It was the BTLers' fault?

kennyboy66_2

EdInvestor wrote: »

Indeed we do.

+There are the "flippers",who buy new-build flats off plan and hope to sell them on for a profit before they have to complete the purchase

+There are the "gearers", who extract equity from each property so as to provide a deposit for the next one, thus building a large portfolio of both properties and mortgages.

Both these speculators rely on a rising market.

+There are the "sell to renters", effectively short sellers, who own property and then sell out in the hope of being able to buy back later when prices have fallen .

These speculators are hoping for a falling market.


Serious buy to let landlords are not speculators. They are either interested in the income from their investment, or, if geared, in long term capital growth (the "pension" investors.) Neither type of genuine BTL investor will be under any pressure by current market trends, which will only affect the speculators.

It's very irritating that so many people persistently confuse the BTL investors with the speculators. It also distorts their analysis of how the market will behave as they assume all BTL landlords are of the speculator type, when these are in the minority..

"You Sir, are a speculator, I, however am an Investor"

Would you continue to invest in BLT if;

a) The risk of medium term capital losses outweighed the prospect of capital increases.

b) The tax treatment of borrowing costs was made less favourable (fairer?).

teabelly

It is a combination of many things. Lending that has been slacker than it should be, loss of confidence in pensions, greedy Gordon Brown knackering pensions further by taking 20% of the profits and screwing every single person with one, lack of house building, immigration, impatient FTBs who want everything now and won't wait until they can afford it, amateur BTL speculators sucked into it by dodgy doings, government legislation which puts up the cost of new builds with requirements for affordable housing & council kick backs and infrastructure charges , John Prescott wanting thousands of flats built even though people don't like them - investors moved in as no !!!!!! else was buying them!

The tax situation is perfectly fair as the business is funded on debt therefore debt payments are allowable and debt received (equity) isn't taxable either. Income is taxed on actual profits and losses can be carried over. It is as daft as trying to tax gambling as you'd have to allow losses against tax as well as taxing profits.

What has made property less affordable is the lack of wage increases hidden by tax credits and the use of short term debt and equity release by many households to fill the gap. The RPI is a total lie and does not reflect the real cost of living. High taxation of road fuel and increasing cost of oil the fundamental reason inflation is going up. Extra tax burdens on normal families hasn't helped either.

Supermarkets make profits on food so there is no reason why landlords can't make money from shelter.

EdInvestor

kennyboy66 wrote: »

Would you continue to invest in BLT if;

a) The risk of medium term capital losses outweighed the prospect of capital increases.

If I was interested in income, yes, though current yields are quite poor..

b) The tax treatment of borrowing costs was made less favourable (fairer?).

I assume you mean loan interest deductions. This is a normal business expense. An income investor would not think the tax treatment of rental income was especially advantageous and it would be seriously unfair compared with other investment classes if there was no tax relief on loan interest.

Stevenic

teabelly wrote: »

It is a combination of many things. Lending that has been slacker than it should be, loss of confidence in pensions, greedy Gordon Brown knackering pensions further by taking 20% of the profits and screwing every single person with one, lack of house building, immigration, impatient FTBs who want everything now and won't wait until they can afford it, amateur BTL speculators sucked into it by dodgy doings, government legislation which puts up the cost of new builds with requirements for affordable housing & council kick backs and infrastructure charges , John Prescott wanting thousands of flats built even though people don't like them - investors moved in as no !!!!!! else was buying them!

Spot on, city centre flats are going to feel the brunt of the downturn. When people talk about 40% drops, this is the sector most likely to experience that type of reverse. The real fun in the new build market is coming from the requirement for zero carbon homes as the Government or Local Authority have no idea how much this is going to cost and how this will effect their target for 3 million new homes by 2020.

teabelly

City centre flats have sold approximately for 26% less than their original purchase price consistently over the last few years. 80k for a one bed second hand flat is about right for a lot of areas if 2 bed terraces are about 100-120k. New builds at 120k for the same are over priced. I'd be expecting to pay less than a 100k for most areas if pricing was consistent with prices of one bed flats. Flats around 80k here usually sell. There aren't many that don't. Sadly people haven't realised their ex council ugly looking one isn't going to reach 80k as easily as a nice flat with communal gardens or other features. They still pitch them at the same price though...

What also matters is rental levels. I don't honestly see how anyone would pay more than 600 pcm for a one bed flat anywhere outside London. Am I wrong in this assumption? Did it not occur to those that bought flats for 180-200k that need rents of £1100 pcm to stack that it seemed incredibly expensive?

kristianwilliams

i was looking at moving flat to a house recently. New houses were built in a run down area about four years ago. Selling price back then was £130,000. Today they are selling for £90,000. Thats a huge drop. My landlord knows that my GF and I are long term renters (paying off debt and saving for a house ourselves) and is overly nice to us. Gave us a ring to say that they had some come on the market to rent.

Unfortunately, we were too late, another family got in first. We still went to take a look. Lovely house, parking, in an estate, all new builds, lovely playing fields, even allowed small pets.

£400pcm.

Im not sure that will even cover the cost of the mortgage, but according to our landlord, they were up for £740pcm for 3 months before the drop in price.

I just shook my head. Who ever has bought them to rent out must be covering the extra out of their own pockets. So the golden egg has suddenly become another expense.

Gorgeous_George

In a price crash, flats and 1 bed homes suffer most. People who would otherwise buy thse hutches can afford proper houses - with gardens and rooms that take full sized furniture.

GG