How does Buy to Let END!

[spygirl]

https://www.socialhousing.co.uk/news/news/heylo-agnostic-about-debt-or-equity-as-it-targets-20000-homes-71481

[AWW]

25 minutes ago, CVG said:

Turn any freehold property into part buy -part rent with Hose Rhodes Dickson Estates Agents and 'Your Home'. You simply need 20% cash deposit on the full purchase price, there's no need for a mortgage and you can buy more or move at any time.

*Your Home eligibility criteria: 
-Good credit history 
-Income to support the unpurchased share 

Anyone with 20% of the full purchase price as a deposit, good credit history, and income sufficient to cover the unpurchased share, would simply get a mortgage and buy the whole house, no?  I must be missing something here, because that sounds bonkers.

[Wight Flight]

15 minutes ago, spygirl said:

Scam

https://yourhome.org.uk/

WTF is a deposite?

And Hose Rhodes was a very respected agency. Until...

https://www.islandecho.co.uk/sold-hose-rhodes-dickson-acquired-by-major-mainland-property-services-group/

[CVG]

11 minutes ago, AWW said:

Anyone with 20% of the full purchase price as a deposit, good credit history, and income sufficient to cover the unpurchased share, would simply get a mortgage and buy the whole house, no?  I must be missing something here, because that sounds bonkers.

And, of course, you are responsible for the full maintenance costs.

[JohnnyB]

1 hour ago, spygirl said:

Scam

https://yourhome.org.uk/

Thread crosser

Also nice chart

[spygirl]

25 minutes ago, JohnnyB said:

Thread crosser

Also nice chart

 

[Andersen]

On 29/09/2022 at 01:08, sarahbell said:

Spotted some locally looking like they'd cost too much to improve the EPC of.

LL's were talking about this several months ago, responses ranged from "sell now" - "upgrading to new EPC make it unprofitable" - "If I upgrade now I can't apply for the upcoming grants" - "do nothing - expect another last minute climb down and the proposed changes will be quietly forgotten like so many others"

TLDRL More proof that Uk.gov couldn't organise a party in a brewery (they had to sack the PM after their recent attempt!)

[Ash4781b]

18 hours ago, Wight Flight said:

I've come up with a new simple financial rule for the BTL brigade.

they were renting at 4% yield, and borrowing at 2%.

They still get 4% yield, but will be borrowing at 6%.

Therefore whatever their monthly profit used to be will now be their monthly loss.

Do you think I should post this hand ready reckoner on property118?

Just reading an article suggests 90% of BTL mortgage are interest only. No idea if that’s a fact. Generally seems to suggest that landlords will attempt to raise rents to cover the mortgage cost increases. Or the mortgage market rates come down as interest only BTL is unviable at these rates. Oh we’ll long live interest only BTL. You had a good run!

[Wight Flight]

47 minutes ago, Ash4781b said:

Just reading an article suggests 90% of BTL mortgage are interest only. No idea if that’s a fact. Generally seems to suggest that landlords will attempt to raise rents to cover the mortgage cost increases. Or the mortgage market rates come down as interest only BTL is unviable at these rates. Oh we’ll long live interest only BTL. You had a good run!

I am surprised it is that low. The whole point is to borrow and leverage to the max.

The last thing you want to be doing is paying down the debt.

[Wight Flight]

As predicted, the HMO system has finally made it here.

Just get this super friendly landlord trying to create a wonderful home for three couples.

Or for the more cynical trying to trouser £1850 for a £1k house.

https://www.onthemarket.com/details/12425210/

 

[spygirl]

11 hours ago, Wight Flight said:

As predicted, the HMO system has finally made it here.

Just get this super friendly landlord trying to create a wonderful home for three couples.

Or for the more cynical trying to trouser £1850 for a £1k house.

https://www.onthemarket.com/details/12425210/

 

More shared house than HMO, which needs 4-5 bedrooms.

Rent looks too high for LHA/singletons/DSS..

And too high for a group of working sharers i.e. bar eatery staff .. not that I have any grasp on IoW rentals.

