There will not be a crash

The_Dangerman

dannyboycey wrote: »

How will wages rise by 30-50% in 3 years? Tightening of credit, slow economy, recession, rising inflation, rocketing fuel bills.... Where are these companies going to find the cash for these wage increases!??

I said catch up, relatively, not overtake. We're possibly arguing semantics though.

I'm getting a 4.8% rise this year so my company can clearly afford decent rises.

It seems a lot of bitterness from those who aren't on the property ladder. There maybe the desire of a crash, but I'll re-hash this thread in a year to show this wasn't the case.

I'm not even remotely concerned about a crash. In fact I see it as good time to invest and take advantage of those who are desperate to sell.

snoopy78

The_Dangerman wrote: »

The FTB has been replaced by the BTL landlord who rent out to what would have been the FTB for the interest only cost of the mortgage which allows the rent to cover the mortgage.

There is not actually that many BTL, a report out resently stated that BTL has only increased house prices by 3% (if I remember correctly). Also given that higher deposits are needed and debt is now very expensive BTL is less attractive. A lot of LL don't make a huge profit from the letting itself, any profit gets hit by a 40% tax rate and by profit this includes any money to pay the mortgage above the interest (the repayment part). So LL hope for house price rise too, if that is not happening then there will be less LL willing to risk the BLT market.

EdInvestor

snoopy78 wrote: »

A lot of LL don't make a huge profit from the letting itself, any profit gets hit by a 40% tax rate

If you're referring to CGT, it's going down to18% in April.If you're referring to letting income, most people don't make profit on the income after claiming expenses such as mortgage interest .

The_Dangerman

Debt expensive? I've just funded my latest BTL deposit by stoozing!!

Not all LLs pay tax @ 40%, there are lot of basic rate tax payers who are at it.

With the stock market a bit iffy, BTL is still very attractive. Houses are always a good investment in the right area, there will always be fluctuations in prices and slowdowns but provided you can afford to sit on, in the long term prices will always go up.

Generall the only way you can lose over the long term(and that may only be not gaining as much) is

1. Buying in area that becomes undesirable (eg a waste dump springs up next door!)
2. A huge price crash AND stupidly high interest rates.

I've only been at BTL for 3 years and already I would need a 50% price crash for me to be in negative equity.

Paul_N_4

The_Dangerman wrote: »

Debt expensive? I've just funded my latest BTL deposit by stoozing!!

Not all LLs pay tax @ 40%, there are lot of basic rate tax payers who are at it.

With the stock market a bit iffy, BTL is still very attractive. Houses are always a good investment in the right area, there will always be fluctuations in prices and slowdowns but provided you can afford to sit on, in the long term prices will always go up.

Generall the only way you can lose over the long term(and that may only be not gaining as much) is

1. Buying in area that becomes undesirable (eg a waste dump springs up next door!)
2. A huge price crash AND stupidly high interest rates.

I've only been at BTL for 3 years and already I would need a 50% price crash for me to be in negative equity.

So in your first post you argue there isn't going to be a crash, and by your fifth you're trying to convince people (and yourself by the sounds of it) that you'll be alright if there IS a crash?

What point are you trying to argue? Whether or not there is going to be a crash? Or whether or not, as a BTL landlord, you'll be financially sound if there is one?

If you are financially sound with your BTLs then you really don't need to tell other people about it. The decline or rise in house prices over the next few years will not be governed by the financial stability of your personal portfolio.

You may be fine, but I suspect many more recent BTLers may not be.

Gorgeous_George

Looking at the average interest rate for the previous 6 months may give some indication of the problem in the late 80's and early 90's. Remember, these are BofE base rate averages and NOT mortgage rates that were typically 2% higher.

