV

More importantly if you look at the CML data BTL purchases have crashed but still the most recent data for Jan 2017 shows 5,900 BTL purchases using mortgages (the number purchased outright is not included in this 5,900). Dec 2016 was 6,400 purchases.

The new norm looks around 70-80 thousand BTL purchases annually using mortgages

https://www.cml.org.uk/news/press-releases/january-2017-monthly-lending-trends/

Of course there will be sales too so the net number is more impoprtant however the purchases using mortgages have only crashed towards 2012 levels

4: Yes there are additional taxes and some people will sell however landlords are still buying with mortgages and it looks like this year they will purchase some 80,000 units using BTL mortgages

2008 or 2009 or 2010 was actually much worse. For instance in Q4 2009 landlords purchased 14,760 units using BTL mortgages. The same Q4 but for 2016 landlords purchased 19,300 units using BTL mortgages. So the bears frothing at the mouth that the big crash is finally here as landlords have stopped buying is just any bear myth spread by bears to keep other bears poor

1) Except the article tells you 37% of renters have moved 3 or more times in 5 years.

2) Fair enough, but it does show a very large slowdown in purchases. How about 1 in 4 selling up. That's quite a significant number:

http://www.telegraph.co.uk/investing/buy-to-let/one-in-four-buy-to-let-investors-sell-up-due-to-new-tax/

3) You contradict yourself here. You are saying that most BTL owners have no mortgage, but then you go on to say the new norm looks like 70 - 80,000 BTL purchases annually using mortgages. Which one is it? As for it's always been the case that most rentals have no mortgage at all, can you back that up? I don't think you can.

4) But I thought you just said that most rentals are brought without a mortgage? Oh, but now you are saying there will be 80,000 more BTL with a mortgage this year alone?

westernpromise

AG47 wrote: »

The perma prop bulls would have to admit that property can't always be permanently going up.

Please identify any "perma prop bull" who maintains that property is "always permanently going up".

Conrad

Crazy new homes market;

I've been awaiting prices and release dates on 3 new homes developments for months, with a view to buying on one of these.


2 of them at long last have their opening day this Saturday. Annoying they come up on same day as both are first come first served and I fully suspect all will be sold out within the first hour or two.


Turns out they've had huge interest (the sales girls are incredibly stressed and take days to returns calls / emails).


Demand is so high that they are taking restrictive measures so the sites aren't physically inundated.


Measures include;

• Pre-qualification detailed and very personal interviews over the phone
• Pre-qualification reference numbers issued if interview is successful and required to even set foot on site
• Mortgage approval in principle certificates required - but now lenders and some brokers are refusing to give these until a property is being proceeded upon (offer accepted). Some lenders wont give a full AIP unless a property is agreed first.
• Proof of deposit, address and ID all PRIOR to offer
• Sealed bids - noting 'only successful bids will be contacted by us, please do not contact us if you hear nothing, bids are full and final'

No service charge information is available. I've noticed this is common practice now - and often the buyer is only furbished with these important cost details well into the purchase process.

This is around the M25.


So much for the market calming down, and I'm not talking cheap property here. For example a new 2 bed apartment will cost between £275k-£399k.
2 bed apartment going rate in the area 12 months ago was £225k average.