'BTL Landlords go long'

LillyJ

Well they might be. Especially if they sell now and buy in a year or so.
Like I said before my landlord bought in the 70s and this house is now worth 140k so he is quids in if he sells now. He can then buy outright in a year and make a fortune.
A lot of BTLs tend to have a higher deposit than FTBs and if the bank can see that the rent (which won't go down IMO) exceeds the mortgage by quite a lot, then they will lend easily.

Everyone moaned about BTLs before claiming they were causing the HPI, now you think it is a good thing that they will be snapping up a couple of bargains a few months down the line? Work out which one it is?!

WTF?_2

LillyJ wrote: »

Well they might be. Especially if they sell now and buy in a year or so.
Like I said before my landlord bought in the 70s and this house is now worth 140k so he is quids in if he sells now. He can then buy outright in a year and make a fortune.
A lot of BTLs tend to have a higher deposit than FTBs and if the bank can see that the rent (which won't go down IMO) exceeds the mortgage by quite a lot, then they will lend easily.

Everyone moaned about BTLs before claiming they were causing the HPI, now you think it is a good thing that they will be snapping up a couple of bargains a few months down the line? Work out which one it is?!

Do you honestly think that there's enough ready and willing capital out there to put a floor under a deflating bubble as it starts to gather speed?

There will be some smart landlords out there who cashed in on their older properties with a lot of equity and who will swoop back in when they reckon the market has bottomed out. They're not just going to plunge their ready cash into a falling asset class before then though and they certainly won't be enough of them with enough cash to trigger another immediate boom either.

MrDT

dolcevita wrote: »

I couldn't find one of those "banging your head against a wall smilies", so this will have to do.....

:eek:

Maybe I'm missing something here, but I think Lilly's got a point?

Hypothetical situation a few months down the line:

• Prices drop by 20%, from say 200k to 160k johnny first time buyer can't raise the mandatory 32k to cover the 20% deposit, and his earnings are too low now that we're only offered 3x income multipliers anyway so no mortgage here. No house for johnny ftb, keep saving your deposit buddy...
• Bank lends captain bee tee elle a hefty sum as he has high levels of equity in other properties, maybe captain btl bought in the 70s and has a few houses mortgage free as collateral? Captain btl gets the loan, buys the house.

Prices have dropped, still nothing available for the first time buyer as the buy to letters have already swooped, again. Like I said, maybe I'm missing something.

I figure lower prices will be good for everyone except for those that bought at the top of the market, but I don't think it'll mean an affordable house is made available to all wannabe first time buyers...


edit:
1 - I type slowly
2 - !!!!!!? just answered me pre-emptively

boinging_2

LillyJ wrote: »

Like I said before my landlord bought in the 70s and this house is now worth 140k

Has he sold it for £140,000 or is this his / an estate agents hypothetical valuation?

LillyJ

MrDT wrote: »

Maybe I'm missing something here, but I think Lilly's got a point?

Hypothetical situation a few months down the line:

• Prices drop by 20%, from say 200k to 160k johnny first time buyer can't raise the mandatory 32k to cover the 20% deposit, and his earnings are too low now that we're only offered 3x income multipliers anyway so no mortgage here. No house for johnny ftb, keep saving your deposit buddy...
• Bank lends captain bee tee elle a hefty sum as he has high levels of equity in other properties, maybe captain btl bought in the 70s and has a few houses mortgage free as collateral? Captain btl gets the loan, buys the house.

Prices have dropped, still nothing available for the first time buyer as the buy to letters have already swooped, again. Like I said, maybe I'm missing something.

I figure lower prices will be good for everyone except for those that bought at the top of the market, but I don't think it'll mean an affordable house is made available to all wannabe first time buyers...


edit:
1 - I type slowly
2 - !!!!!!? just answered me pre-emptively

Thanks that is what I meant, just put better.

LillyJ

boinging wrote: »

Has he sold it for £140,000 or is this his / an estate agents hypothetical valuation?

No but next door sold last week for 160k (I knew our neighbours very well) within 3 weeks of being on the market and 2 months ago the one down the road sold for 170k.

2 are on in the street at the mo, both priced at offers around 175k

So I think I was being pretty conservative with the 140 estimate

Gorgeous_George

There are many types of BTLer.

There are those who bought flats off-plan in cities they'd never visited (and wouldn't wish to visit). Buying with 80% mortgages and gifted deposits of 20% to cover the remainder, they will find, if they haven't already, that their flats are worth a lot less than the glossy brochures suggested.

There are others who bought to speculate and let their properties while the market rose. They need to get out before the falls get worse, if that is what will happen.

And there are the majority who bought simply to let the property and to provide a little something for their futures. My BTL brings me a gross income equivalent to 25% of my salary. When I retire, I shall have no mortgage, pensions equivalent to 50% of my salary and income from my BTL. I think that provides a comfortable retirement. If prices fall over the next year or two, I will buy another property or two to let. But only if the numbers stack up in the short, medium and long terms - and regardless of house price movements.

GG

MrDT

boinging wrote: »

Has he sold it for £140,000 or is this his / an estate agents hypothetical valuation?

Surely in this extreme example the gap between valuation and sale price is pretty inconsequential to the seller? If I bought comfortably for maybe £3k in the seventies and then sold today for £110k I wouldn't be crying over the £30k I'd 'lost' on the overblown valuation...

'worth £140k' mightn't be 100% accurate, but the realised capital gain for this landlord would far outweigh any paper losses (yes, after adjusting for inflation) I'm sure.

boinging_2

I'm still shocked that people are not in favour of lower house prices and don't see them as a positive thing.

It's better for FTB's and for people moving up the ladder as the house they buy is cheaper as a percentage of the drop in the house being sold. The only people affected are those downsizing and those who borrowed out of their depth at the top of cycle.

LillyJ

Thanks, again that is what I was trying to get at MrDT!

THat is a very conservative estimate, and he is currently getting £750 a month rent on the place so what I am saying is he is hardly stupid and has a hell of a lot of equity.

I would imagine the house cost him a couple of grand in the 70s. He has 5 such houses, all bought that long ago.