Excuse me...

[BlasterBates]

But isn't this exactly what brought the US financial system crashing down.

British subprime crisis brewing

Complete the following sentence:

"The UK is different because:"

[expat]

But isn't this exactly what brought the US financial system crashing down.

British subprime crisis brewing

Complete the following sentence:

"The UK is different because:"

"This time it's different" are the four most expensive words in the investing language.— Sir John Templeton

[BrilloPad]

Seems you have to register to get the full article - could someone paste it up please?

BP
PS I still think the UK **IS** different.....

[TheBigYinJames]

PS I still think the UK **IS** different.....

I think it's only different in the type of people who will be sub-prime in the UK. In the US, sub-prime means gun-totin hick who aint got no job sir. In the UK, sub-prime means junior developer who has a few extra k last year after pizza and jazz mags, who decides he can now afford a 150k mortgage to run a BTL which is going down the pan now.

The educational level of the defaulter makes no difference to the economy.

[BlasterBates]

How buy-to-let turned into a mug’s game
By Jonathan Guthrie

Published: October 15 2008 19:15 | Last updated: October 15 2008 19:15

The financial crisis has killed off punterism – grassroots financial opportunism – in the UK as surely as leveraged investment banking. Its most recent incarnation was in a bovine stampede into buy-to-let property. Tens of thousands of landlords are now stumbling over a financial cliff. An effigy of a buy-to-let investor (circa 2007) will soon appear in the Wax Museum of Popular Capitalism alongside such other historical mugs as the share-dealing ’80s cabbie and the dotbomb day trader of the 1990s.

Punterism is not in itself a bad thing. An alternative business dictionary might define it by its justifying cliché: “If you don’t do yourself a bit of good, no one else will.” At its best, punterism inspires shrewd individuals to tuck into free lunches that others disdain. Some pioneers become multi-millionaires. That triggers the related phenomenon of mug punterism, in which rash wannabes rush in after the original window of opportunity has closed. They come spectacularly unstuck pour encourager les autres.

EDITOR’S CHOICE
Comment on this column - Jun-28More from this columnist - Jul-13Andreas Panayiotou, a prominent property entrepreneur, helpfully predicted the death of the buy-to-let boom to FT readers last August. That was 13 months before the withdrawal of dominant lender Bradford & Bingley last month. The numbers no longer made sense, Mr Panayiotou said back then. Residential property prices would fall 20 per cent.

They probably have. The widely quoted figure of a 12.4 per cent decline over 12 months is based on thin volumes and may conceal a bigger drop. Mr Panayiotou, who started out as a developer in Hackney in 1996, told me recently that he had sold most of his once vast residential property portfolio, realising around £750m. Two other well-known buy-to-let investors, former maths teachers Judith and Fergus Wilson, have announced that they will sell off 900 properties.

Canny operators first came into the buy-to-let market in response to an improvement in landlords’ rights in 1996. Then, rental yields were above 10 per cent, interest charges were around 7 per cent and the property bubble was still inflating. Buy-to-let, in the words of bloke rockers Dire Straits, was “money for nothing and your chicks for free”. But by 2007 it was becoming a mug’s game. Rental yields had fallen to 3 per cent, below the typical two-year fixed mortgage rate of 4.5 per cent, and prices were starting to peak.

Now the capital gains that lured latecomers have evaporated, swallowing their deposits and leaving some with negative equity. They are coming off fixed rates on to variable charges of around 6.5 per cent at a time when their incomes are threatened by recession. Their nest egg investments have hatched into cuckoos. There is little respite for them in the government’s requirement for banks it has part-nationalised to resume mortgage lending at 2007 levels. The focus here will be on owner occupiers.

Patricia, a single mother I encountered recently, is typical of buy-to-let casualties. Her mortgage costs on five buy-to-let apartments will shortly jump by £1,000 a month. Her rents do not even cover current interest and the capital value of the flats has fallen 20 per cent. “I’ve just lost my job and I’m temping, so my income is reduced,” she said. “I don’t know what to do. It’s horrendous.” She is likely to lose all her properties, including her home, and crystallise an unpayable £60,000 debt.

