Landlords enjoy windfall from global storm

IveSeenTheLight

I know this is specifically about the rental market in Scotland, this is where I have a vested interest, however I'm sure the philosophy will be the same across other areas in the UK.

http://business.scotsman.com/personal-finance/Landlords-enjoy-windfall-from-global.3761390.jp

Hopefully this will help to explode the myth that BTL's (of which most are based on the mortgage to rent ratio) being forced to sell up.

mystic_trev

If you look back at the last crash, yields also increased dramatically, one of the reasons being that prices were dropping. I've been in the BTL game over ten years and it's time to lock in some of my profits, which is why I'm selling. The last ten years of HPI is comming to an end, andthere's no point in 'looking in the rear view mirror! I wouldn't be surprised if prices don't even keep up with inflation for the next ten years. Time for me to move on and try to sniff out the next 'Goldmine' I note you've only been in the BTL market for the past year, a warning from the article you quote.

This boost to the residential letting sector makes it a good time for existing landlords, although the unsettled economic conditions are not ideal for those considering entering the buy-to-let market

Good luck.

IveSeenTheLight

mystic_trev wrote: »

If you look back at the last crash, yields also increased dramatically, one of the reasons being that prices were dropping. I've been in the BTL game over ten years and it's time to lock in some of my profits, which is why I'm selling. The last ten years of HPI is comming to an end, andthere's no point in 'looking in the rear view mirror! I wouldn't be surprised if prices don't even keep up with inflation for the next ten years. Time for me to move on and try to sniff out the next 'Goldmine' I note you've only been in the BTL market for the past year, a warning from the article you quote.



Good luck.

You make some valid points.
While I have been in the BTL market for little over a year, one of the properties I bought was a number of years ago.
the other one I have last year still has a very high LTV.

I appreciate your decision to get out at the top of the cycleand invest elsewhere.
I have decided to go for a long term view for my investment and can live with a drop in property value (if it happens) for the next few years.

My point of this post was to point out that as a result of the likelyhood of higher Rental Yields will not as many point out here result in droves of BTL LL's leave the market

I wish you all the luck in your future investments

sarkin

Buy low sell high.

Generali

IveSeenTheLight wrote: »

You make some valid points.
While I have been in the BTL market for little over a year, one of the properties I bought was a number of years ago.
the other one I have last year still has a very high LTV.

I appreciate your decision to get out at the top of the cycleand invest elsewhere.
I have decided to go for a long term view for my investment and can live with a drop in property value (if it happens) for the next few years.

My point of this post was to point out that as a result of the likelyhood of higher Rental Yields will not as many point out here result in droves of BTL LL's leave the market

I wish you all the luck in your future investments

Rental yields increased in the early 90s as rents increased and property values fell. Rents increased due to high levels of inflation and due to people putting off buying a house (why buy today when you can buy tomorrow for less - classic 'deflationary spiral').

My feeling is that if the economy goes bad (which I think it will but your prediction on that is as good as mine*) rents will increase more rapidly than last time as people will lose their homes more quickly if they lose their jobs as they don't get welfare payments for mortgage interest for quite a while any more (12 months?).

My feeling also is that the government is spending pretty much everything that they can at the moment. If a recession comes along and tax receipts fall (less spending = less VAT, lower company profits = less corporation tax, lower personal incomes = less NI/income tax) then spending will have to fall at just the point when upward pressure is being put on welfare spending.

Something will have to give and I suspect it will be that housing benefits will be capped in some way as it's an easy political target ("We won't line the pockets of private LLs" etc.). At that point, rents will start to fall back.




*Economists predicted 8 of the last 2 recessions.

GavLaw

IveSeenTheLight wrote: »

You make some valid points.
While I have been in the BTL market for little over a year, one of the properties I bought was a number of years ago.
the other one I have last year still has a very high LTV.

I appreciate your decision to get out at the top of the cycleand invest elsewhere.
I have decided to go for a long term view for my investment and can live with a drop in property value (if it happens) for the next few years.

My point of this post was to point out that as a result of the likelyhood of higher Rental Yields will not as many point out here result in droves of BTL LL's leave the market

I wish you all the luck in your future investments

It depends on location though, in general aberdeen and edinburgh are obviously doing very well but I have found some other impressive figures from the citylets report;

"For 2 bed flats in Aberdeen the spike in rental prices seen in the fourth quarter of both 2006 and 2005 has not been repeated and indeed rents show a small decline of 1.2% on Q3 2007.

In Renfrewshire, average rents have followed a
broadly similar pattern to those of Glasgow city - stable but with little growth.

It’s the same story in Lanarkshire with little growth in rental prices since Q4 ‘06.

Rental prices for 2 bed flats in the region were fractionally lower than Q4’06 at £479. "

http://www.citylets.co.uk/reports/

MissMoneypenny

Generali wrote: »

My feeling is that if the economy goes bad (which I think it will but your prediction on that is as good as mine*) rents will increase more rapidly than last time as people will lose their homes more quickly if they lose their jobs as they don't get welfare payments for mortgage interest for quite a while any more (12 months?).

My feeling also is that the government is spending pretty much everything that they can at the moment. If a recession comes along and tax receipts fall (less spending = less VAT, lower company profits = less corporation tax, lower personal incomes = less NI/income tax) then spending will have to fall at just the point when upward pressure is being put on welfare spending.

Something will have to give and I suspect it will be that housing benefits will be capped in some way as it's an easy political target ("We won't line the pockets of private LLs" etc.). At that point, rents will start to fall back.
.

As more repossessions flood the market, the lower the value of houses. How will some BTLers fair when they need to remorgage and the value of their houses are close to or lower than the mortgage? Not all will be able to sub their tenants rent. I think some are in for a very rough ride.

Numbnutz_2

As more repossessions flood the market, the lower the value of houses. How will some BTLers fair when they need to remorgage and the value of their houses are close to or lower than the mortgage?

That would require a massive reduction in house prices though, the average LTV for BTL is only 50%.

m00m00

not for recent entrants (in the past couple of years) it isn't, and these are the people most vulnerable to any changes in the economy.

mystic_trev

Numbnutz wrote: »

That would require a massive reduction in house prices though, the average LTV for BTL is only 50%.

Depends on who's figures you take, and ranges between 50% to 75%. Many new loans taken ot last year were 90% LTV's and if this were taken out on a newbuild with a 20% 'incentive' ..........well, already well into negitive equity.

I do know of a Landlord, who's got a portfolio of a dozen properties and maintains he's never had to borrow a penny! I suppose he's reinvested all the income from the three he inherited nearly 30 years ago, so it can be done! He's also the worst kind of Landlord you're ever likely to meet. One of his tenants removed the central heating ststem, radiators and all - before doing a runner! When the Landlord went to check on the Property he couldn't go upstairs because the Tenant had removed those as well :rotfl:

Generali

m00m00 wrote: »

not for recent entrants (in the past couple of years) it isn't, and these are the people most vulnerable to any changes in the economy.

Maybe. I think some of the more spectacular losses are going to be among people that have increasingly borrowed against existing properties to finance new ones and have built up huge BTL empires with vast amounts of equity support huge amounts of debt. Them and all the people that have lied and bought using OO mortgages because they don't have the deposit or rental cover. Time will tell.