How does Buy to Let END!

[JoeDavola]

3 minutes ago, Wight Flight said:

The landlords are selling because the numbers no longer stack up, so why would another landlord buy?

Property is such a big part of the British psyche and a signifier of 'status' that I do wonder if there will always be people with a few hundred extra K lying about who can't think of anything better to do with it than buy another house so they can brag about their portfolio at dinner parties.

This is why I say there needs to be a culture change where all of a sudden owning extra houses is seen as a liablity i.e. a money pit.

The other possibility if 500K landlords are selling up is perhaps some big company a la Blackrock in the US starting to hoover them up? But not at today's prices of course.

[sancho panza]

3 hours ago, spygirl said:

OAPs die.

You can piss around with the market timing but you cant hold a housing postion for long.

bear in mind that ~30%-50% of houeholds udner 40 dependign on bennies fro the blk of their income.

Theres a huge demographis timebomb heading forthe pythohs arse. Its goign to dump.

 

 

Some great psots there spy.I agree.Think there's a misconception that prices aren't set at the margins byt FTBers/BTLers buying nd the 3 D's selling.

Whilst hsoe market particpant may cosntitue some 10% of purchases,they have a hguely disproportionate influecne on pricing.

Equity swappers swapping equity in mid tier deals can set the prices for theri trades but as soon as someone enters the market who is either new moeny or odl moeny exiting then a different ball game begings.

AS I've said before ref our fmily frined,likely 20 odd hosues getting repoed and coming onto the market in the next 4 months unles they decide to go bankyrupt before they're forecd to.

There'll be a load more of these.

 

PS have you any good sources for numbers of total mortgages.Duckducked but some dta is very hard to find

3 hours ago, Wight Flight said:

We hear 500k landlords are due to sell up.

I do wonder who is going to buy these houses?

The landlords are selling because the numbers no longer stack up, so why would another landlord buy?

Tenants are currently paying a lot less in rent than they would for a mortgage on their home - so probably can't afford to buy, but also why would they when they currently have a good deal and are looking at buying in to a falling market?

I think we have a proper stalemate at current prices.

In a nutsehll there WF.

At current prices/yields,BTL is dead in the water.

FTBer demand has more life but if we get prices moving itno a sutained downtrend that wil drop off

3 hours ago, JoeDavola said:

Property is such a big part of the British psyche and a signifier of 'status' that I do wonder if there will always be people with a few hundred extra K lying about who can't think of anything better to do with it than buy another house so they can brag about their portfolio at dinner parties.

This is why I say there needs to be a culture change where all of a sudden owning extra houses is seen as a liablity i.e. a money pit.

The other possibility if 500K landlords are selling up is perhaps some big company a la Blackrock in the US starting to hoover them up? But not at today's prices of course.

Think you're wrong there Joe.Lot of boomers I know are starting to look atntheir outgoings and flap a bit.

S above ref our family frined.70 years old and dropping 20 into the amrekt in a firesale.Won't be the only one.

Blackrock can do maths on yield and cost of carry,they won't be propping anything up without 40% off current prices or a huge fat subsidy from govt which wouldnt wash poltically

[JoeDavola]

57 minutes ago, sancho panza said:

Think you're wrong there Joe.Lot of boomers I know are starting to look atntheir outgoings and flap a bit.

S above ref our family frined.70 years old and dropping 20 into the amrekt in a firesale.Won't be the only one.

Blackrock can do maths on yield and cost of carry,they won't be propping anything up without 40% off current prices or a huge fat subsidy from govt which wouldnt wash poltically

I really do hope I am wrong.

Logically the inflating cost of maintaining a property both in terms of labor and materials, and the inflating cost of maintaining the loan required to buy a property, should change people's opinion over time. I remember Frank saying that at some point in the early 90's after that crash houses were viewed very much as a liablity, perhaps we will return to that way of looking at things.

I still think ultimately we'll just have years of denial, years of the market being in 'limbo' with a shrinking number of people willing or able to take part in it. Asking prices haven't dropped at all in NI approx 1 year after the IR rises, and I'm struggling to see what might be the catalyst that would drive people actually dropping asking prices by a meaningful amount - the nearest I can think of is people who want/need quick sales, a divorce, a repo etc...

