'BTL Landlords go long'

Vincenzo

No big surprise but interesting to some figures all the same......

Buy-to-let landlords go long

24/04/2008 09:00

Just 2% of buy-to-let landlords are planning to sell properties when tenant leases expire, according to a survey by the Royal Institution of Chartered Surveyors.

The low percentage is surprising given that RICS’ latest quarterly survey showed 4.6% of landlords were planning to sell property. Rising rents and worries over prices and mortgage blockages could be affecting landlords’ decisions, it said.

RICS said the latest data suggested that fears of a wave of selling by buy-to-let landlords was “misplaced” and that the housing market would not have to cope with a sharp increase in supply from this source. There had been concerns that buy-to-let landlords would take advantage of the cut in capital gains tax this month to offload investments. RICS surveyed 500 residential letting agents.
24/04/08 Financial Times 2

IveSeenTheLight

Vincenzo wrote: »

No big surprise but interesting to some figures all the same......

It's definately not a surprise to me.
Most BTL landlords view the investments as a long term strategy and are not in the business of buying and selling depending on the housing cycle.

Sure it's good to buy low and sell high, but I would think that those BTL sellers are ones which are / were planning on leaving the BTL investment strategy

dannyboycey

IveSeenTheLight wrote: »

It's definately not a surprise to me.
Most BTL landlords view the investments as a long term strategy and are not in the business of buying and selling depending on the housing cycle.

Sure it's good to buy low and sell high, but I would think that those BTL sellers are ones which are / were planning on leaving the BTL investment strategy

I suspect many think (wrongly) that this is just a blip and all will be back to normal soon. There are many BTL landlords that simply can't afford to make a monthly defecit for a prolonged period. The longer they hold out, the more they will lose. Of course, this wont apply to all of them, but to those with little or no equity on IO mortgages, there is no way they can make the figures add up. It's a case of sell now and cut your losses - or wait and risk being repossesed.

Benefits_Blagger

the problem is that most of the main predictions are that we are going to have falls of upto 10% at worse. Any buy to letter sitting down and working through the transaction costs will realise it's not worth selling up yet. however when predicted falls of 30%+ become accepted as mainstream a lot more will be rushing to sell up.

WTF?_2

Vincenzo wrote: »

Just 2% of buy-to-let landlords are planning to sell properties when tenant leases expire, according to a survey by the Royal Institution of Chartered Surveyors.

An excellent opportunity to get out for those who bought at the peak but are smart enough to see the writing on the wall then.

Mind you, if they got into BTL any time in the last few years they probably aren't smart enough to understand the almighty mess they are facing.

dannyboycey

Benefits_Blagger wrote: »

however when predicted falls of 30%+ become accepted as mainstream a lot more will be rushing to sell up.

Those with no equity are playing a VERY dangerous game though. Even a 10% drop would seriously shaft them. They can't sell and they can't turn a profit from rental income. Oh deary me.... This is what happens when greedy people think they can have a go at being Alan Sugar just because they saw someone on TV do it.

IveSeenTheLight

dannyboycey wrote: »

I suspect many think (wrongly) that this is just a blip and all will be back to normal soon. There are many BTL landlords that simply can't afford to make a monthly defecit for a prolonged period. The longer they hold out, the more they will lose. Of course, this wont apply to all of them, but to those with little or no equity on IO mortgages, there is no way they can make the figures add up. It's a case of sell now and cut your losses - or wait and risk being repossesed.

I think you think (wrongly) that the majority of BTL landlords are on the very edge of affording the property and subsidise the monthly mortgage payments

I rent out two properties, one has an LTV (paper valuation) of 39% and the other 58%.
Both have tenants which cover the mortgages and the associated costs and the extra is utilised to reducing the mortgage even further.

You may think that I bought these properties a long time ago, but I bought one 4 years ago and the other 16 months ago.
I have significantly reduced the mortgage since buying them.

Do you think I am at risk, I think not.
I have a long term strategy which I am very confident will proove correct and I suspect many BTL landlords are in the same position.

sure there will be some that have miss calculated, invested for the wrong reasons. I just don't buy into that this is the majority.

IveSeenTheLight

dannyboycey wrote: »

Those with no equity are playing a VERY dangerous game though. Even a 10% drop would seriously shaft them. They can't sell and they can't turn a profit from rental income. Oh deary me.... This is what happens when greedy people think they can have a go at being Alan Sugar just because they saw someone on TV do it.

I agree, if a BTL portfolio has a very low equity then they may have a problem, but where is it shown that this is the majority of the cases?

Can anyone post some statistics that show the BTL LTV ratio and the BTL rental income versus the mortgage payments?
I've yet to see one posted here despite the amount of posts quoting that BTL are going to the wall.

going2die_rich

dannyboycey wrote: »

there is no way they can make the figures add up. It's a case of sell now and cut your losses - or wait and risk being repossesed.

Or push up the rent for tenants, which many landlords are doing. If the majority do this, tenants will have little choice but to pick up the higher costs of mortgage payments. It only wont work if a few landlords choose to do this since tenants can go else where. But if most do this (which would seem logical to pass on the higher costs), tenants will struggle to find cheaper rent else where so will have very little choice but to pay up.

danm

BTL business plans are not driven on house prices, they are driven on Rental demand.

All the STR'ers and repossed families should keep demand high should it not. In some ways i think that BTL'er are better off than home-owners. They obvioulsy have the same negative equity and re-finance risks, but should the worst happen in the housing market, then they should see an increased customer base.

Alan_M_2

Only People who overextended themselves or bought very recently with high LTV ratios are facing problems.

Many Landlords view their BTL investments as long term (call it a pension if you will) and a large percentage of them are careful how much they expose themselves to risk.

There will be a small percentage of people who have borrowed too much or bought too many properties and will face problems if or when they have voids or come to the end of periods of fixed rate and require a re mortgage.

Don't think every BTL landlord will now have to dump all their assets, in fact if they haven't already sold, it's unlikely they will unless forced to.