Warning: The Buy To Let Boom Is Over!

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  • Warning: The Buy To Let Boom Is Over!

    Lets be honest, it is isn’t it?

    Especially for a lot of full time property investors that started their businesses in the last two or three years. Many will be forced back into their previous careers, some inevitably will go bust.
    With tightening credit markets the heady days of cash-backs at completion are largely over.
    Sure you might be able to get the odd deal through, but with underwriters continually moving the goal posts how sustainable is it?

    Not to mention that with lower valuations, loan to value ratios, higher interest rates and rental cover requirements, you need to be buying at a deep discount to have any chance of a cash back at completion at all.

    If you’re not able to get cash backs and you’ve recently become a full time investor, where does your income come from? (Apart from HMO rentals.)

    And don’t even think about selling! In my opinion Buy To Sell (BTS) isn’t an option right now, as there are simply very, very few buyers around. In fact I’d say this is the best buyers market for a generation. To sell a property right now you’ve either got to be lucky or selling at a big discount yourself.

    Put it this way, have you been in an estate agent’s recently? The ones I’ve been in, well, to be frank I’ve seen more life in a morgue! Make no mistake a lot of companies associated with property will go to the wall before the end of the year, estate agents, mortgage brokers, removal companies, surveyors etc. Not to mention all those people who gave up jobs and spent their hard earned cash to train as HIP providers. How much business are they doing right now?

    Apparently the Council of Mortgage Lenders and Royal Institution of Chartered Surveyors have recently announced they expect property sales to be down by 35% and 40% respectively, this year. Unless things pick up soon, which I very much doubt, I think 65%-75% is more realistic.

    How long is this credit crunch likely to last? Nobody knows, could be 6 months, 12, 18. One thing that is a good bet, with falling house prices and the massive losses many financial institutions have suffered, lending criteria won’t be as lax has it has been for the foreseeable future.

    How far are property prices likely to fall? We’ll in the last property cycle prices fell by about 35% in real terms (allowing for inflation) and 12% in nominal terms. In addition it took over 12 years for property prices to exceed their previous peak reached in 1989.

    This fall did however coincide with the recession of the early 1990’s. At present the economy is holding up fairly well, and as long as it continues to do so we may escape the same level of depreciation. Personally, I think the fate of house prices in the UK will to a large extent be dependent upon the price of oil. If the price of oil continues to appreciate, then inflationary pressures will limit the Bank of England’s ability to lower interest rates, as they have a mandatory inflation target of 2%.

    By now you’re probably thinking I’m a right doom and gloom merchant! I have after all laboured the point to the downside. But no, I think there are some fantastic deals to be done right now, provided you can secure the deal no-money-down and most importantly it produces good positive cashflow. (Why else would you want to acquire a depreciating asset right now unless it puts money in your pocket every month?)

    As a full time landlord with properties throughout South Yorkshire and Lincolnshire, I have a vested interest in property prices going up like most people here! However, I do think it’s all too easy to see just what we want to see. As the saying goes;

    “We see things not as they are, but as we are.”

    When you think about it, it sure does make sense. As an analogy, on 9th November 2001 two planes flew into the World Trade Centre. Some saw it as a barbaric, cowardly act that claimed the lives of thousands of innocent people. Others saw it as an act of martyrdom and a just response to aggressive US foreign policy. The fact is two planes flew into the World Trade Centre, yet people saw it differently - based on their belief system.

    I guess most of us are here because we believe property investment is a good way of making money. And because of that it’s easy to ignore or discount any news or opinion that is counter to those beliefs.

    Anyhow, I thought I’d share some of my thoughts and experiences with you. How are you finding it, what’s been your experiences of late, and how do you see things going forward?