[sancho panza]

2 hours ago, JoeDavola said:

I really do hope I am wrong.

Logically the inflating cost of maintaining a property both in terms of labor and materials, and the inflating cost of maintaining the loan required to buy a property, should change people's opinion over time. I remember Frank saying that at some point in the early 90's after that crash houses were viewed very much as a liablity, perhaps we will return to that way of looking at things.

I still think ultimately we'll just have years of denial, years of the market being in 'limbo' with a shrinking number of people willing or able to take part in it. Asking prices haven't dropped at all in NI approx 1 year after the IR rises, and I'm struggling to see what might be the catalyst that would drive people actually dropping asking prices by a meaningful amount - the nearest I can think of is people who want/need quick sales, a divorce, a repo etc...

I think cost of carry is a big issue going forward.

jsut roughly in Liecester keeping a 3 bed semi

£2000 council tax+£2500+ £1500 maintenance(incl roof/boiler/painting amortised over time)=£6k per annum

Say hosue value £250k then cost of carry is 2.4%

Say cost of carry moves to £7k,then hosue drops to £200k=cost of carry 3.5%

 

what really changes the mood is what happens to real wages in that scenario.I was talking to a Mum at th tots group this mornign and she was syaing her hubby was moaning about hwo there's no moeny left at the end of the month.We had a wuick chat ref inflation running at 13%(RPI) and wages moving up 5%.I pointed out that whilst the real drop in wages was circ 8%,the actul drop in disposable income would be much greater.

 

in terms of years of denail,I'm not sure we will have that luxuary.the current crisis is shaping up more and more to be a sovereign debt crisis,HPI will be the least of our worries imho

 

PS have you read the banking thread and looked at the stage 2 data for the covnetry/skipton/yorks BS's?grim.

Edited April 18, 2023 by sancho panza

[JoeDavola]

36 minutes ago, sancho panza said:

£2000 council tax+£2500+ £1500 maintenance(incl roof/boiler/painting amortised over time)=£6k per annum

What's the £2500 in that calculation?

But yes agreed - 'cost of ownership' will become an important consideration for most people.

Also means if a house is fundamentally 'old fashioned' looking (but not in a way in which is popular), like the one I'm about to link to, there might be very few people interested at such a high price given that it will always look 'old fashioned':

https://www.propertypal.com/36-fort-road-helens-bay-bangor/799289

I think a lot of new builds will suffer this fate where uber-modern design choices look very much 'of their time' and a bit naff 15 years later.

I see quite significant percentage of houses that are such money pits you wonder why anyone would bother.

36 minutes ago, sancho panza said:

PS have you read the banking thread and looked at the stage 2 data for the covnetry/skipton/yorks BS's?grim.

I shall take a look tomorrow, don't want to be losing sleep over it tonight

Edited April 18, 2023 by JoeDavola

[spygirl]

Landlords haven’t yet passed on their rising mortgage costs to tenants, but that could be about to change, research reveals.

Estate and letting agents Barrows and Forrester warn that tenants could be facing a sharp increase in their rent bills as landlords battle soaring buy-to-let mortgage costs.

The firm has analysed the average monthly cost of a two-year fixed BTL product at a rate of 2.9% on the average house price of £268,115.

https://www.property118.com/tenants-warned-that-rent-hikes-are-coming/

Well .. theyve warned us. Our own fault ...

 

Sadly, for Barrows n Fuckwit, majority of rents are set by LHA which arnt going up.

The concept that LL sent setting tge max rent escapes.

If rents go up then a lot of working tenants will leave. It's that simple.

Guns dont kill LLs. Voids do.

 

 

[dnb24]

10 minutes ago, spygirl said:

majority of rents are set by LHA

No one realises that this is the crux of rentals- LHA drives rents.

[sancho panza]

2 hours ago, JoeDavola said:

What's the £2500 in that calculation?

But yes agreed - 'cost of ownership' will become an important consideration for most people.