Mr Panayiotou expects lenders to start pursuing struggling buy-to-let landlords more aggressively over the next few months, as their own credit crisis starts to abate. Statistics from the Council of Mortgage Lenders show that lenders doled out 300,000 buy-to-let mortgages in 2006 and 2007. My authoritative guesstimate is that tens of thousands of the UK’s half a million buy-to-let landlords will face financial difficulties. It will take more than last week’s half-point base rate cut to bail them out.

Rearguard defenders of buy-to-let who point to healthy demand for rental property are whistling in the dark. The income of many tenants will shrink as the recession bites. The Hotel de Mum and Dad will become a thrifty alternative to a rented pad. Vacant city centre flats targeted at young professionals will rebrand as “affordable” housing. They will yield a fraction of original target rents when occupied by welfare claimants. Some will slump into slumhood.

I am myself a buy-to-let investor, sitting halfway along the curve between pioneer and mug. My wife and I now spend our evenings playing the new parlour game of Assessing Our Downside Liabilities. It is so much more zeitgeisty than Canasta.

We have yet to succumb to reverse punterism – a scramble among private investors to lay off risk that is as frantic as the previous rush to take it on. The worst worrywarts have been panic-buying krugerrands. From there, it is but a short step to oiling the hammers of Grandad’s shotgun in preparation for the collapse of civil society.

Will “BTL” signify no more in years to come than a muddled acronym for a popular sandwich filling? Not a bit of it. Ajay Ahuja, a pioneering buy-to-let investor, told me he plans to buy hundreds of cheap properties when prices stabilise. Other bargain hunters will follow his lead. Like John Barleycorn in the old harvest song, punterism always rises again. But given the scale of economic shocks, the fallow period could be protracted this time.

[BrilloPad]

I think it's only different in the type of people who will be sub-prime in the UK. In the US, sub-prime means gun-totin hick who aint got no job sir. In the UK, sub-prime means junior developer who has a few extra k last year after pizza and jazz mags, who decides he can now afford a 150k mortgage to run a BTL which is going down the pan now.

The educational level of the defaulter makes no difference to the economy.

I was referring to our planning laws - which keep the housing stock at a low level.

As long as the poles dont go home we are fine.

[Moscow Mule]

As long as the poles dont go home we are fine.

I thought they'd already gone?

http://www.thisislondon.co.uk/standa...dus/article.do

[BrilloPad]

How buy-to-let turned into a mug’s game
By Jonathan Guthrie

Published: October 15 2008 19:15 | Last updated: October 15 2008 19:15

The financial crisis has killed off punterism – grassroots financial opportunism – in the UK as surely as leveraged investment banking. Its most recent incarnation was in a bovine stampede into buy-to-let property. Tens of thousands of landlords are now stumbling over a financial cliff. An effigy of a buy-to-let investor (circa 2007) will soon appear in the Wax Museum of Popular Capitalism alongside such other historical mugs as the share-dealing ’80s cabbie and the dotbomb day trader of the 1990s.

Punterism is not in itself a bad thing. An alternative business dictionary might define it by its justifying cliché: “If you don’t do yourself a bit of good, no one else will.” At its best, punterism inspires shrewd individuals to tuck into free lunches that others disdain. Some pioneers become multi-millionaires. That triggers the related phenomenon of mug punterism, in which rash wannabes rush in after the original window of opportunity has closed. They come spectacularly unstuck pour encourager les autres.

EDITOR’S CHOICE
Comment on this column - Jun-28More from this columnist - Jul-13Andreas Panayiotou, a prominent property entrepreneur, helpfully predicted the death of the buy-to-let boom to FT readers last August. That was 13 months before the withdrawal of dominant lender Bradford & Bingley last month. The numbers no longer made sense, Mr Panayiotou said back then. Residential property prices would fall 20 per cent.

