'BTL Landlords go long'

swaninn

Yes and they seems to have bought ridiculously overpriced 'new builds' eg Salford Quays Manchester. How do the developers a) get away with this and b) make any money?

brit1234

Vincenzo wrote: »

It has occured to me that in some areas the 'falls' in prices of these properties will skew the property price figures, making the situation in the market appear worse. The reason being that these are the proeprties that will end up in auctions and sold off quick, showing high % losses.

I think you will find now that there are price drops in all areas and all types of property.

Common sense suggests that buy to let is by far the weakest area of the housing market based on little deposits, interest only mortgages and equity removal for further purchases. The credit crunch and large price falls are the death bed of buy to let.

Vincenzo

brit1234 wrote: »

I think you will find now that there are price drops in all areas and all types of property.

Common sense suggests that buy to let is by far the weakest area of the housing market based on little deposits, interest only mortgages and equity removal for further purchases. The credit crunch and large price falls are the death bed of buy to let.

Why do they put the thanks button next to the quote button??

Anyway - I did not say price falls were not widespread. I was simply saying that the falls in these particular properties, some could be as much as 50% on paper, judging by the auction prices, will skew the average price fall data where there are large developments.

I wholly diagree with your second point for reasons discussed throughout this thread. I expect the weakest part of the market is the 'subprime' 100% plus 6x salary etc FTBs....

m00m00

remember though, that repossession sales data does not show up in land registry reports

so it could be suggested the index is biased in favour of HPI anyway

and I would suggest that both certain sectors of BTL and certain subprime high multiplier/High LTV purchasers, are equally paddling up a certain creek sans paddle

WTF?_2

HammersFan wrote: »

I suppose if lots of BTL'ers who have good properties become forced sellers thing will change. I can't see it though really - most landlords know that in 10, 15, 20 or whatever number of years they decide to sell, will have done OK. I don't have any evidence, but I suspect its mainly professional landlords who flip as part of an overall strategy - I reckon they will have stopped that now and quite a few are ready to still battle it out any FTB'ers for properties that come on at a good price.

Some people do find paying the mortgage a struggle - but owning outright by paying over 25 (or even 30 years) beats paying rent for a lifetime (IMO).

With mortgages of up to 7x single salary or 5x joint not being uncommon at the peak of the boom and people looking at large amounts of negative equity and substantial increases in repayments whenever fixes run out, buying has not made sense for most people in many parts of the country (home buyers and definitely not BTLs) for a good while now.

One would have thought that 2005 should have been the wake-up call but once the decision was made to prime the low-interest rate pumps to keep the party fuelled it seems that people lost all sense of financial perspective when it came to paying crazy money for property.

A lot of people who bought since then are going to be paying the price, the only question is how far back will prices roll. My guess is to 2004 levels.

Vincenzo

m00m00 wrote: »

remember though, that repossession sales data does not show up in land registry reports

so it could be suggested the index is biased in favour of HPI anyway

and I would suggest that both certain sectors of BTL and certain subprime high multiplier/High LTV purchasers, are equally paddling up a certain creek sans paddle

While reposessions have increased, the majority of resi properties (of the type I described earlier) being sold at auctions are from sellers who have either failed to sell private treaty or cannot afford to wait. Arguably some of these are the same properties that would have ended up as repos, but they do show up in the data.

dopester

!!!!!!? wrote: »

I'm waiting for about that, though expect it could go to 40% also.

30% over 2-3 years then with stagnant prices and rising inflation for a few years after that is most likely IMO.

I hope you are not underestimating the severity of what is to come !!!!!!.

Earlier in the year the newspapers reported 1 million retail jobs were forecast to be lost... ...combine that with the culling in the City and almost daily stories of some big redundancies here and there....

...together with anecdotal evidence of other businesses feeling the squeeze - and house developers deciding it's not worth building any more... (maybe the builders struggling can happily continue to pay thousands to rent despite being unemployed - and how long will the stupid-high valuations on developers' land-banks last before cashflow forces sales at deep discounts).

Good luck filling your future BTL with securely employed tenants. Some people will continue to be well paid and to prosper even more. Just a lot of sectors are going to suffer as I see it. Property is too illiquid for me as an investment. Just for a home.

My guess is people in some who think their homes are worth £100,000+ for some dingy terrace in some backward town are going to be schooled in what a downturn really means. Even with 30%-40% fall in some of these places as of today.. I'd still be worried of being utterly wiped out in 3 or 4 years time.

WTF?_2

dopester wrote: »

I hope you are not underestimating the severity of what is to come !!!!!!.

Earlier in the year the newspapers reported 1 million retail jobs were forecast to be lost... ...combine that with the culling in the City and almost daily stories of some big redundancies here and there....

...together with anecdotal evidence of other businesses feeling the squeeze - and house developers deciding it's not worth building any more... (maybe the builders struggling can happily continue to pay thousands to rent despite being unemployed - and how long will the stupid-high valuations on developers' land-banks last before cashflow forces sales at deep discounts).

Good luck filling your future BTL with securely employed tenants. Some people will continue to be well paid and to prosper even more. Just a lot of sectors are going to suffer as I see it. Property is too illiquid for me as an investment. Just for a home.

My guess is people in some who think their homes are worth £100,000+ for some dingy terrace in some backward town are going to be schooled in what a downturn really means. Even with 30%-40% fall in some of these places as of today.. I'd still be worried of being utterly wiped out in 3 or 4 years time.

I would hope that it wouldn't be that bad in 3-5 years time. However if it was, then I certainly wouldn't be getting a BTL.

I making the assumptions that:

* I don't fall ill, lose my job etc.

* Prices will fall significantly, enough for me to get my own place mortgage free or near-as in 3 years or so.

* Prices will stay low enough that rents can cover the repayment when I get the BTL a few years later.

* There will be sufficient rental demand to keep rents high enough/ voids low enough to make the above sum work.


The way I look at it is that if done right, a second property will fund itself over the next 20 years and provide me a decent income stream well into retirement, with the option to sell it and cash in once I feel it's too much hassle to manage any more.

Owning a single property never leaves you in a situation to really profit from the property market, despite what those who MEWed were thinking of at the time.

Gorgeous_George

brit1234 wrote: »

I think you will find now that there are price drops in all areas and all types of property.

Common sense suggests that buy to let is by far the weakest area of the housing market based on little deposits, interest only mortgages and equity removal for further purchases. The credit crunch and large price falls are the death bed of buy to let.

No amount of wishful thinking will change the facts and I'm sure there are some BTLers who will struggle.

I can pay my BTL mortgage even without the rental income. Others will need the rental income to pay the mortgage. If the rental income stops, a quickie eviction, refurb and new tenants should deal with the problem. With more properties the risks become more manageable as it is unlikely that all of your rentals will bring such problems at the same time.

GG

m00m00

Gorgeous_George wrote: »

No amount of wishful thinking will change the facts and I'm sure there are some BTLers who will struggle.

I can pay my BTL mortgage even without the rental income. Others will need the rental income to pay the mortgage. If the rental income stops, a quickie eviction, refurb and new tenants should deal with the problem. With more properties the risks become more manageable as it is unlikely that all of your rentals will bring such problems at the same time.

GG

it will depend a lot though on how you've acquired the other properties

if you are highly geared on a lot of properties, then a couple of interest rate hikes in a capital depreciating marketplace, would hurt them a lot more than it would hurt someone like GG.