Also means if a house is fundamentally 'old fashioned' looking (but not in a way in which is popular), like the one I'm about to link to, there might be very few people interested at such a high price given that it will always look 'old fashioned':

https://www.propertypal.com/36-fort-road-helens-bay-bangor/799289

I think a lot of new builds will suffer this fate where uber-modern design choices look very much 'of their time' and a bit naff 15 years later.

I see quite significant percentage of houses that are such money pits you wonder why anyone would bother.

I shall take a look tomorrow, don't want to be losing sleep over it tonight

£200 pcm for heating/telephone line/alarm etc=circa £2500.

I think rising markets cover a raft of ills.Beeny always used to point that out to some of the people on her show

The problem new builds have is new build premium.LCP acadata estimate that at circa 15%,so buyers paying 15% extra to be first owener.

IN a rising market it doens't matter,new builds jsut don'tgo up as much as other hosues for resale.Where teh pain will become apparent is in the resale market.Lot of new builds are short on square footage,so ona cost for cost basis,in a down market they may well get left on the shelf.

I wouldn't touch one.I've friends in the trdes nd they all say how poorly they're made these days.

[Wight Flight]

1 hour ago, spygirl said:

Landlords haven’t yet passed on their rising mortgage costs to tenants, but that could be about to change, research reveals.

Estate and letting agents Barrows and Forrester warn that tenants could be facing a sharp increase in their rent bills as landlords battle soaring buy-to-let mortgage costs.

The firm has analysed the average monthly cost of a two-year fixed BTL product at a rate of 2.9% on the average house price of £268,115.

https://www.property118.com/tenants-warned-that-rent-hikes-are-coming/

Well .. theyve warned us. Our own fault ...

 

Sadly, for Barrows n Fuckwit, majority of rents are set by LHA which arnt going up.

The concept that LL sent setting tge max rent escapes.

If rents go up then a lot of working tenants will leave. It's that simple.

Guns dont kill LLs. Voids do.

 

 

They keep telling us it is a business. You will have good years and bad years.

this bloke gets it.

Quote

Yawn, again landlords trying to cover interest rate rises which they should have factored in to their rent when buying the property (I always factored in interest rates of 7.5%). Good luck in getting the money out of the tenant who almost certainly wont be able to afford it and is likely to default. Issue a S21 to get the tenant out, good luck in that as well as the council will tell the tenant to sit tight until the bailiff breaks down the door which will likely be 12 months later. I predict (for certainty) many landlords going under this year or forced to sell because they didnt go into BTL with their eyes open, they probably thought i was a quick buck.

 

[Wight Flight]

1 hour ago, sancho panza said:

I wouldn't touch one.I've friends in the trdes nd they all say how poorly they're made these days.

A past friend of mine builds rather a lot of homes in London.

He bought a city pad. It wasn't one of his builds.

[tank]

7 hours ago, JoeDavola said:

I really do hope I am wrong.

Logically the inflating cost of maintaining a property both in terms of labor and materials, and the inflating cost of maintaining the loan required to buy a property, should change people's opinion over time. I remember Frank saying that at some point in the early 90's after that crash houses were viewed very much as a liablity, perhaps we will return to that way of looking at things.

I still think ultimately we'll just have years of denial, years of the market being in 'limbo' with a shrinking number of people willing or able to take part in it. Asking prices haven't dropped at all in NI approx 1 year after the IR rises, and I'm struggling to see what might be the catalyst that would drive people actually dropping asking prices by a meaningful amount - the nearest I can think of is people who want/need quick sales, a divorce, a repo etc...

Unemployment is the key.

You can't have any of form of real correction without a major recession and high unemployment forcing overleveraged owner occupiers and BTL landlords to sell up.

The HPC types on here who think otherwise have been proven wrong over and over again for 20 years. The last proper recession we had was in 2008 and house prices fell just like in the early 90s. 

[Wight Flight]

14 minutes ago, tank said:

Unemployment is the key.

You can't have any of form of real correction without a major recession and high unemployment forcing overleveraged owner occupiers and BTL landlords to sell up.

The HPC types on here who think otherwise have been proven wrong over and over again for 20 years. The last proper recession we had was in 2008 and house prices fell just like in the early 90s. 

Probably true.

And that unemployment will likely be caused by rampant inflation and high interest rates leading to bugger all consumer spending.