01/12/1980.....15.8
01/03/1981.....14.7
01/06/1981.....13.0
01/09/1981.....12.1
01/12/1981.....13.4
01/03/1982.....14.3
01/06/1982.....13.6
01/09/1982.....12.4
01/12/1982.....10.7
01/03/1983.....10.3
01/06/1983.....10.4
01/09/1983.....9.9
01/12/1983.....9.4
01/03/1984.....9.1
01/06/1984.....8.9
01/09/1984.....9.6
01/12/1984.....10.3
01/03/1985.....11.3
01/06/1985.....12.5
01/09/1985.....12.1
01/12/1985.....11.5
01/03/1986.....11.7
01/06/1986.....11.3
01/09/1986.....10.2
01/12/1986.....10.2
01/03/1987.....10.7
01/06/1987.....10.1
01/09/1987.....9.3
01/12/1987.....9.3
01/03/1988.....9.0
01/06/1988.....8.3
01/09/1988.....9.1
01/12/1988.....11.3
01/03/1989.....12.5
01/06/1989.....13.0
01/09/1989.....13.5
01/12/1989.....14.1
01/03/1990.....14.7
01/06/1990.....14.9
01/09/1990.....14.9
01/12/1990.....14.5
01/03/1991.....13.9
01/06/1991.....12.7
01/09/1991.....11.5
01/12/1991.....10.7
01/03/1992.....10.4
01/06/1992.....10.3
01/09/1992.....10.0
01/12/1992.....8.9
01/03/1993.....7.0
01/06/1993.....6.0
01/09/1993.....5.9
01/12/1993.....5.8
01/03/1994.....5.5
01/06/1994.....5.2
01/09/1994.....5.1
01/12/1994.....5.4
01/03/1995.....6.0
01/06/1995.....6.5
01/09/1995.....6.6
01/12/1995.....6.6
01/03/1996.....6.4
01/06/1996.....6.1
01/09/1996.....5.8
01/12/1996.....5.8
01/03/1997.....5.9
01/06/1997.....6.0
01/09/1997.....6.4
01/12/1997.....6.9
01/03/1998.....7.2
01/06/1998.....7.3
01/09/1998.....7.4
01/12/1998.....7.3
01/03/1999.....6.5
01/06/1999.....5.6
01/09/1999.....5.2
01/12/1999.....5.2
01/03/2000.....5.5
01/06/2000.....5.9
01/09/2000.....6.0
01/12/2000.....6.0
01/03/2001.....6.0
01/06/2001.....5.7
01/09/2001.....5.3
01/12/2001.....4.8
01/03/2002.....4.2
01/06/2002.....4.0
01/09/2002.....4.0
01/12/2002.....4.0
01/03/2003.....4.0
01/06/2003.....3.8
01/09/2003.....3.7
01/12/2003.....3.6
01/03/2004.....3.7
01/06/2004.....4.0
01/09/2004.....4.3
01/12/2004.....4.7
01/03/2005.....4.8
01/06/2005.....4.8
01/09/2005.....4.7
01/12/2005.....4.6
01/03/2006.....4.5
01/06/2006.....4.5
01/09/2006.....4.5
01/12/2006.....4.7
01/03/2007.....5.0
01/06/2007.....5.3
01/09/2007.....5.5
01/12/2007.....5.7

It IS different this time. Low base rates are good but NO MONEY and BANKS FAILING will be the problem.

You can work out when the Tories held elections by looking for the dips in rates. When they stopped dropping rates just before the election, they were voted out. The British public are generally a bit thick.

GG

The_Dangerman

Paul_N wrote: »

So in your first post you argue there isn't going to be a crash, and by your fifth you're trying to convince people (and yourself by the sounds of it) that you'll be alright if there IS a crash?

What point are you trying to argue? Whether or not there is going to be a crash? Or whether or not, as a BTL landlord, you'll be financially sound if there is one?

If you are financially sound with your BTLs then you really don't need to tell other people about it. The decline or rise in house prices over the next few years will not be governed by the financial stability of your personal portfolio.

You may be fine, but I suspect many more recent BTLers may not be.

No.

In my last point I was arguing that potential BTL landlords aren't going to be put off because they can't lose even if there is a crash, which I'm also arguing, that there won't be. It really is difficult to lose on property(though not impossibe - standard disclaimer)

Why won't recent BTL landlords be financially stable? What's going to happen to them? Nothing, they will just keep renting their houses out and laugh all the way to the bank provided they have at least a medium term outlook.

Relax, take it easy, chill out! Everything will be fine!

brit1234

The_Dangerman wrote: »

I've only been at BTL for 3 years and already I would need a 50% price crash for me to be in negative equity.

50% increase in properties in 3 years is completely unsustainable and clearly a bubble. If that is the case then yes your properties are likely to fall 50% or even slightly more in the coming years as lending reverts to traditional levels.

The speculators have bailed. :rotfl:

The_Dangerman

No, it's called buying houses which are undervalued, possibly due to neglect. Sometimes a quick renovation is all that is required to add thousands.

Of course 50% includes my own money that I have invested, ie the deposit, because negative equity is owning more than the house is worth. Obviously the prices won't have to drop as far for the property to be worth less than I bought it for.

I'm sure wouldn't be alone in laughing if investors lost money on property, but I would never be so churlish to laugh at those who haven't managed to get on the proeprty ladder.

dannyboycey

brit1234 wrote: »

50% increase in properties in 3 years is completely unsustainable and clearly a bubble. If that is the case then yes your properties are likely to fall 50% or even slightly more in the coming years as lending reverts to traditional levels.

The speculators have bailed. :rotfl:

He will also have a hell of a job releasing any of that 50% and selling will be even harder. Just hope his noose... sorry... portfolio isn't too big.