How does Buy to Let END!

[Boon]

Seems a lot of writing to just say that interest rate rises (and taxation changes) have made it a relatively poor investment. That is how the land lies now, in the past it would have made sense.

The real lifting was done by the capital gain in the asset, and even then I would wager much of the gain was condensed into a short period of time. A lot of areas around there were shit before the Olympics and got gentrified.

Also doesn't mention counterparty risk in tenancy, given the type of people he is letting to if he hasn't come across a costly problem in all these years then that is extremely lucky. 

Also seems to be some creative stretching to justify things - ie why take calls about leaky taps if property is fully managed?

Logic seems to suggest sell, but either seems emotional attachment or unwillingness to test the market. Even at £400k, £100k deposit and 6% mortgage IO that is £1,500 a month interest.

The ex-LA housing category from what I see looks to be the hardest to sell in London and many I think just won't go. Many of them look like they won't be standing in 50 years time. 

[Bobthebuilder]

Saw this one today. They are stating a rental yield of 4.7%, that's £700 per month, the mortgage calculator at the bottom of the page states £1040 per month mortgage. Complete rubbish however you look at it, can get the same return in a savings account.

Where do I sign up?

https://www.rightmove.co.uk/properties/129874478#/?channel=RES_BUY

I have a mate in the same town who rents a 2 bed terrace house with a garden and garage for £650.

[Wight Flight]

A bit of cheery reading on this cold day.

https://www.property118.com/serco-contract-was-a-train-wreck/

 

[JohnnyB]

11 hours ago, Wight Flight said:

A bit of cheery reading on this cold day.

https://www.property118.com/serco-contract-was-a-train-wreck/

 

Lol

Could quote every line in that article, but will just mention the fact that this guy did literally nothing for 12 months, just sitting back expecting everyone else to work hard and funnel money at him. Not even check on the house.

And he has the nerve to complain about "public sector workers, all utility company representatives & most large Corporate companies"

not being perfect in solving issues for him. If everyone else in society was as big a parasite as he is we would all starve to death in a month.

 

[King Penda]

19 minutes ago, JohnnyB said:

Lol

Could quote every line in that article, but will just mention the fact that this guy did literally nothing for 12 months, just sitting back expecting everyone else to work hard and funnel money at him. Not even check on the house.

And he has the nerve to complain about "public sector workers, all utility company representatives & most large Corporate companies"

not being perfect in solving issues for him. If everyone else in society was as big a parasite as he is we would all starve to death in a month.

 

I’d even be worried if I owned a house outright and was letting it out at the moment they have shown they can change the rules at a whim during covid 

[wherebee]

5 hours ago, King Penda said:

I’d even be worried if I owned a house outright and was letting it out at the moment they have shown they can change the rules at a whim during covid 

I explained to a friend of mine about 3 months ago what the US government had done during the pandemic to make evicting a tenant for non payment of rent impossible, and how it had ruined thousands of small landlords.

He's now selling his rental property in Melbourne (his wifes place from before they were married).  You should have seen the disbelief when I explained it to him over a beer.  He clearly saw the Labor gvt in Melbourne as a threat.

[spygirl]

8 hours ago, King Penda said:

I’d even be worried if I owned a house outright and was letting it out at the moment they have shown they can change the rules at a whim during covid 

 

3 hours ago, wherebee said:

I explained to a friend of mine about 3 months ago what the US government had done during the pandemic to make evicting a tenant for non payment of rent impossible, and how it had ruined thousands of small landlords.

He's now selling his rental property in Melbourne (his wifes place from before they were married).  You should have seen the disbelief when I explained it to him over a beer.  He clearly saw the Labor gvt in Melbourne as a threat.

Fat Fergus -  1 vote

2000 tenants - 2000 votes.

 

[GTM]

Are things turning in the rental market? I've not had much luck this year, even being outbid for some rentals after offering the asking rent. 

One place on the edge of my search area having started at £2000pcm a month or so ago fell to £1800 a week ago and has just dropped to £1600 today.

[Wight Flight]

To quote an email from my landlord today ...

Quote

After the B of E screwing us all again it's great to have some good news!

