Demand for buy-to-let mortgages has increased significantly in recent months as landlords rush to cash in on the continuing boom in rental prices, according to the Bank of England. The scramble to purchase rental properties is even leading would-be buyers to put in sealed bids in some areas of the south-east.
In its latest Trends in Lending Report the Bank said most major UK lenders reported demand for buy-to-let lending continuing to increase over the summer, reflecting rising rental yields. Rents rose in every region of the UK in September 2011, pushing the average rent to a record high of £718 per month – £1,029 in London – according to the latest LSL Property Services buy-to-let index. Lea Karasavvas, director of broker Prolific Mortgage Finance, says this is driving demand for properties: "We're having sealed bids with buy-to-lets because the rental market is just so strong."
Landlords are now getting an average yield of 5.3%, up from 5.2% in August, LSL says. Meanwhile, tenant arrears have dropped to their lowest level since April 2010, with just 8.6% of all UK rent unpaid or late by the end of September.
There were 32,000 buy-to-let loans, worth £3.5bn, taken out between April and June, the highest number and value since the last quarter of 2008, according to the Council of Mortgage Lenders (CML). Director general Paul Smee called this "encouraging news", and said first-time buyers were not being displaced by buy-to-let landlords.
But Matt Griffith of first-time buyer campaign site PricedOut, disagrees. He says: "In a market where equity is king, investors are able to outbid first-time buyers for available lower-level properties. In the housing market, equity is nearly always a result of longevity – which gives older homeowners a head-and-shoulders advantage. Housing wealth and ownership is more generationally lopsided than it has been since the 1940s, and we appear to be seeing older groups pressing home their advantage through investment buying."
Both tenants and first-time buyers, then, face a bleak future: squeezed out of the market by house prices that remain high across swathes of the country, and soaring rents charged by landlords.
According to the Association of Residential Lettings Agents, the problem is a lack of supply, and the government should be doing more to encourage landlords. It says the private rental sector is nearing capacity – three-quarters of its 6,000 members believe there are now more tenants than properties, with the increase in demand particularly acute in London and the south-east.
Tim Hyatt, president ARLA, says: "There is a finite amount of rental property and unless both housing supply and mortgage availability improves, renters will find their options in the market are reduced. The government is doing little to encourage landlords to invest in new properties, therefore we are running out of quality stock to offer to tenants. This is reflected in rent increases and a lack of choice for consumers.
However, communities and local government minister Greg Clark said in early October that the private rental sector is "destroying family life". Similarly, MP Caroline Flint , in a speech at the Labour Party conference, said she wanted stronger private tenants rights.
Improved tenure rights, such as longer notice periods for eviction, are favoured by some landlords because they offer them greater security, too, and Griffith thinks they could make the market more stable. "Stronger tenure rights would help reduce the level of short-term investment flows into the sector as well as improving the experience of the renter, who is steadily getting older and as a result requires stability for children, family and schools," he says.
But many lenders will only issue buy-to-let loans on a property with an assured shorthold tenancy in place (typically a tenancy term of at least six months and no more than 12 months).
"It's the bankers, not the landlords, to blame here," Griffith adds. Halifax and Accord Mortgages, for example, both demand that properties be let on an assured shorthold tenancy basis – although some, including Woolwich mortgages, do not.
If the opportunities for lenders and borrowers evaporate, the buy-to-let boom may run out of steam. LSL's David Newnes points out that while rental yields have hit 5.3%, total returns over the past year fell to 1.8% (a result of house prices falling outside London).
Griffith says banks may be underestimating the risks of buy to let. "Yields are still very low in historical terms, further declines in house prices look likely and tenant arrears have been climbing steeply. Both the later trends may intensify as we move into a very difficult period for UK household income."
Loans on offer
This year has seen a number of small lenders return to the buy-to-let mortgage market but things have changed since the credit crunch.
"Borrowing 85% [of a property's value] was easy pre-credit crunch, and the fees on those loans were a lot lower," says Lea Karasavvas, director of Prolific Mortgage Finance. Now charges of £1,999 are not uncommon and borrowers will find little choice above 75% loan to value (LTV).
