Panic selling by landlords could turn slump into rout

IveSeenTheLight

Generali wrote: »

Rather than get in a tizz about whether it's speculation or not, I reckon it's better to go to the CML website and get the actual figures rather than rely on some half-bottomed journalist to have the numeracy to be able to write lucidly on this.

Excellent post Generali,

13,000 out of approx 1.44 million (0.9%) doesn't infer to me that the LL's will turn a slump into a rout.
Especially if you consider the the wider range of properties experienceing trouble is 1.2%, thus there are more OO mortgages in trouble than BTL's

IveSeenTheLight

Generali wrote: »

BTL LLs (or at least the ones posting on here) have been saying for a long time, "I'm in it for the long term". Now we can find out if they're actually in it for the long term or in it until the repossession order comes through!

If the mortgage market doesn't go back to 'business as normal' (ie huge amounts of money available for all to borrow at historic low rates) then of course the ones only in it until they lose money will find that they're in it for the long term, like it or not!

In your previous post, you pointed out factually that 0.9% are experiencing trouble making the payments (defaulting / missed payments).
Surely this means that 99.1% are not defaulting.
Why does this signify that reposession orders will come through?

Any BTL LL, even amateur ones (which I would say am one, but still deal professionally with my tenants ) should be in the market for a long term gain and not at all necessary a capital gains gain.

I'm essentially in it to either have a good pension or to provide something for my children (lots of ways to do this).
I essentially make no profit on the property, as all profit is going in to reduce the capital and LTV.
This may not be the best BTL strategy giving tax issues, but it is very secure for me. It will also mean that the time when the tenant has finished paying off the mortgage for me will be much sooner and therefore the profit much higher

Kez100

its the trend that is important. Suddenly within one quarter the number of problem payers has doubled. Business is not about just today its about forecasting and trends of that ilk are terribly worrying.

IveSeenTheLight

Kez100 wrote: »

its the trend that is important. Suddenly within one quarter the number of problem payers has doubled. Business is not about just today its about forecasting and trends of that ilk are terribly worrying.

I can understand this and can see that it will get worse.
The facts are that problem BTL mortgages are less than the wider scale problem mortgages.
So why sensationalise BTL as making the situation worse.
I can onle presume its because they assume that the likelyhood of getting rid of the property is higher if it is a BTL rather than if it is owner occupied.

BTL problem mortgages have jumped from 0.73% to 0.9% so thats from 7,477 mortgages to 9,660 mortgages in one quarter.
In the grand scale, even if you trend this to get worse, do you really see this as making a significant difference to the housing market. I don't think so. Credit will by far affect the market more.
To put into scale, the wider market percentage of homes in arrears greater than 3 months was as high as : -
3.82% in 1995, trending lower each year until
0.85% in 2004 and then increasing to
1.1% in 2006 dropped down to 1.02% before heading back up to
1.1% at year end 2007
It seems that as HPI was on the increase, less people got into arrears How HPI is on the decline, arrears

[edit note] edited to correct figures taken from the CML website http://www.cml.org.uk/cml/statistics [[/edit note]

IveSeenTheLight

Trollfever wrote: »

CML stats are here:

http://www.cml.org.uk/cml/statistics

Thanks Trollfever,
You could play over the stats here for a long time, very interesting reading

dopester

IveSeenTheLight wrote: »

Excellent post Generali,

13,000 out of approx 1.44 million (0.9%) doesn't infer to me that the LL's will turn a slump into a rout.
Especially if you consider the the wider range of properties experienceing trouble is 1.2%, thus there are more OO mortgages in trouble than BTL's

7 month-on-month falls in UK (even with regional variances in to the mix).

And -2.5% in April alone.

On an average UK home, that is -£4,339 in a month. Or near -£145 per day.

At £173,583, the average home is worth 4.4% less than in May 2007 – the biggest annual drop since December 1992.

And the crash has only really just started. We've not seen anything yet really.



I agree, not only are many landlords paying more for their mortgages then they take in rent, but you BTL-ers should be congratulated for providing a real benefit to FTBs, allowing them to sit back and enjoy watching house prices continue to freefall.

This graph is always welcome on any thread + the updated versions will be welcome for many many months to come. :rotfl:

wisbech_lad

inmypocketnottheirs wrote: »

I just wonder what will happen if prices fall by say 20%.

Would there then be a clamour of buyers?

If so, would that then not fuel another HPI trend?

Hmm, when your Scottish Widows pension shares went down 20% or more, did you say "w00t, I get me 20% more shares for the same amount, buy buy buy" or did you say "share based pensions are a disaster, I'll go bung my money into BTL instead"

Some people do buy on crashes (Warren Buffet comes to mind), but as you yourself show, most run a mile from an asset class that has hit the rocks, at least until a strong upturn is in place again. E.g. many got into BTL post 2002, rather than 1996-2002.

IveSeenTheLight

What has the last post got to do with the thread saying that LL's are panic selling turning a slump into a rout?

If you want to quote statistics, they can easily be shown differently for different regions.
The region I have a vested interest in rose 23% in 2007 and 13% annualised in the first quarter of 2008, meaning that average prices in the area would have to statisticall drop by 22% from the peak to return to Jan 2007 prices.
A 4.4% drop YoY means nothing given previous years increases and the more important fact that I have tenants that pay my interest and capital payment with a further 25% above this which covers for factor fee's, insurance, maintenance & further capital reduction.

I've certainly seen no facts that suggest panic selling by Landlords
Do you consider a headline in a newspaper fact?

BTL mortgages in trouble raised from 0.73% to 0.9%, while the wider market mortgages in trouble is 1.1%.
Certainly not percentage (while they may increase more) that fills me with a sense of panic

IveSeenTheLight

wisbech_lad wrote: »

Hmm, when your Scottish Widows pension shares went down 20% or more, did you say "w00t, I get me 20% more shares for the same amount, buy buy buy" or did you say "share based pensions are a disaster, I'll go bung my money into BTL instead"

Some people do buy on crashes (Warren Buffet comes to mind), but as you yourself show, most run a mile from an asset class that has hit the rocks, at least until a strong upturn is in place again. E.g. many got into BTL post 2002, rather than 1996-2002.

Donald Trump built his empire buying property in New York with money he did not have at a time when everyone was selling and property was on the decline.

What's he doing nowadays I wonder?

wisbech_lad

Exactly. He's equivalent to Buffet in shares (buy value, even if market is declining) Well, apart from the fact his firms have gone bankrupt couple of times, and Buffet never has.

But most don't do this (buy on decline) Given that most people in UK, when their share based pension plans tanked, didn't do the sensible thing (put more money into share based pensions, because they are now better value for money) but abandoned share based pension plans as an asset vehicle, what makes you think people won't behave in exactly the same way with BTL's?