I don't know who us is, but I don't want to tell him it isn't me.

[reformed nice guy]

5 minutes ago, Wight Flight said:

To quote an email from my landlord today ...

I don't know who us is, but I don't want to tell him it isn't me.

Was the good news a rent increase?

[Wight Flight]

9 minutes ago, reformed nice guy said:

Was the good news a rent increase?

No.

He managed to get a plumber to fix my leaking tap.

[No One]

1 hour ago, Wight Flight said:

To quote an email from my landlord today ...

I don't know who us is, but I don't want to tell him it isn't me.

 

1 hour ago, reformed nice guy said:

Was the good news a rent increase?

 

1 hour ago, Wight Flight said:

No.

He managed to get a plumber to fix my leaking tap.

your...LL...talks ???

 

holly shit

[Wight Flight]

21 minutes ago, No One said:

 

 

your...LL...talks ???

 

holly shit

We have a very good relationship.

I look after his house very well, and he looks after anything I tell him needs doing.

There are some good ones out there.

[spygirl]

On 17/10/2022 at 06:39, spygirl 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/

 

Ripped this from the property thread on here, posted to TOS, ripping it back as its good example of IO BTL SVR going vertical.

'We'll lose £5,000 on just one of our buy-to-lets': Landlords hit hard by Britain's mortgage chaos

https://uk.finance.yahoo.com/news/own-five-buy-lets-lose-110000236.html

When Charlene Deane, a buy-to-let landlord near Bristol, comes to the end of one of her fixed-rate mortgages, her £930 per year profit on the property will become a £4,980 loss.

- ADVERTISEMENT -

 

Mrs Deane, 40, and her husband have built up a small portfolio of five buy-to-lets since 2009, when they started renovating local properties and letting them to families on housing benefit.

But interest rate rises mean their business model is now being turned upside down. Since the start of this year, the average rate on a two-year fixed-rate buy-to-let mortgage has more than doubled from 2.94pc to 6.34pc, according to Moneyfacts, a data company.

Rates have climbed so high that Mrs Deane’s property will no longer be able to meet lenders’ affordability stress tests – which means in turn that she will be moved on to an even higher rate.

Her existing mortgage rate on the property is 3.76pc. But when the fixed rate expires in June, she will be moved to a standard variable rate. This is currently 7.85pc. This means that Mrs Deane’s mortgage payments will jump by 106pc from £6,914 per year to £14,299.

Currently, Mrs Deane makes a post-tax profit of £931 per year on the property. After her fixed-rate mortgage expires, she will be losing £4,977 per year. The blow has been amplified by the phasing out of tax relief on buy-to-let mortgages since 2017.

She said: “This affects our ability to pay our own mortgage and bills, and therefore is not sustainable. Sadly, I am now looking at the possibility of leaving the private rental sector altogether."

Mrs Deane will be unable to remortgage the property because she will not be able to meet lenders’ stress test requirements.

 

If .... she remains in the lenders rent/income range then she'll get to stay at almost 8%.

If she  fails then shell have to sell.

Again. BTL are commercial mortgages. If the bank does not like the risk or old schol tie then theyll call the loan in. Instantly.

There is no come come back or regulation.

This is why SME keep bank loans low - they dotn want to left high n dry when the bank gets cold feet.

The reason why IO BTL loans were so inanely  low was because theyd never done this lending before, so have no failure rates, so stupidly put the risk at the same as resi mortgages.

I dont know but Id guess 80%+ of IO BTL loans were originally written at sub 4%

Another poster cutnpaste some comments -

"EI

Ed Isacke
14 MIN AGO
My heart bleeds for the landlords. But did they not know interest rates can go up?

DH

Down Hill
15 MIN AGO
There is no story here. Landlords who assumed success on a business model of endless ultra low interest rates deserve little sympathy. And I'm in favour of responsible private b2l landlords

PJ

Peter Joy
18 MIN AGO
'Rates have climbed so high that Mrs Deane’s property will no longer be able to meet lenders’ affordability stress tests – which means in turn that she will be moved on to an even higher rate.'
Oh, that's helpful. And logical. Not. And doubtless accompanied by some helpful HSBC/ Barclays rainbow leaflets about how much and deeply said virtuous institutions 'care', too.
To those that hath, shall be given. To those that hath not, they shalt be kicked when they art down...