Rates are not as competitive as they were. "Before the credit crunch there wasn't a huge difference between residential and buy to let rates," says property funding specialist Adrian Anderson.
For landlords with at least a 40% deposit, Principality building society is offering a two-year fixed-rate deal at 3.89% and a fee of £999, while Woolwich has a lifetime tracker at base rate plus 2.98%, with a fee of £1,999.
Other criteria have also tightened - for instance Lloyds banking group now lets landlords take just three loans from its lenders, which include Birmingham Midshires and Halifax, but the minimum rent required is still typically 125% of the monthly cost of repaying the mortgage.
Comments
22 October 2011 11:48PM
Onwards and upwards. Not only are rents rising rapidly due to unprecedented demand, a collapse in house building and massive population growth, but established investors (and owners) are benefiting from the lowest mortgage rates in history, encouraging more and more people to rent out rather than sell, release equity to invest or expand portfolios. The supposed bust has turned out to be a massive boon for property investment.
Meanwhile, pensions continue to suffer badly...
22 October 2011 11:55PM
Tenants are paying to occupy someone else's property - not their own. Landlords should be entitled to evict at their discretion. It's their investment after all.
Saying that, there's not a chance of secure tenancies anyway. It's not in the interest of the lenders, EAs and property industry. More importantly, it's not in the interest of the politicians - most of whom have their own property portfolios.
23 October 2011 1:04AM
The measure of how screwed up and wrong the housing market is unwittingly exhibited by the previous 2 comments by turnbull2000.
Roll on the sensible correction, the more i see the massive inequity in UK housing the more i see a future of social unrest.
23 October 2011 6:03AM
5.3%...! Your having a laugh, mine average 7.1%, looking forward to a nice 5% increase in rent come renewal time.
Happy days.
23 October 2011 9:08AM
Not according to my friend who is a repossessions clerk.
They are starting to sell them off now...
23 October 2011 9:10AM
"In a market where equity is king, investors are able to outbid first-time buyers for available lower-level properties. In the housing market, equity is nearly always a result of longevity – which gives older homeowners a head-and-shoulders advantage."
What?! The length of time you have been active in the housing market is related to your ability to purchase a house?!
I thought those over 40 had already decided their advantage was caused by their hard work, their financial genius and, of course, everyone under 40 being feckless, profligate and lazy.
Who'd have thought it.
Government endorsed, sorry, government approved, theft from the young.
Just because something is legal, doesn't mean it's moral.
23 October 2011 11:13AM
Rental yields of about 5% are still very historically low, together with falling house prices makes buy to let a dangerous option especially as there are better yields else where. Then you have to factor in increasing void periods due to unemployment, wage freezes, high inflation and housing benefit reform.
23 October 2011 11:28AM
"Landlords are now getting an average yield of 5.3%, up from 5.2% in August, LSL says".
I own two-bedroomed houses in Epsom,Surrey worth about £240,000 each,which I rent out for about £850 per month each,so I make about 4% per annum after expenses,not a bad rate for these times.
I charge less than the going rate,but get long term tenants,which is an important factor in the buy-to-let industry.
24 October 2011 4:38AM
So HOW is having longer eviction periods going to assist tenants?
As a landlord am I really going to take on a tenant who may stop paying rent and then it might take 10 months to evict someone, and that is with the present system?
I have a wrongun tenant who has not paid me rent since Feb 2011.
I am awaiting for a 2nd eviction date on 8.11.11 to occur!
So far she owes me £9500.00.
She has manipulated the county court system.
My property would have been repossessed now if it wasn't for my BOM&D.
How does giving longer eviction terms assist the tenant?
This, as I now will NEVER take a tenant on who does not qualify for Rent Guarantee Insurance.
The county court system in England is dysfunctional and not fit for purpose.
Would I allow a tenant to potentially bankrupt me just because they choose not to pay rent?
Why does there seem to be a presumption that landlords have vast reserves to cover situations such as a tenant not paying rent for any reason.
