jamesogt Posted March 11, 2008 Posted March 11, 2008 http://www.marketoracle.co.uk/Article2728.html The UK's property boom has to large part been fed by an army of buy to let investors (many of whom are amateur landlords). This is illustrated by the estimate of 1,000,000 buy to let mortgages, up from barely 20,000 ten years ago. However for some time new buy to let investors have been increasingly banking on capital gains rather then rental incomes covering the costs, which given the most recent HBOS statistics of 2 months of consecutive price drops for Sept and Oct 07, increasingly looks less likely going forward and hence primes the buy to let market to lead the stampede for the exit, resulting in a sharp drop in UK house prices. Buy to lets typically produce yields of between 3% and 5% of their current value, and therefore now present a poor investment compared to the situation barely 4 years ago. The timing for the sharp drop is likely to coincide with Labour's change on capital gains tax which effectively cuts the tax payable on gains accumulated over the last few years to 18% from 40%. This tax change comes into force on 1st of April 2008 and thus the expectation is for an avalanche of selling amongst buy to let investors to lock in profits. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/11/cmbtl11.xml Anxiety over the state of the property market in Britain shows no signs of letting up. As the major auction houses gear up for their February sales, there are worrying signs. Savills says it has seen an increase in the number of repossessed properties - and it expects this trend to continue over the coming months. "We have seen an uplift in repossessions," says Chris Coleman-Smith of Savills. "I think we will see a steady stream of repossessions at auctions across the country this year." Allsop, Britain's largest property auctioneer, says 40 per cent of the lots in its February auction were repossessions, a significant number of which came from buy-to-let investors. http://uk.reuters.com/article/electionsNews/idUKN1927888620080221 LONDON (Reuters) - Britain's fragile housing market is underpinned by a resilient economy but credit market woes could still lead to a deeper downturn, Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors (RICS), said. Rubinsohn told the Reuters Housing Summit on Tuesday the influential industry body was sticking with its zero percent house price forecast for 2008 but that he was mindful of growing risks in light of recent falls in new buyer enquiries. "They (our models) are suggesting that the risks are on the downside of zero," he told the summit in London. However, he added that the probability of a 1990s-style UK housing crash was still about 1-in-10, in line with a previous forecast made in September. "The odds (since then) certainly have not increased partly because the economy does seem to be displaying real resilience in the face of headwinds," he said. More than eight months after the U.S subprime crisis triggered a global debt crunch, Rubinsohn said the reduced availability of credit was still the number one risk factor facing Britain's housing market. --------------------------------------------------------------------- Correct I am no expert but reading what Market Oracle, The Telegraph and Reuters have to say it does not look particularly attractive.
cbr900 Posted March 11, 2008 Posted March 11, 2008 returns on rent isn't what buy-to-let is about AT ALL , we bought a house in Eckington 7 years ago for 36000 that is now valued at 110000 . It has been empty for 12 months in all during that time . In another 15 years there will be no mortgage on it and god knows how much it will be worth . Thats not to mention the other three which are all let and cover their debt . Like I stated , you wont make money out of buy-to-let short term . For that you have to buy wisely and have the contacts needed to turn them around quickly and at a profit . Tell you what , it works for me and I just don't listen to all this crap . The only people that will be having home repossessed are the people that have been living beyond their means on cheap mortgage deals and cheap credit , well to those people I say " serves you right " . And it wil be a lesson learned about money management.
perplexed Posted March 11, 2008 Posted March 11, 2008 Buy to let is doing ok, despite the naysayers...If you buy the correct one and price accordingly, you'll do fine. Even if the prices drop, so what? Unless you're planning to sell it in the very near future, you'll do ok in the long run. We've had one for about six years. The property has been empty for a grand total of about 6 weeks in all that time. Capital gains-wise, it's gone up quite a bit in that time. Ok, so it may have dropped back a bit recently, but I'm still several grand up on the value plus the income for 6 years! So we ain't parting with it just yet! I also agree with some of the other posts that say we're talking ourselves into a slump. The papers/TV are full of it, so much so that it's almost becoming a self-fulfilling prophecy. Whatever you buy, it'll be worth a heck of a lot more in, say 5 years, than it is now. Just don't cripple yourself and totally rely on income to cover the mortgage. Leave yourself some slack. Just my opinion, but it is coupled with experience!!
mossdog Posted March 11, 2008 Posted March 11, 2008 I am wanting to buy an investment property to rent out, I have a budget of about £115-120,000. This is the first time I have done something like this and feel a little overwhelmed with the choices available! Does anyone have any advice on the best type of property/area to consider? All suggestions would be most welcome! Errr!..........Don't! The buy to let market has to be maintained by people who can pay rent in the long term,and the wealth is now migrating East at a rapid rate!as we are becoming a bolthole for people migrating West. Don't believe all this booming economy spin by this incompetant bunch of egomaniacs running the country,you are about to find out a different tale soon! We have been professional landlords in the Ecclesall Road both commercial and domestic for many years,but have decided now is the time to exit! Some less experienced newcomers to the scene may think different!
Tony Posted March 11, 2008 Posted March 11, 2008 It's very simple. You buy a property that provides a return on the investment that is adequate for your requirements. If you don't see one, don't buy. If you do see one, buy. You have to work out what your personal requirements are. It isn't rocket science and the doom mongering Daily Mail headlines have no bearing on an individual investment.
handypandy Posted March 11, 2008 Posted March 11, 2008 The doom and gloom merchants are generally the ones with ropey properties that they are having trouble letting to a more discerning market. My business is in refurbishing properties mainly for landlords and developers, the project we are just completing has just been let before the board arrived. Yes the market is a bit twitchy at the moment Lets face it, a gorilla could have made money on property during the last few years, presently it takes a bit more nous, but if the product is right it will still move. I still think its where the safe money is. Long term, how many people do you know, ever lost money on property?
Hepstall Posted March 11, 2008 Posted March 11, 2008 you could increase your gains by perhaps buying a property in need of some work.
handypandy Posted March 11, 2008 Posted March 11, 2008 you could increase your gains by perhaps buying a property in need of some work. You could but I wouldn't suggest it for a first step into the rental market. Better to get something that is half tidy already and spruce it up a bit. Although the refurbishing is how I earn my living, it is not for the amateur on a tight budget, it can reap its rewards though with the shrewder buyer.
pete_jim Posted March 12, 2008 Posted March 12, 2008 I am wanting to buy an investment property to rent out, I have a budget of about £115-120,000. This is the first time I have done something like this and feel a little overwhelmed with the choices available! Does anyone have any advice on the best type of property/area to consider? All suggestions would be most welcome! What nobody has asked is how much of the £115-£120k budget is borrowed money, what rate of return you NEED as opposed to WANT over say the next 5 years, are you prepared to tie up the money for a period in excess of say 7 years? If more than 50% of your budget is 'borrowed', don't buy. If you NEED more than you would get in a good interest bearing deposit account then think carefully about investing in buy to let. It isn't easy money or guaranteed in any shape or form. If you can't say that you won't need the capital invested for say 7 years then again I wouldn't do it. Generally I am with cbr900 on this though. We have few properties which work well for us, we bought at reasonable prices (some when the market was supposed to be on the way down), but it's got to be viewed as work. You have to look after them, keep them well maintained, chase tenants for rent, and so on. We only have four tenants but at times they occupy a significant amount of our workload. I would imagine that the bulk of repossessions at the moment are people that thought it was easy money, mortgaged themselves silly and over borrowed.
iamthemoon Posted March 12, 2008 Posted March 12, 2008 hoe about not buying and giving the growing number of people on the forum a chance to get onto the housing ladder!!
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