They probably have. The widely quoted figure of a 12.4 per cent decline over 12 months is based on thin volumes and may conceal a bigger drop. Mr Panayiotou, who started out as a developer in Hackney in 1996, told me recently that he had sold most of his once vast residential property portfolio, realising around £750m. Two other well-known buy-to-let investors, former maths teachers Judith and Fergus Wilson, have announced that they will sell off 900 properties.

Canny operators first came into the buy-to-let market in response to an improvement in landlords’ rights in 1996. Then, rental yields were above 10 per cent, interest charges were around 7 per cent and the property bubble was still inflating. Buy-to-let, in the words of bloke rockers Dire Straits, was “money for nothing and your chicks for free”. But by 2007 it was becoming a mug’s game. Rental yields had fallen to 3 per cent, below the typical two-year fixed mortgage rate of 4.5 per cent, and prices were starting to peak.

Now the capital gains that lured latecomers have evaporated, swallowing their deposits and leaving some with negative equity. They are coming off fixed rates on to variable charges of around 6.5 per cent at a time when their incomes are threatened by recession. Their nest egg investments have hatched into cuckoos. There is little respite for them in the government’s requirement for banks it has part-nationalised to resume mortgage lending at 2007 levels. The focus here will be on owner occupiers.

Patricia, a single mother I encountered recently, is typical of buy-to-let casualties. Her mortgage costs on five buy-to-let apartments will shortly jump by £1,000 a month. Her rents do not even cover current interest and the capital value of the flats has fallen 20 per cent. “I’ve just lost my job and I’m temping, so my income is reduced,” she said. “I don’t know what to do. It’s horrendous.” She is likely to lose all her properties, including her home, and crystallise an unpayable £60,000 debt.

Mr Panayiotou expects lenders to start pursuing struggling buy-to-let landlords more aggressively over the next few months, as their own credit crisis starts to abate. Statistics from the Council of Mortgage Lenders show that lenders doled out 300,000 buy-to-let mortgages in 2006 and 2007. My authoritative guesstimate is that tens of thousands of the UK’s half a million buy-to-let landlords will face financial difficulties. It will take more than last week’s half-point base rate cut to bail them out.

Rearguard defenders of buy-to-let who point to healthy demand for rental property are whistling in the dark. The income of many tenants will shrink as the recession bites. The Hotel de Mum and Dad will become a thrifty alternative to a rented pad. Vacant city centre flats targeted at young professionals will rebrand as “affordable” housing. They will yield a fraction of original target rents when occupied by welfare claimants. Some will slump into slumhood.

I am myself a buy-to-let investor, sitting halfway along the curve between pioneer and mug. My wife and I now spend our evenings playing the new parlour game of Assessing Our Downside Liabilities. It is so much more zeitgeisty than Canasta.

We have yet to succumb to reverse punterism – a scramble among private investors to lay off risk that is as frantic as the previous rush to take it on. The worst worrywarts have been panic-buying krugerrands. From there, it is but a short step to oiling the hammers of Grandad’s shotgun in preparation for the collapse of civil society.

Will “BTL” signify no more in years to come than a muddled acronym for a popular sandwich filling? Not a bit of it. Ajay Ahuja, a pioneering buy-to-let investor, told me he plans to buy hundreds of cheap properties when prices stabilise. Other bargain hunters will follow his lead. Like John Barleycorn in the old harvest song, punterism always rises again. But given the scale of economic shocks, the fallow period could be protracted this time.

Many thanks - I am registering but need to see my home email.

I am suprised at the FT putting up such sensationalist stuff - do they want daily mail readers?

On the other hand its far to early to start buying yet - whatever sasguru says.

Repossessions still rising - that needs to stop - then the overhang of houses needs to be sold. I think there will be a 3 year window of cheapness (like 1992 to 1995) - and we are not there yet.

[DS23]

while i kiss the sky

how many of the btl brigade on here are starting to suffer?

[Bear]

But isn't this exactly what brought the US financial system crashing down.

British subprime crisis brewing

Complete the following sentence:

"The UK is different because:"

The UK is different because: the financial system has already crashed!