MO

Mark oo
26 MIN AGO
It's a business - in business you have to deal with what is thrown at you, including changes in borrowing rates. If what you're saying is you don't like being in business - then get out of it. No doubt you've been doing very nicely up til now - nothing lasts forever.

HW

Hello World
26 MIN AGO
< >
Between the above two arrows if you zoom in really close, you will see a microscopic violin and it is playing just for Charlene. 😄

RG

Ray Gainsayer
14 MIN AGO
Yeah, seen it! Is that a photo of Clifton Bridge also? Good spot to jump off! 😂"

I assume Peter Joy is a fcukwit LL.

Again, this is commercial lending. Theres no leaflets, no help, noone inthe bank gives a fuck. They want lending on their terms n hurdles. Or their money back.

There will be no consultation,. no meeting, no wiggle room.

Commercial lending dotn care whether the borrower is up or down or in between. They have a pool of loans. As soon as they turn bad they want their money back.

 

[Ash4781b]

5 hours ago, spygirl said:

Ripped this from the property thread on here, posted to TOS, ripping it back as its good example of IO BTL SVR going vertical.

'We'll lose £5,000 on just one of our buy-to-lets': Landlords hit hard by Britain's mortgage chaos

https://uk.finance.yahoo.com/news/own-five-buy-lets-lose-110000236.html

When Charlene Deane, a buy-to-let landlord near Bristol, comes to the end of one of her fixed-rate mortgages, her £930 per year profit on the property will become a £4,980 loss.

- ADVERTISEMENT -

 

Mrs Deane, 40, and her husband have built up a small portfolio of five buy-to-lets since 2009, when they started renovating local properties and letting them to families on housing benefit.

But interest rate rises mean their business model is now being turned upside down. Since the start of this year, the average rate on a two-year fixed-rate buy-to-let mortgage has more than doubled from 2.94pc to 6.34pc, according to Moneyfacts, a data company.

Rates have climbed so high that Mrs Deane’s property will no longer be able to meet lenders’ affordability stress tests – which means in turn that she will be moved on to an even higher rate.

Her existing mortgage rate on the property is 3.76pc. But when the fixed rate expires in June, she will be moved to a standard variable rate. This is currently 7.85pc. This means that Mrs Deane’s mortgage payments will jump by 106pc from £6,914 per year to £14,299.

Currently, Mrs Deane makes a post-tax profit of £931 per year on the property. After her fixed-rate mortgage expires, she will be losing £4,977 per year. The blow has been amplified by the phasing out of tax relief on buy-to-let mortgages since 2017.

She said: “This affects our ability to pay our own mortgage and bills, and therefore is not sustainable. Sadly, I am now looking at the possibility of leaving the private rental sector altogether."

Mrs Deane will be unable to remortgage the property because she will not be able to meet lenders’ stress test requirements.

 

If .... she remains in the lenders rent/income range then she'll get to stay at almost 8%.

If she  fails then shell have to sell.

Again. BTL are commercial mortgages. If the bank does not like the risk or old schol tie then theyll call the loan in. Instantly.

There is no come come back or regulation.

This is why SME keep bank loans low - they dotn want to left high n dry when the bank gets cold feet.

The reason why IO BTL loans were so inanely  low was because theyd never done this lending before, so have no failure rates, so stupidly put the risk at the same as resi mortgages.

I dont know but Id guess 80%+ of IO BTL loans were originally written at sub 4%

Another poster cutnpaste some comments -

"EI

Ed Isacke
14 MIN AGO
My heart bleeds for the landlords. But did they not know interest rates can go up?

DH

Down Hill
15 MIN AGO
There is no story here. Landlords who assumed success on a business model of endless ultra low interest rates deserve little sympathy. And I'm in favour of responsible private b2l landlords

PJ

Peter Joy
18 MIN AGO
'Rates have climbed so high that Mrs Deane’s property will no longer be able to meet lenders’ affordability stress tests – which means in turn that she will be moved on to an even higher rate.'
Oh, that's helpful. And logical. Not. And doubtless accompanied by some helpful HSBC/ Barclays rainbow leaflets about how much and deeply said virtuous institutions 'care', too.
To those that hath, shall be given. To those that hath not, they shalt be kicked when they art down...