 

 

[Wight Flight]

6 minutes ago, spygirl said:

More shared house than HMO, which needs 4-5 bedrooms.

Rent looks too high for LHA/singletons/DSS..

And too high for a group of working sharers i.e. bar eatery staff .. not that I have any grasp on IoW rentals.

 

 

If the landlords pick the tenants then in my book it is an HMO. House sharers pick their own housemates.

Don't like the idea of the third bedroom being shorter term.

And people are homeless. They will pay whatever they possibly afford.

[spygirl]

https://www.telegraph.co.uk/property/buy-to-let/buy-to-let-landlords-face-ruin-mortgage-rates-rocket/

Buy-to-let landlords face ruin as mortgage rates rocket

Decisive action from new Chancellor may not be enough to save property investors

ByMelissa Lawford and Alexa Phillips16 October 2022 • 6:00am

Landlords will be forced to sell up or inflict huge rent rises on their tenants as soaring mortgage rates risk destroying the buy-to-let model. 

Jeremy Hunt, the new Chancellor, will unveil a package of economic policies later this month, but regardless of his interventions, landlords will face significantly higher interest rates when their current loans expire, experts have warned.

Tenants will be unable to afford higher rents because of the cost-of-living crisis and growing tax burden. Analysts have warned that Britain is on the cusp of a “buy-to-let explosion”. 

If landlords who come to the end of a fixed-rate deal in 2023 or 2024 have to pay mortgage rates that are four percentage points higher than currently, more than half will be unable to remortgage unless they raise rents, according to Moody’s, a credit rating agency. 

In this ­scenario, these landlords would have to raise rents by 27pc in order to be able to refinance, it warned. Nearly two thirds of all fixed-rate buy-to-let mortgages will expire by the end of 2024, according to Moody’s, which analysed a sample of 52,000 loans.

Andrew Goodwin of Oxford Economics, an analyst, said landlords might be unable to raise rents enough because their tenants would be unable to pay.

He said: “Renters are coping with severe falls in real wages and the economy is contracting. It will be really tough for landlords; they are getting squeezed from both sides. The whole market has become accustomed to low interest rates. The viability of buy-to-let is based on that.”

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As well as rising costs, renters must grapple with a growing tax burden. Mr Hunt warned on Friday that “some taxes will have to go up”.

Even if mortgage rate rises are slowed or halted by Mr Hunt’s actions, landlords will still face much higher costs than before as rates rise globally. 

Paul Cheshire, a former government adviser and emeritus professor at the London School of Economics, said: “We still have external pressure on interest rates.” 

Lenders judge affordability for buy-to-let mortgages by comparing gross rental incomes with interest payments via a measure called the interest coverage ratio (ICR). If an investor’s mortgage payments rise, they will have to raise their rent to maintain their ICR. 

Banks require a minimum ICR of 125pc for ­limited companies and basic-rate taxpayers, and 145pc for ­higher-rate taxpayers. A four percentage point increase in mortgage rates by the end of 2023 would push 30pc of properties with expiring fixed-rate deals below their minimum ICR requirement. 

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To be able to remortgage, these landlords would need to raise rents by 12pc. If the four percentage point increase were maintained until the end of 2024, the share of properties failing the minimum ICR requirement would surge to 54pc. These landlords would need to raise rents by more than a quarter to meet their lender’s affordability criteria. 

Jamie Finch, 64, is a landlord with 10 properties in London. All are on ­variable-rate mortgages at around 3.25pc. Mr Finch calculated that if this rate climbed to 5.5pc he would be paying an extra £100,000 in interest. This is less than he earns from the business.

“I would go bankrupt or I would have to sell,” he said. 

If large numbers of landlords sell up, house prices could fall much further than the 10pc to 15pc that Oxford Economics has currently forecast. Landlords with fixed-rate deals that expire over the next two years are paying rates of around 3.4pc. 