Most landlords receive rent and pay the mortgage.
We are not charities able to subsidise non-rent paying tenants for whatever reason.
If government wishes to increase property supply it must facliltate immediate eviction of tenants if they have missed 2 rent payments.
No mucking about police remove them as they are then squatters if they are not paying rent.
Until this is done potential landlords are reluctant to enter the market as they know it only takes 1 non-rent paying tenant and you could be bankrupted and loses your own home.
RGI is the only route for landlords if they wish to protect themselves from losing their property if a tenant stops paying rent.
What happens to ALL the tenants who can't qualify for RGI nor have a guarantor who will qualify?
What landlord in their right mind would wish to expose themselves to bankruptcy if they can't obtain RGI on their tenant?
This will mean tens of thousands of tenants unable to rent; whereas assured eviction the day after rent has not been paid for 2 months, (1 month and 1 day in the case of rent paid in advance monthly), would persuade landlords into the market.
24 October 2011 9:25AM
My friend says it takes about 2-3 years to get around to selling a repossessed Buy to Let. That is when you don't have a Govt. actively propping up the market / values and mortgagees that don't want to sell for fear of their mortgage books...
24 October 2011 9:39AM
Kill off B2L and save your children It really is that simple.
Join and support the many e_petitions to Regulate and tax properly the evils of B2L.
http://epetitions.direct.gov.uk/search?q=buy2+let
Did you know B2L do not pay council taxes on home let to students for example Whole range of low taxes, advantages, even low interet rates on savings force more B2L. All part of the Govt and BoE policy too keep house prices High.
30yr debt mortgages to MPs 2nd homes in London wtc wtc..
Join ans Support the many ePetitions to Ban, Regulate the evils of Buy 2 Let
24 October 2011 10:04AM
Truth is that houses are still massively overpriced and will eventually come down. When the day comes that interest rates rise and the BTL parasites will get burned. Bring it on!
24 October 2011 10:05AM
@gandalftheWhite
"Did you know B2L do not pay council taxes on home let to students"
I'd rather pay the council taxes than let my properties to students.....
24 October 2011 10:36AM
Here is a list of the top postcodes for the best BTL yields, Blackpool topping the list at 5.3%:
http://www.thisismoney.co.uk/money/mortgageshome/article-1689988/Top-100-postcodes-for-buy-to-let.html
Obviously landlords will tell you they achieve higher yields by paying less for a property, perhaps one that needs a lot of work, or preying on repossessions, etc. Those with really high yields will most likely be the slumlords. If your landlord has a very high yield, you are probably living in a poorly maintained, possibly even dangerous property and paying over the odds.
Gross yield can actually be far from reality - it's not like the quoted interest on a savings account. With costs, fees, void periods and the ever present non-paying tenants we're always hearing about, the true returns are a lot less and you usually make a loss in the first years until you can get away with bumping up the rent.
I found this out when someone recommended looking into different pension ideas, and the advice with BTL is to do your sums - so I did. I found out (if my sums are correct) that for an average example I would probably be better off with an ISA. See here:
http://www.guardian.co.uk/discussion/comment-permalink/12963471
That's not to say there's not money in it with the right properties, but I certainly don't believe it's the cash cow it is if you invested in the early boom years. Tie that with the stress (for a normal person) of being a landlord, then I found BTL to be a bad choice. And if everyone who could, invested in BTL, together with all the accidental landlords who can't sell, then there would be too large a supply and landlords would make huge losses, get into negative equity and be unable to sell. Although I'm not saying that is a particularly bad thing.