    Andrew

    PS If you’re interested in learning more about the 18 year property cycle, the different phases and money making strategies for each, you can download a FREE Report on the following link;

    www.renegadelandlord.com/syb

  • #2
    But the era of the thinly disguised "advertorial" ended much earlier Andrew - successful marketing techniques are more subtle in 2008....
    Unshackled by the chains of idle vanity, A modest manatee, that's me

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    • #3
      Brilliant! Couldn't have put it better myself
      The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

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      • #4
        Help for you

        Hi Everyone!
        Do you know Propertyline International?
        This real estate agency found me a house like I was looking for, within my prices range. This agency has properties in Cyprus, Portugal, Italy, Turkey, Morocco, Dubai and Egypt.
        I can assure you that it's worth it to contact them!
        Go to visit their site:
        http://www.propertylineinternational.co.uk.
        Good Luck in the purchase of your dreams’ House.
        See U!

        Comment


        • #5
          This is obviously the thread for "spammers"..........
          Mrs Jones
          I am not an expert - my posts are my opinion and should not be taken as fact!!

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          • #6
            Now why do you think real estate agents trying to sell property abroad have all of a sudden contacted me asking if I would like to act as an agent for them? Answer - they're struggling to find buyers!
            The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

            Comment


            • #7
              Hi Islandgirl

              Ok, fair point, I can see where you're coming from.
              But really all I was trying to do was raise the issue of the changing property market to see how others are finding it, and to provide free information that some might find interesting and useful.

              Andrew

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              • #8
                Originally posted by Renegade Landlord View Post
                Hi Islandgirl

                Ok, fair point, I can see where you're coming from.
                But really all I was trying to do was raise the issue of the changing property market to see how others are finding it, and to provide free information that some might find interesting and useful.

                Andrew
                But you ended your post by a link to your own site, didn't you, which rather detracts from the free and untainted nature of your helpfulness!
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

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                • #9
                  www.renegadelandlord.com/syb

                  Oh great you have fixed the world. To%%er
                  What i write is what i think....If you need solid info PAY A SOLICITOR!!

                  Comment


                  • #10
                    Originally posted by Renegade Landlord View Post
                    Hi Islandgirl

                    Ok, fair point, I can see where you're coming from.
                    But really all I was trying to do was raise the issue of the changing property market to see how others are finding it, and to provide free information that some might find interesting and useful.

                    Andrew
                    Then why does the text read like a badly written piece of junk mail? This would not fool anyone I'm afraid Andrew. You start your original post with "Let's be honest" - now that is good advice! Another piece of good advice is "Never underestimate the intelligence of the Landlordzone member".
                    No hard feelings Andrew but you will have to be a little more subtle in order to drive traffic from here to your site!
                    Unshackled by the chains of idle vanity, A modest manatee, that's me

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                    • #11
                      i totally agree with all the views here. they are all well thought out.

                      look at my site for white papers on what you are after.

                      http://www.whowantstomarryme.co.uk

                      Comment


                      • #12
                        Originally posted by marryme View Post
                        i totally agree with all the views here. they are all well thought out.

                        look at my site for white papers on what you are after.

                        http://www.whowantstomarryme.co.uk

                        I have seen it all now. Please please god dont let me ever rent to this 24ct WOPPER.

                        Is that website a wind up....i really hope so....it must be
                        I am in shock....this guy can not be real please. Im off to the GP...im seeing things...

                        Do you think this guy is protected by the MENTAL HEALTH ACT. CRAZY

                        ....im in shock now
                        What i write is what i think....If you need solid info PAY A SOLICITOR!!

                        Comment


                        • #13
                          Andrew

                          Not sure I agree the economy is holding up well. The government has overspend. The consumer boom has ended becasue of the high level of debt and the inability of consumers to withdraw housing equity in a falling market. Inflation is at a ridiculously high level. Unemployment is rising and is only at its current level because of the number of public sector jobs created by GB.

                          Comment


                          • #14
                            I'm really keen to leave England. I hate England as there are too many idiots and evil tyrants.
                            So says marryme...what a great idea! Get on with it mate.
                            That site followed by the views of the baldman - I need a lie down and its only 8.40am
                            Unshackled by the chains of idle vanity, A modest manatee, that's me

                            Comment


                            • #15
                              Island girl. Look on the bright side at least Bradford and Bingley has been rescued from becoming the next Northern wreck.

                              Comment

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