According to Moneyfacts, a data company, the average quoted rates for two-year and five-year fixes are now 6.84pc and 6.78pc. These rates are likely to climb further, although perhaps more slowly if Mr Hunt is able to calm the markets.

Chris Norris of the National Residential Landlords Association, a trade body, said: “Costs are going up at a faster rate than they have in living memory. Landlords’ margins aren’t high enough to absorb the increases that we expect in the next couple of years.” 

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Government policy is a further blow. The last time rates were this high, landlords were shielded by tax relief on buy-to-let mortgages, Mr Norris said. Since 2020, this support has been removed.

Gertie Owen, 63, has 45 tenants in houseshares in London and Newcastle. For the first time she increased the rent for sitting tenants by 5.5pc this year. If she takes on new tenants, she will raise the rent by another 10pc, she said. Three of her properties are on fixed-rate deals that are coming to an end. She has been paying 3.4pc but expects to remortgage at 7pc.

Her tenants pay rent that includes bills, which means she also has to shoulder soaring utility costs. The blow has been amplified because Ms Owen can no longer offset all of her interest payments against her tax bill.

Advertisement

Since 2020, the majority of landlords taking out mortgages have done so using a limited company, which means they can still offset their interest payments against their tax bill.

But in 2018 and 2019 the majority were buying as individuals – and it is this group that will be coming to the end of their five-year fixed-rate deals in 2023 and 2024.

[Wight Flight]

1 hour ago, spygirl said:

https://www.telegraph.co.uk/property/buy-to-let/buy-to-let-landlords-face-ruin-mortgage-rates-rocket/

Buy-to-let landlords face ruin as mortgage rates rocket

Decisive action from new Chancellor may not be enough to save property investors

ByMelissa Lawford and Alexa Phillips16 October 2022 • 6:00am

Landlords will be forced to sell up or inflict huge rent rises on their tenants as soaring mortgage rates risk destroying the buy-to-let model. 

Jeremy Hunt, the new Chancellor, will unveil a package of economic policies later this month, but regardless of his interventions, landlords will face significantly higher interest rates when their current loans expire, experts have warned.

Tenants will be unable to afford higher rents because of the cost-of-living crisis and growing tax burden. Analysts have warned that Britain is on the cusp of a “buy-to-let explosion”. 

If landlords who come to the end of a fixed-rate deal in 2023 or 2024 have to pay mortgage rates that are four percentage points higher than currently, more than half will be unable to remortgage unless they raise rents, according to Moody’s, a credit rating agency. 

In this ­scenario, these landlords would have to raise rents by 27pc in order to be able to refinance, it warned. Nearly two thirds of all fixed-rate buy-to-let mortgages will expire by the end of 2024, according to Moody’s, which analysed a sample of 52,000 loans.

Andrew Goodwin of Oxford Economics, an analyst, said landlords might be unable to raise rents enough because their tenants would be unable to pay.

He said: “Renters are coping with severe falls in real wages and the economy is contracting. It will be really tough for landlords; they are getting squeezed from both sides. The whole market has become accustomed to low interest rates. The viability of buy-to-let is based on that.”

Advertisement

As well as rising costs, renters must grapple with a growing tax burden. Mr Hunt warned on Friday that “some taxes will have to go up”.

Even if mortgage rate rises are slowed or halted by Mr Hunt’s actions, landlords will still face much higher costs than before as rates rise globally. 

Paul Cheshire, a former government adviser and emeritus professor at the London School of Economics, said: “We still have external pressure on interest rates.” 

Lenders judge affordability for buy-to-let mortgages by comparing gross rental incomes with interest payments via a measure called the interest coverage ratio (ICR). If an investor’s mortgage payments rise, they will have to raise their rent to maintain their ICR. 

Banks require a minimum ICR of 125pc for ­limited companies and basic-rate taxpayers, and 145pc for ­higher-rate taxpayers. A four percentage point increase in mortgage rates by the end of 2023 would push 30pc of properties with expiring fixed-rate deals below their minimum ICR requirement. 