24 October 2011 10:37AM
RaynorGoddard
ha ha, does make me laugh, we should ignore what the Bank of England, the council of mortgage lenders, Association of Residential Lettings Agents and the various other professional property investors quoted above say as Raynosr mate disagrees.........whatever, the desperation to ignore reality is hysterical....lowest interest rates ever, highest rents evertotal BTL wet dream......
p.s the BTL guys I know are only just starting to come back into the market now after having spent the lat 4-5 years sitting on the sidelines.....(though this is obviously a very small sample and I would not claim it to be necessarily representative of the market as a whole – that would just be silly…)
24 October 2011 10:43AM
Well you had better get used to the fact that rents are going to go up and up and up coz that's the way it is going to be from now on
The Govt lets millions of immigrants in...and equips them with every benefit imaginable...and free housing...and you get to pay for it
Meanwhile housebuilding is at a standstill
Don't dare buy property as you will lose....heavily...as prices fall
So most of the young had better rent and suck it up
Rent controls - rubbish - just creates a black market and worse shortages
What we need is more tax breaks for landlords - like the ability to charge depreciation on property capital costs - as they can in Germany US and Oz
And quicker / easier process for evicting non-paying tenants
Non-payment of rent is theft, pure and simple
Failing that, dispense with tenants altogether and just leave property empty - you can't rig the market
24 October 2011 10:47AM
Oi Greg, STFU. Grant knows what he is doing, he worked in marketing before taking over his hobby ministry.
Anyone who can't see the direct and unbreakable link between marketing and housing strategy, well I am not going to explain it and I for one am glad that such an obviously talented individual is in charge.
GREED, still rampant and multiplying like the oh so topical Contagion, who gives a fuck how house prices are bolstered and held up, sell to anyone who can secure the debt for £250 down and a billionaire by Christmas.
That credit crunch thing, one off can't happen again even if you recreate the same conditions.
The unstoppable march back to the 1500s continues, how many people do you own?
24 October 2011 10:54AM
Spareme, LANDLORDX and Turnbull back to full force. Just like the old days on the forum. Littering the comments with the usual tongue - hanging - out - panting - for - money. Do you guys really think of nothing else. And waht exactly have the mortgage advisers been telling us that is so wholly unadulterated good advice. I should take a longer term view if I was you.
24 October 2011 12:40PM
I was "terminated" twice by greedy BTL landlords, who then both failed to cash in quickly and sell up.
The rules are horribly stacked in favour of the dishonest, decent tenants get "ejected" at the drop of hat by fickle landlords and decent landlords get shafted by bad tenants. Lying agents collect fees and don't actually do anything useful for anyone.
Out of the 4 properties I've rented, two were handled professional by both landlord and their agent. The other two were fickle landlords, a notice to quit on the last working day before Christmas was a delightful surprise. In addition one agent was a useless tosser that was fleecing both me and the landlord.
24 October 2011 12:44PM
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24 October 2011 1:12PM
Soooo, where's the corresponding article on house prices going up then ? Guess there'll be one along in a minute. Keep calm and carry on paying the interest only !
24 October 2011 1:45PM
people like me who bought two years ago dont own a house - the bank does. however inflation erodes the real value of your debt while low interest rates make the repayment reasonable.
if you can let go of the obsession with short term 2 year deals and plan for the future its not a bad time to buy.
its not a bad time to rent either - though how the market will cap rent rises with little alternative for accommodation remains to be seen.....
24 October 2011 1:51PM
What is a "repossessions clerk"?
24 October 2011 1:57PM
I know I shouldn't rise to this, but honestly @Turnbull2000
Firstly, your suggestion that tenants "occupying someone's else property" suggests you place us somewhere on a par with rats. Tenants are customers - they are paying for a SERVICE which landlords are in a contractual relationship to provide.
Secondly, millions of people rent - often poorer and more vulnerable members of society. Are these people not allowed to have a home so they can send their children to schools and put down roots? And isn't it the job of society to protect them from unscrupulous money grabbing landlords by providing some security of tenure?
24 October 2011 2:29PM
And isn't it the job of society to protect them from unscrupulous money grabbing landlords by providing some security of tenure?
Errrr..... no it's not, actually. It's society's jobs to make sure both parties honour the contract they entered into. If the landlord tries to evict before the lease terminates, bad landlord. If the tentan doesn't pay rent, bad tenant and he/she should be kicked out summarily.
Where does all this pathetic nanny state philospohy come from? Turnbull writes to provoke, but he is right.... the tenant is in someone else's property. If the landlord wants his property back at the end of the lease or when the tenant fails to pay.... the tenant should get out.