MO

Mark oo
26 MIN AGO
It's a business - in business you have to deal with what is thrown at you, including changes in borrowing rates. If what you're saying is you don't like being in business - then get out of it. No doubt you've been doing very nicely up til now - nothing lasts forever.

HW

Hello World
26 MIN AGO
< >
Between the above two arrows if you zoom in really close, you will see a microscopic violin and it is playing just for Charlene. 😄

RG

Ray Gainsayer
14 MIN AGO
Yeah, seen it! Is that a photo of Clifton Bridge also? Good spot to jump off! 😂"

I assume Peter Joy is a fcukwit LL.

Again, this is commercial lending. Theres no leaflets, no help, noone inthe bank gives a fuck. They want lending on their terms n hurdles. Or their money back.

There will be no consultation,. no meeting, no wiggle room.

Commercial lending dotn care whether the borrower is up or down or in between. They have a pool of loans. As soon as they turn bad they want their money back.

 

Needs to get some financial advice asap. Could easily end up bankrupt from the posted details.

[Bear Hug]

1 hour ago, Ash4781b said:

Needs to get some financial advice asap. Could easily end up bankrupt from the posted details.

£930pa  profit 'before' wasn't great either. Guess they were hoping for those capital gains. 

[AWW]

2 hours ago, Ash4781b said:

Needs to get some financial advice asap. Could easily end up bankrupt from the posted details.

I imagine tens of thousands of BTL will end up going bankrupt over the next couple of years. The vast majority are on IO mortgages which are going to be twice as expensive on an asset valued at 30% less, optimistically.

[spygirl]

3 minutes ago, AWW said:

I imagine tens of thousands of BTL will end up going bankrupt over the next couple of years. The vast majority are on IO mortgages which are going to be twice as expensive on an asset valued at 30% less, optimistically.

All that, and the major bollocks - Banks can call in loan when they want.

First sniff of HP falls or missed  rent - repo letter goes out.

Try selling a house in a v thin market. Cant.

[Option5]

Another issue for BTL landlords is that they tend to do the minimum maintenance and decoration. This makes them even less attractive to prospective purchasers unless the price is low.

[onlyme]

13 minutes ago, Option5 said:

Another issue for BTL landlords is that they tend to do the minimum maintenance and decoration. This makes them even less attractive to prospective purchasers unless the price is low.

Doubly so when they've crowded out the whole market in areas and turned them into less than desirable purchases, you might be able to fix up the house and garden you buy to save some money but that won't change your neighbours' places  either side or along the street.

[Option5]

I wonder how Fat Fungus is getting on?

[Ash4781b]

12 hours ago, AWW said:

I imagine tens of thousands of BTL will end up going bankrupt over the next couple of years. The vast majority are on IO mortgages which are going to be twice as expensive on an asset valued at 30% less, optimistically.

Well the articles at the moment suggest raise the rents. But that’s an early step as effectively I see that as BTL is now more risky. Now getting articles about business models not working and head scratching and staring into the abyss and blaming this and that. I do think gov will intervene. If run some of the numbers like in that article some BTL are hurtling towards bankruptcy. They sort of gets what happening but no idea how to fix it. Properly only goes up…

[Ash4781b]

12 hours ago, Option5 said:

Another issue for BTL landlords is that they tend to do the minimum maintenance and decoration. This makes them even less attractive to prospective purchasers unless the price is low.

They unlikely to sell to other interest only BTL due to finance market conditions. Have to exit at first time buyer prices.

[AWW]

30 minutes ago, Ash4781b said:

business models not working

Always makes me laugh when I read this. They think they have business acumen! Scratching a yield of 2.5% before costs when IRs could only go up  was a fairly big clue that the "model" was completely unsustainable.

[Wight Flight]

Good luck with this...

https://www.property118.com/rents-to-rocket-by-20-as-landlords-pay-higher-mortgage-costs/