Advertisement

To be able to remortgage, these landlords would need to raise rents by 12pc. If the four percentage point increase were maintained until the end of 2024, the share of properties failing the minimum ICR requirement would surge to 54pc. These landlords would need to raise rents by more than a quarter to meet their lender’s affordability criteria. 

Jamie Finch, 64, is a landlord with 10 properties in London. All are on ­variable-rate mortgages at around 3.25pc. Mr Finch calculated that if this rate climbed to 5.5pc he would be paying an extra £100,000 in interest. This is less than he earns from the business.

“I would go bankrupt or I would have to sell,” he said. 

If large numbers of landlords sell up, house prices could fall much further than the 10pc to 15pc that Oxford Economics has currently forecast. Landlords with fixed-rate deals that expire over the next two years are paying rates of around 3.4pc. 

According to Moneyfacts, a data company, the average quoted rates for two-year and five-year fixes are now 6.84pc and 6.78pc. These rates are likely to climb further, although perhaps more slowly if Mr Hunt is able to calm the markets.

Chris Norris of the National Residential Landlords Association, a trade body, said: “Costs are going up at a faster rate than they have in living memory. Landlords’ margins aren’t high enough to absorb the increases that we expect in the next couple of years.” 

Advertisement

Government policy is a further blow. The last time rates were this high, landlords were shielded by tax relief on buy-to-let mortgages, Mr Norris said. Since 2020, this support has been removed.

Gertie Owen, 63, has 45 tenants in houseshares in London and Newcastle. For the first time she increased the rent for sitting tenants by 5.5pc this year. If she takes on new tenants, she will raise the rent by another 10pc, she said. Three of her properties are on fixed-rate deals that are coming to an end. She has been paying 3.4pc but expects to remortgage at 7pc.

Her tenants pay rent that includes bills, which means she also has to shoulder soaring utility costs. The blow has been amplified because Ms Owen can no longer offset all of her interest payments against her tax bill.

Advertisement

Since 2020, the majority of landlords taking out mortgages have done so using a limited company, which means they can still offset their interest payments against their tax bill.

But in 2018 and 2019 the majority were buying as individuals – and it is this group that will be coming to the end of their five-year fixed-rate deals in 2023 and 2024.

Oh well. They can always sell the house to the current tenants.

Who will be able to pay about half of what the landlord paid for it by leveraging up the tenant's income to outbid the tenant for the property.

Shame.

 

 

[Castlevania]

Jamie Finch, 64, is a landlord with 10 properties in London. All are on ­variable-rate mortgages at around 3.25pc. Mr Finch calculated that if this rate climbed to 5.5pc he would be paying an extra £100,000 in interest. This is less than he earns from the business.

“I would go bankrupt or I would have to sell,” he said.

Great “business”

[Boon]

The fucking cheek of some of these people.
The London dude would most likely be sitting on a bit of capital gains unless he bought 10 new builds in 2017.

The thought of going bankrupt of having to sell is the same as people saying  heat or eat, of course you are going to sell if things got bad.

Just pretending that shit is really bad and pleading for a bailout, just in not so many words.

 

[spygirl]

7 hours ago, Wight Flight said:

Oh well. They can always sell the house to the current tenants.

Who will be able to pay about half of what the landlord paid for it by leveraging up the tenant's income to outbid the tenant for the property.

Shame.

 

 

A 1/4

Remember the LL cannot afford a repayment plan.

The tenant has to find bot the mortgage and the repayment.

 

[spygirl]

6 hours ago, Castlevania said:

 

 

Its thats magic 4% and insane leverage.

Under 4% .... tootles on, throwing off pennies on a 10 x ?300k-500k IO loans - ~3m->5m of debt.

Go slightly above 4% - and IO BTL is going to end up around 10% rather than 3% - and poof! bankruptcy.

LL and the banks nee to go under/

 

[Guest]

I do wonder what banks' BTL lending departments are thinking when they see these articles in the press.

"Should... should we really have lent £XXbn interest only to these potless amateurs hoping that ZIRP would last forever or was that a huge mistake?"

