Britain's deflating buy-to-let bubble

Doc_N

hearts wrote: »

sigh.....I hate to say this cos it's going against the grain but Iv'e bought another 4 BTLs in the last 3 months ;-)

For goodness sake, why, when all the evidence is now pointing very clearly to falling prices? This was a few weeks ago, presumably, before Northern Rock and the media coverage that followed changed sentiment completely?

Pobby

Interesting chat with a mortgage broker,who,btw is struggling since the NR fiasco to get anyone approved.He said that the vast majority of applicants have been self cert.Why?Well he is based in Cornwall,land of the minimum wage.

The average house price there is now over £220,000.Go figure!

hearts

Doc_N wrote: »

For goodness sake, why, when all the evidence is now pointing very clearly to falling prices? This was a few weeks ago, presumably, before Northern Rock and the media coverage that followed changed sentiment completely?

I have been into BTL for many years. Also through the "crash". I make sure the properties I buy cover what I need. I am never short of tenants. Because some people envisage a crash doesn't mean we all do. The market here is still bouyant and even if it falls in the short term Im in it for the long haul.
The trouble with a lot of people is they see BTL as some sort of short term money making scheme and judge everybody as in it for this reason. For many it's a business and as such short term market trends whether up or down are not an influencing factor when purchasing ;-)

Doc_N

hearts wrote: »

I have been into BTL for many years. Also through the "crash". I make sure the properties I buy cover what I need. I am never short of tenants. Because some people envisage a crash doesn't mean we all do. The market here is still bouyant and even if it falls in the short term Im in it for the long haul.
The trouble with a lot of people is they see BTL as some sort of short term money making scheme and judge everybody as in it for this reason. For many it's a business and as such short term market trends whether up or down are not an influencing factor when purchasing ;-)

I'm intrigued, though. I can see that you're in it for the longer term, but wouldn't it still make sense to wait, and then buy at lower prices. Just out of curiosity, would you still make the same decision if you were considering the purchase today?

WTF?_2

Doc_N wrote: »

I'm intrigued, though. I can see that you're in it for the longer term, but wouldn't it still make sense to wait, and then buy at lower prices. Just out of curiosity, would you still make the same decision if you were considering the purchase today?

Although BTL returns currently aren't great, you have to remember that it was viable up until quite recently and will some day be viable again once the prices drop. It's just that the crazy price bubble has skewed all sorts of things.

Also, don't forget that you can leverage yourself to get into the property game and that is a great attraction for people. You could turn 10k into 100k by taking out a mortgage (keeping the figures nice and round for the sake of example). No bank is going to lend you that sort of money - or indeed, any money - if you say you want it to get into equities or currency trading.

Doc_N

!!!!!!? wrote: »

Although BTL returns currently aren't great, you have to remember that it was viable up until quite recently and will some day be viable again once the prices drop. It's just that the crazy price bubble has skewed all sorts of things.

Also, don't forget that you can leverage yourself to get into the property game and that is a great attraction for people. You could turn 10k into 100k by taking out a mortgage (keeping the figures nice and round for the sake of example). No bank is going to lend you that sort of money - or indeed, any money - if you say you want it to get into equities or currency trading.

I take your point, but surely now is not a good time for anyone to be buying - even the BTL merchants. Accepting that in the very long term property prices are likely to continue to rise, it still makes no sense to buy now, when in the shorter term they're probably going to fall.

The clever money is staying out of the market until prices have fallen, and then it's likely to be possible to buy, say, 4 houses for the price of 3 now. Sounds a bit like a BOGOF, that, doesn't it?!

hearts

Doc_N wrote: »

I take your point, but surely now is not a good time for anyone to be buying - even the BTL merchants. Accepting that in the very long term property prices are likely to continue to rise, it still makes no sense to buy now, when in the shorter term they're probably going to fall.

The clever money is staying out of the market until prices have fallen, and then it's likely to be possible to buy, say, 4 houses for the price of 3 now. Sounds a bit like a BOGOF, that, doesn't it?!

Firstly, I bought 2 of these properties AFTER recent events. So yes I would have still bought.

What you are expressing is an opinion of how the market will go. I actually don't share this opinion.
"The clever money is staying out of the market" This will only be clever if in fact prices do fall ;-)
I can only act on my belief of what property prices will do in my area. If Im wrong no problem I can sit it out.....but I don't think I'm wrong. ;-)

WTF?_2

hearts wrote: »

Firstly, I bought 2 of these properties AFTER recent events. So yes I would have still bought.

What you are expressing is an opinion of how the market will go. I actually don't share this opinion.
"The clever money is staying out of the market" This will only be clever if in fact prices do fall ;-)
I can only act on my belief of what property prices will do in my area. If Im wrong no problem I can sit it out.....but I don't think I'm wrong. ;-)

I don't see how it makes sense to get into BTL at current house prices, save in the few areas of the country where a rental income compares favourably with mortgage or loan repayments.

If you don't need a loan (ie have cash) then it would make a lot more sense to even stash it in a savings account rather than put it into BTL where the returns are so low.

That's irrespective of whether or not we see a sssssh, crash.

hearts

!!!!!!? wrote: »

I don't see how it makes sense to get into BTL at current house prices, save in the few areas of the country where a rental income compares favourably with mortgage or loan repayments.

If you don't need a loan (ie have cash) then it would make a lot more sense to even stash it in a savings account rather than put it into BTL where the returns are so low.

That's irrespective of whether or not we see a sssssh, crash.

As I said, Im not getting into BTL, I've been in it for many years. ;-) I can still buy property at the right price to make it worthwhile. Although the yields are far lower than they were prices are still low enough for it to be viable.

IveSeenTheLight

!!!!!!? wrote: »

I don't see how it makes sense to get into BTL at current house prices, save in the few areas of the country where a rental income compares favourably with mortgage or loan repayments.

If you don't need a loan (ie have cash) then it would make a lot more sense to even stash it in a savings account rather than put it into BTL where the returns are so low.

That's irrespective of whether or not we see a sssssh, crash.

I have 2 BTL properties, one bought three years ago, the other at the start of this year.
The property I bought three years ago has a Rental yield of 9.387% and has increased in value by 88%.
The property I bought at the start of this year has a rental yield of 6.154%
This property has also increased in value by 27% in 10 months

• Do I make a profit, yes.
• Will my properties house prices continue to increase in the long term, yes
• Would I consider buying another property to let out at this economic time, yes, however it is important to choose the right property in the right area.

My advice for anybody considering buying a property to rent is not to be scared about the rumour mongerers that property prices will crash.
Do you market research, find a good property, in a good location , with a high rental return and for a long term investment, you will benefit