24 October 2011 2:33PM
As a first time buyer its so frustrating going round to the few properties which are within my (small) budget and not getting a look in because of BTL's with their massive deposits or are cash buyers.
All I would like is to get some priority when it comes between picking between FTB or people with homes already and are seeing it as a business.
OR they should get taxed higher on their yields so that that money can be invested in new property or shared ownership schemes.
it feels very skewered to the BTL's, i'd like to be able to buy property before I get to retirable age! and break the cycle of having to rent driving those proces up!
24 October 2011 3:12PM
@Purple mascara.
Evidently a typo on your part but i wish BTL's could be skewered.
@Ambon, someone elses property? Interesting, i'd say 'the banks' property, ergo the taxpayers property in a lot of cases.
Worried yet Ambon??
24 October 2011 3:17PM
It is skewed towards people with more money - like everything!
I am not sure I see the advantage otherwise. Personally I would rather sell to a nice couple who want to live in my house. Much less likely to drop their bid at the last minute or mess you around.
24 October 2011 3:43PM
ha, sorry freudian slip with 'skewered'. ;)
But yes typically FTBs don't have as much money as people who have been paying off their mortgages for awhile already, so I lost out on one property just because the other person was BTL whom was a cash buyer sadly.
It seems like one of those catch 22 situations where you need to get onto the ladder to be able to start saving up towards bigger deposits and better rates, and then getting out of that high price rental market.
Surely there needs to be some sort of government or bank regulations to change this. I can't see it happening naturally, (only getting worse?)
24 October 2011 5:02PM
@purplemascara
Yet BTL landlords would have you believe that they're not taking away properties from FTBs. For example they'll say that they take properties that need doing up that FTBs wouldn't touch (although for the last decade I know dozens of FTBs that have bought a place that needs doing up, either because of affordability, being in the area they like or because they've seen on telly you need to "put your own stamp" on your property.)
Someone's lying (hint: it's BTL landlords)
24 October 2011 5:17PM
In a time where there is a shortage of housing, then it is disgusting that we have a system that allows, and encourages people to buy multiple properties.
It is a system of greed.
24 October 2011 5:20PM
Welcome to the next bubble...POP!!!
24 October 2011 5:47PM
Rents are going up but I doubt if you look over a 10 year period whether they are keeping up with inflation
I own quite a few properties and a simple analysis shows for me that those rents have increased are lower than the rise in inflation
In real terms rents have fallen but this doesnt make good headlines.
24 October 2011 6:32PM
There are no good headlines for many of the bitter, twisted posters on here like willb42, GandalftheWhite, RaynorGoddard, et al. The only headline they'd like to see is "Government jails BTL landlords and gives property to tenants"
There has always and will always be a section of the population that never owns their own property. It's not in the UK constitution that every British citizen is entitled to their own home. Council houses were always "rented" of sorts. You never actually owned them unless you bought them. The one time sell off at ridiculously low prices has been and gone. Welcome back to the status quo where if you are on low income then you are less likely to be able to buy your own place.
As for house price crash. A family member of mine just sold their house, in less than a week and for 2% under the asking price. They were initially offered 15% under the asking price and quickly gave a sensible offer when given the proverbial finger. All seems normal to me. It's just the crap houses in the crap areas that are struggling. Be honest, who wants to buy a 2 up 2 down terrace in inner city wherever, with crime through the roof and no off street parking??? But there is plenty of demand for 3+ bed semi/detached in leafy neighbourhoods with good schools and facilities.
In the meantime rents will go up. Simple supply and demand. My maintenance and gardener costs have gone up 15% in the last 2 years on my rental portfolio. Companies slapping on fuel surcharges and increases in VAT being some of the blame. Pretty much all services I use put up costs by inflation every year regardless. Can anyone give me a vaild reason why as a landlord I should not pass these service cost increases to the tenant who is receiving those services?
24 October 2011 7:33PM
Philanthropy.