Edited October 17, 2022 by Guest

[spygirl]

51 minutes ago, Darude said:

I do wonder what banks' BTL lending departments are thinking when they see these articles in the press.

"Should... should we really have lent £XXbn interest only to these potless amateurs hoping that ZIRP would last forever or was that a huge mistake?"

There literally only a handful with significant exposure.

Nationwide, Cov BS, Leeds BS.

 

[HousePriceMania]

"How does Buy to Let END!"

 

With Jeremy Hunt buying all BTLs for 10x more than they are worth, including his 7.

 

[sarahbell]

On 16/10/2022 at 22:31, Wight Flight said:

Oh well. They can always sell the house to the current tenants.

Who will be able to pay about half of what the landlord paid for it by leveraging up the tenant's income to outbid the tenant for the property.

Shame.

 

 

HMO. 
Which one do you sell to?

[Long time lurking]

 

[spygirl]

I saw this listed today - 

https://www.onthemarket.com/details/12453385/?utm_source=home_co_uk&utm_medium=cpc&utm_campaign=home_feed

Attention All Investors - High-Quality, High Yielding, Established HMO Available

Fantastic opportunity to purchase a beautifully presented, well-established 5-bedroom HMO in Scarborough. The property has had extensive upgrades and refurbishments to a high standard throughout. The HMO run over two floors comprising of 4 bathrooms in total (including 2 en-suite) with a large communal kitchen/diner and living space, all of which are immaculately finished. In addition, the property benefits from easy access to on street parking.

..

The property is fully occupied with quality tenants in-situ and it has remained in very good condition since works commenced in 2020. In total, the Gross Income is £40,380 per annum and the Gross Yield is 10.76%.

HMO .. on top of commercial premises ... how much more lenders No No are you going to go for?

£375k.

The gross rent is jus the price divided by rental income.

Assuming you could borrow to buy this - and I doubt you cold then the rental income will be wiped out by the mortgage cost.

I did wonder if they are still putting around the crap yield calculators.

Like this one-  

https://www.axa.co.uk/landlord-insurance/how-to-calculate-rental-yield/

Yep.

What is a good rental yield?

There isn’t a one-size-fits-all approach when it comes to defining a ‘good’ rental yield. The ideal percentage will change depending on the location and whether it’s a residential property or student accommodation.  As a general rule, a gross rental yield between 5 and 6 percent would be considered ‘good’ and anything above 7 percent would be ‘very good’.

Are you insane????

A gross yield of 7% means all the rental income is going on mortgage payments.

You need a *NET* yield of 5%-10% to cover the risk, so a gross yield well over 10%-15%.

IO BTL are all insane - the LLs, the banks.

 

 

 

Banks are discovering that holding cash can be lucrative again

Rising interest rates are reviving dim memories of what it means to live without free money

https://www.ft.com/content/7783b6e2-be48-4f63-af7f-248427b41395

 

 

 

 

[JoeDavola]

1 hour ago, spygirl said:

What is a good rental yield?

There isn’t a one-size-fits-all approach when it comes to defining a ‘good’ rental yield. The ideal percentage will change depending on the location and whether it’s a residential property or student accommodation.  As a general rule, a gross rental yield between 5 and 6 percent would be considered ‘good’ and anything above 7 percent would be ‘very good’.

Are you insane????

A gross yield of 7% means all the rental income is going on mortgage payments.

You need a *NET* yield of 5%-10% to cover the risk, so a gross yield well over 10%-15%.

IO BTL are all insane - the LLs, the banks.

Yeah there's a couple of slum apartments for sale recently in the university area here - a terraced house converted into a couple of flats on sale for £290K and they're claiming 9.3% yield:

https://www.propertypal.com/unit-1-2-85-university-avenue-belfast/779554

If it was that good, i.e. an easy 9.3% return after all costs, they wouldn't be selling it IMO.

I think part of the elephant in the room here especially for these slums is not only the soaring cost of borrowing but the soaring cost of maintenance once the students/immigrants who have been renting it trash the place every year.