[sancho panza]

18 minutes ago, tank said:

Unemployment is the key.

You can't have any of form of real correction without a major recession and high unemployment forcing overleveraged owner occupiers and BTL landlords to sell up.

The HPC types on here who think otherwise have been proven wrong over and over again for 20 years. The last proper recession we had was in 2008 and house prices fell just like in the early 90s. 

I thinka significant upturn in UB is inevitable fromwhere we are.It's possibly already building from what I'm hearing anecdotally and seeing in the news

We've an economy that relies on huge amoutns of stimulus to even function in the dysfunctional manner it does.NHS £230bn,welfare bill £300bn ....mainly funded up till now with teh BoE monetzing huge chunks of the fiscal deficit.

The real itnerest for me here is the nature and severity of the recession rathr than the hosuing correction.

https://www.itv.com/news/2023-04-18/uk-unemployment-rate-rises-and-vacancies-fall-as-jobs-market-falters

 

[Boon]

A classic mumsnet:

https://www.mumsnet.com/talk/property/4788039-struggling-with-rental-property-costs

Really this sort of thing needs to happen in much greater numbers for sentiment among the masses to turn. But that might be something later in the year.

[dnb24]

8 hours ago, tank said:

Unemployment is the key.

You can't have any of form of real correction without a major recession and high unemployment forcing overleveraged owner occupiers and BTL landlords to sell up.

The HPC types on here who think otherwise have been proven wrong over and over again for 20 years. The last proper recession we had was in 2008 and house prices fell just like in the early 90s. 

As the USA are very close to falling into recession now, and as we follow I think we will see that perfect storm -as you say.

[JoeDavola]

Without wishing to derail too much.... with regards to the post @Wight Flight quoted:

"Good luck in getting the money out of the tenant who almost certainly wont be able to afford it and is likely to default. Issue a S21 to get the tenant out, good luck in that as well as the council will tell the tenant to sit tight until the bailiff breaks down the door which will likely be 12 months later."

By default do they literally mean stop paying rent?

So if my landlord say puts my rent up by £200 a month and I say "I can't afford that", and pay nowt, it could take them 12 months to get their flat back?

What if I say 'I can't afford that' but keep paying the old rent amount every month?

[spygirl]

8 hours ago, Boon said:

A classic mumsnet:

https://www.mumsnet.com/talk/property/4788039-struggling-with-rental-property-costs

Really this sort of thing needs to happen in much greater numbers for sentiment among the masses to turn. But that might be something later in the year.

Theres that magic ~100/200 spread of rent over mortgage - 

 

 

I have an interest only mortgage on the property. I got it in 2007 when they were practically giving them away. It was my first house. I put down a 10% deposit and boom, I had a house.

As I was in a fixed term when I first rented it out and as it was only supposed to be temporary, I got a consent to lease for my mortgage rather than switching to a buy to let. I renew this every year.

The rent I get is £620pcm, but after letting agent fees, insurance, rent cover, etc. I get £540 to cover my mortgage. Until September last year this was around £450 each month. I put the difference aside to pay for any repairs, etc. so I’ve never really made any money on it - it just sort of looked after itself.

You know whats coming .....

My most recent letter from my mortgage lender advising me that they are increasing my interest rate again arrived this morning. My new payment will be £867. This has crept up like everyone else’s, I’m sure, but its now really starting to panic me…

And theres more .....

 

I got an email today to say the roof is leaking and it will cost £1700 to repair.

And more ....

The house has been on the market since June with no offers. I’ve reduced the price to now £7k less than what I paid for it.

 

And Id bet big money, as shes not mentioned it, that shes not [paying her fucking taxes.

At ~ 620/m shes lookign at ~200/m in tax.

Yes, I do pay tax on that. This years tax bill was not fun.

Awww I wish all landlords were as kindhearted as yourself, you seem so sweet!

No shes not. Shes a fuckign fuckwit who has control over another persons home FFS.

[spygirl]

6 minutes ago, JoeDavola said:

Without wishing to derail too much.... with regards to the post @Wight Flight quoted:

"Good luck in getting the money out of the tenant who almost certainly wont be able to afford it and is likely to default. Issue a S21 to get the tenant out, good luck in that as well as the council will tell the tenant to sit tight until the bailiff breaks down the door which will likely be 12 months later."