24 October 2011 8:16PM
Because you are an investor running a business. That is how you a treated also from a tax point of view. For the tenant it is their "home".
More secure tenancies are better for landlords. You can still evict, it is just there maybe limited reasons (such as non payment of rent).
24 October 2011 8:39PM
Most decent rental contracts have a clause regarding rent increases. Service charges can be offset against tax. It also depends what the service is: why would a tenant have a long term interest in, say, the garden, when they have no security?
24 October 2011 8:49PM
Many small business go under because customers don't pay their invoices on time. Fact!
Half a year without getting paid would put most businesses, large or small out of business. If you don't believe me, ask your company's accountant.
People that think landlord should be able to cover the non-payment of rent indefinately are misguided and plain, down right wrong.
24 October 2011 9:06PM
Coooooooooooool!!!!!!!!!
24 October 2011 9:35PM
True, and thats bad.
However most BTL landlords don't employ anyone for their BTL business. Its not even their main income used to provide housing and food for their family. Its usually just some extra cash or additional pension provision. Decent small businesses will at least provide new or niche services not currently supplied by competitors or which are better value in its marketplace.
So sorry, no sympathy for the landlord who took a gamble that didn't pay off. A landlord going out of business is only a shame for their poor tenants, who will have to put up with the disruption of moving. And if its due to a non-paying tenant anyway then no symapthy for the tenant either.
As landlords will often say: Life is tough, put up with it and join the real world instead of whining.
24 October 2011 11:24PM
Buy-to-let is a system which basically is used by the older generations to fleece the younger ones. My objections are based on:-
1. A person`s home should be sensibly secure - if they pay the rent and generally look after the place then there should be no risk of them being evicted.
2. The idea that someone can own someone else`s home is wrong - it puts the landlord in a position of unwarranted power, and also in difficulties if he has financial problems. A person`s home should not be regarded as a financial investment by someone else.
3. Rents seem to be based on mortgage repayments, which means that, after 25 years or so the tenant finishes up no better off, but the landlord then completely owns the property. Even after that the rent, I expect, does not diminish, which means tenants are for ever paying off the purchase of properties which have already been bought. Since houses can last for many decades (my house is 180 years old), this seems very unjust.
To remedy this the government should, firstly, put a stop to buy-to-let.
Secondly, it should take over the existing buy-to-let mortgages, paying off the mortgagees according to their share of the property they have already paid for.
The finance for that should come from reducing the Inheritance Tax Threshold to zero (i.e. abolishing it) and if that is not enough then abolishing inheritance in total. I realize this might be opposed by some Conservatives, but it`s about time we started to nurture our young rather than fleece them.
25 October 2011 9:47AM
MrFumoFumo
24 October 2011 10:36AM
Fumo your hypothetical on the other article is very good.
It illustrates perfectly why BTL 'business models' seem to be based on nothing more than the expectation of crazy capital appreciation. Your model seemed quite generous with expectations of future appreciation as well.
Little wonder the BTL rubes are desperately talking up the market in an effort to keep the ponzi going.
25 October 2011 10:34AM
There was perhaps an element of truth to that four or five years ago. Now though, there's more realistic expectation fuelling BTL..
1. Expectation of a relatively safe investment,
2. Expectation of good rent growth as the population continues to surge
3. Expectation that prices won't collapse thanks to state intervention
4. Expectation that it's better than your cash being destroyed by inflation
5. Expectation that you're in control and won't get shafted like you do with pensions
6. Expectation that tenants will essentially pay for your investment rather than do so yourself
7. Expectation that your children will inherit your pension investment, not some anonymous annuity provider when you die.
I could keep on going...
