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BTL - Oh Dear

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    BTL - Oh Dear

    Trying to make an easy-money BTL and a recruitment agent....how much sympathy I have...

    http://www.thisismoney.co.uk/mortgag...age_id=56&ct=5

    Like so many young professionals hoping to cash in on Britain's property boom, Paula Collins, a 26-year-old recruitment consultant from London, thought her money would be safe.

    The buy-to-let market was booming and the deal from a Manchester developer seemed too good to pass on.

    The two-bedroom flat in the Castlefield area was valued at £175,950, but the developer was offering a 15% discount, taking the price down to £149,500 - and best of all, no downpayment was required.

    He would pay the 15% deposit. Paula simply needed to cover her legal costs and stamp duty. If it sounded too good to be true, it was.

    After 18 months, in which Manchester, like many northern cities, has seen a massive oversupply of new city centre apartments, Paula's flat is now worth just £140,000.

    Her mortgage costs her £900 a month, but she receives only £600 a month in rent. That's when she could find a tenant. Now the flat is lying empty, so Paula has to stump up £900 a month just to cover costs.

    'The offer seemed too good to refuse at the time. My boyfriend had some buy-to-let properties and I decided to do this one as a long-term investment, but I hadn't anticipated that the property would be so debilitating,' says Paula.

    'I paid such a high price, partly because independent valuers told us it was worth a lot more, and now I can't sell because there are so many apartments in the area.

    'I'm at a desperate stage. I've lost an enormous amount of money - about £14,000. I'm getting married in a few weeks, but this has put an enormous strain on the relationship and led to endless stress and tears. It has greatly affected our chances of being able to buy a house of our own now, and it has certainly left me disillusioned with the buy-to-let market.'

    Paula is not alone. There are 900,000 buy-to-let landlords in Britain, many spurred on in the past few years by rising house prices and the accessibility of mortgages tailored for buy-to-let investors.

    Many saw it as a get-rich- quick scheme in a buoyant market. But interest rates have risen, house prices are falling and people who have borrowed beyond their means, or didn't set aside money to cover periods when the property is empty, are finding themselves unable to pay the mortgage and being forced to hand back the keys to the bank.

    Last week, Gordon Brown's adviser on the housing market, Kate Barker, confirmed that the buy-to-let market is heading for a slump. She said that higher interest rates, provoked in part by the sub-prime mortgage crisis in the U.S., combined with collapsing rental values, meant that small-time property speculators were 'vulnerable'.

    She also indicated that the Bank of England was unlikely to cut interest rates to help the market recover.

    For Britain's buy-to-let owners that is disastrous news. For these are not slick-suited property tycoons with money to burn: they are ordinary, middle-class people hoping that bricks and mortar would be the safest way to invest for their future - perhaps to help pay for children's university fees, or as a retirement nest-egg.

    #2
    The valuers got it wrong and she was greedy, there was a program on last week where a guy sold his 300k house and bought a dive in Essex which left him with 200k to play the property market with, he had agents falling over themselves to sell him houses at 'under market value' ...why would anyone sell something for less than its worth.
    Science isn't about why, it's about why not. You ask: why is so much of our science dangerous? I say: why not marry safe science if you love it so much. In fact, why not invent a special safety door that won't hit you in the butt on the way out, because you are fired. - Cave Johnson

    Comment


      #3
      Mutley,

      congratulations, excellent use of the Oh Dear (TM) brand.

      That really is an Oh Dear (TM).

      Typical, greed, greed, greed.

      Milan.

      Comment


        #4
        She simply missed the boat, Those that bought a few years ago are still quids in because they paid less and their mortgages are lower.

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          #5
          Originally posted by gingerjedi View Post
          he had agents falling over themselves to sell him houses at 'under market value' ...why would anyone sell something for less than its worth
          Because the agent isn't the one selling the property. If your brown paper bag contains more money than the seller's 2% (or whatever), then the agent will be happy to persuade the real seller to drop their price. Those who want to stay out of jail can simply make it clear that they will re-sell through the same agency which doubles the agents commission and so encourages them to rip off the granny who owns the house.

          Comment


            #6
            Originally posted by Muttley08 View Post
            'I'm at a desperate stage. I've lost an enormous amount of money - about £14,000.


            WOW if my worst investment was only as bad as this I'd be semi-retired already.... go on, somebody start a "Worst Investment Ever" thread...

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              #7
              The next thing for her and others in the same boat is will they have the nous to bail out and can she afford to bail out at a loss and take the hit. I looked around some of the early Manc city centre pads in the mid 90s with a view to BTL. It was quite grim on a wet Sunday morning and some of the sellers were desperate. It put me off and probably cost me a nice little BTL fortune. The inner city is now much improved since the mid 90s but I still think some of the BTLers are in for some pain.

              Comment


                #8
                Originally posted by TazMaN View Post


                WOW if my worst investment was only as bad as this I'd be semi-retired already.... go on, somebody start a "Worst Investment Ever" thread...
                You are not a spread better and I lose my £5.

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                  #9
                  Originally posted by rootsnall View Post
                  The next thing for her and others in the same boat is will they have the nous to bail out and can she afford to bail out at a loss and take the hit.
                  But shirley, prices will rise again one day, especially with all the immigrants pouring into the country and needing a roof over their heads. And what about all those BBC staff moving into Manchester?

                  Couldn't she just think of it as a pension fund that she sticks 900 quid a month into?

                  She's relatively young, and 30 years down the road the capital gains will outperform most low-risk investments.

                  Comment


                    #10
                    Wendigo,

                    I would suggest from reading the article she doesn't have 900 quid a month to stick into it and she thought the rent would pay the mortgage...

                    now, as she says, her and her other half don't have any free money to get a mortgage for their own place

                    perhaps the best would be if they find jobs in Manchester and go and live in their nice apartment

                    Milan.

                    Comment

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