By default do they literally mean stop paying rent?

So if my landlord say puts my rent up by £200 a month and I say "I can't afford that", and pay nowt, it could take them 12 months to get their flat back?

What if I say 'I can't afford that' but keep paying the old rent amount every month?

Normally theyd carry on payign the exising rent and wait for the LL to serve an eviction notice, which will cost money and take 12-24 moths.

Fater that, the LL will find out the place cannot be rented at the higher rent.

 

[JoeDavola]

Just now, spygirl said:

Normally theyd carry on payign the exising rent and wait for the LL to serve an eviction notice, which will cost money and take 12-24 moths.

I'll bear that in mind if mine decides to slap some obscene increase in rent on this year, as I have a gut feeling they might.

[sancho panza]

11 hours ago, Boon said:

A classic mumsnet:

https://www.mumsnet.com/talk/property/4788039-struggling-with-rental-property-costs

Really this sort of thing needs to happen in much greater numbers for sentiment among the masses to turn. But that might be something later in the year.

The first reply I saw really speaks volumes about the mentality on there

and then from the OP(remember the tenant is  former solicitor whta were the banks doing lending clowns like 100% IO mrotgages?

[Guest]

2 hours ago, JoeDavola said:

I'll bear that in mind if mine decides to slap some obscene increase in rent on this year, as I have a gut feeling they might.

If it was me in that position (it's not, I'm renting privately in Scotland where we have rent control) I'd be looking up how to activate the rent tribunal process in preparation for a possible big hike.

[JoeDavola]

5 minutes ago, Darude said:

If it was me in that position (it's not, I'm renting privately in Scotland where we have rent control) I'd be looking up how to activate the rent tribunal process in preparation for a possible big hike.

We'll see what happens - I'm on a 3 month rolling contract so not sure if that matters.

Fact of the matter is this flat really needs major work done to the kitchen and a new bathroom at this point if they want to charge top dollar for renting it - they could put £10K into it easily to give it a facelift but the warning sign is that there's been a few times workmen have been sent out by the letting agents to measure up a job, and then the job just never gets done which says to me that the owner of the flat can't/won't pay for it.

Last one was about a year back a couple of young lads came out and measured up the radiator in the bathroom because it was so rusted and knackered it needed a new one; then just never heard from them again.

To be fair the rental market is so woeful they could probably rent this place as is, but it would take some balls given how knackered certain parts are - to be fair it's over 20 years old and basically everything except the boiler is the original one.

Edited April 19, 2023 by JoeDavola

[spygirl]

6 minutes ago, sancho panza said:

The first reply I saw really speaks volumes about the mentality on there

and then from the OP(remember the tenant is  former solicitor whta were the banks doing lending clowns like 100% IO mrotgages?

Shell start the eviction. Shell fuck it up. Itl take 24 months.

the tnant may or may not pay rent durign that period.

The tnant will deffo not be lettign peopel look aroudn the house.

So maybe 24 month of ~800/m to find - thats another 20k loss.

Then the hosue will sit their empty as she chases the market down.

Potenatial for another 50k of losses.

Shes fucked.

 

[sancho panza]

18 hours ago, JoeDavola said:

I shall take a look tomorrow, don't want to be losing sleep over it tonight

Joe,jsut some food for thought here from tut banking thread

BTL loans souring at an alarming rate,resilaons to  lesser degree.dyor natch,there's more charts on the Cov and Yorkshire BS's,same general story differnet nuances

from the skipton BS section,Stage 1 one is performing laons,stage 2=deterirorating,stage 3 deafualt,look at 2021 then look at 2022 year end

[spygirl]

R4 You n Your.

25 years sicne the first BTL mortgage ...

II turned it off as its going  to be drivel.

I wonder when the first large bank will declare it is closing all its BTL book.

I doubt any big banks are writing new business.

Itll either raise SVR to stupid - Take your mortgage and fuck off levels.

Or might even push for repagyment of the loans - too much risk blah blah

But its coming.