25 October 2011 10:43AM
Interesting article, fascinating comments! We considered buying a smallish property to rent out, as an alternative to a private pension with no guarantee that it would provide an income. We had this strange idea that if you treat it as a pension, then like all other pensions, you have to pay money in, so we'd reduce the rent by the same amount that we'd have put into a pension, style of thing, (exact numbers to be worked out, obviously) on the basis that you don't get a free ride anywhere these days. We decide that if we went ahead with it, we'd rent it out at below market rate, sod the 6 month assured shorthold tennancy and offer it as a very long term secure home for someone, y'know, a home, put down roots, have a family, security etc and take our chances that we might get a bad tennant. Life's like that, take the rough with the smooth, y'know, reality. Having read some of the comments BTL, I'd guess we'd be lumped in with all the other "greedy f**kers" etc, even though we thought we were doing it for a good reason, ie affordable, security for the tennant, that style of kidney. And who knows, maybe, just maybe, a pension of some sorts at the end.
I don't think we'll bother, now.
25 October 2011 11:13AM
I'd agree with this list. I'd add if you're risk averse, max out your cash ISA (if you can get a decent rate) before looking at BTL. Also don't forget that if you have a mortgage, rental income can also be invested for a better return than the interest on the mortgage. This will help pay down the mortgage faster. Then when you retire, you could have one or two paid for houses to supplement your pension.
25 October 2011 11:27AM
OMG Turmbull200 in ramping shocker, and pointing out the obvious broken back of the market.
1. Expectation of a relatively safe investment, (relative....yes its all relative isnt it. the value of your investment can go down as well as down)
2. Expectation of good rent growth as the population continues to surge (bleeding families dry is not a good thing, nor is mass immigration, but both dont matter when your sat off in 'Turnbull-Towers'
3. Expectation that prices won't collapse thanks to state intervention (this has been a criminal, to 'protect us all' debtors and halfwits have been bailed out to the cost of the prident)
4. Expectation that it's better than your cash being destroyed by inflation (for inflation see theft)
5. Expectation that you're in control and won't get shafted like you do with pensions (that your in control of a part of other peoples lives... ooooh the power, lucky you)
6. Expectation that tenants will essentially pay for your investment rather than do so yourself (yeah bleed em; dry, your a lovely person, show business not show friends and all that, f*ck everyone else not lucky enough/old enough to buy 5-10 years ago)
7. Expectation that your children will inherit your pension investment, not some anonymous annuity provider when you die. (lets hope you never end up on a life support machine, if your kids have picked up your generous and socially morality traits they have probably pre signed a DNR order as soon as they can manage joined up writing)
I can buy right now, i'm lucky, i dont really care what happenbs to house prices, all i want to see is the greed and avarice wiped out, and along with it all the horribly selfish commentors on cif.
25 October 2011 11:32AM
...see i like Hamptoncourt, talks sense (apart from calling people naive ;-))
Hampton falls into (self proffessed) right place at the right time 2nd property owner. I'd go as far as to say Hampton is sympathetic to the current housing crisis, i wish some of the rampers would be as decent.
25 October 2011 12:01PM
@willb42
So other than on a moral level, you don't actually disagree with all my points.
25 October 2011 12:19PM
Hampton
It's not even about being risk averse. Judging by the average yields of about 5% (before voids and maitenance costs etc etc). There are plenty of better options, such as stock market, if you don't mind a bit of risk.
Plus, your capital is a lot more liquid and you don't have to become an on-call 24 hour maitenance man. ,
25 October 2011 12:58PM
Will, I like you too (although you do rant a bit) ;)
Swampmongrel, there are many places to invest, each with risk. Fumo was comparing BTL and cash ISAs. My view is top up on a cash ISA first, before even considering BTL.
BTL can work on a number of levels (income growth and captial growth over the long term), but as you say there are other ways to invest and BTL is not as attractive as it was.
Don't be swayed by 5% gross yield on BTL as this varies massively. Also consider the effects of leverage. If someone puts £50k in a £200k BTL (minium % equity needed for a BTL mortgage these days) and gets 6% gross yield (ie 12k per year, which will be going up each year don't forget) you need to measure that against the 50k invested. That's 24% p.a. gross yield on the initial investment. Take off mortgage payments (you can get fixes for less than 5%), voids, etc (maintenance can usually be offset against tax ) and that could still be a reasonable return. Of course none of this is guaranteed, but nothing is. Best to have a diversified portfolio.