oh dear: Thinking of buy-to-let? Do the sums

[AtW]

House prices may crash but they will recover

Case in point - that BBC debt woman. She has got BTL property and since she got in cashflow troubles she defaulted on her morgage payments. Now she is about to get her property taken over and sold: nobody is going to allow years of nonpayment, this long term strategy is only okayish if you have the means to support yourself in case of troubles. But most people don't - I am not saying you specifically will have to be forced to sell your property at a loss, no - most likely not, but enough people who overstretched themselves will be in big trouble and have to sell at a big loss.

[GreenerGrass]

Case in point - that BBC debt woman. She has got BTL property and since she got in cashflow troubles she defaulted on her morgage payments. Now she is about to get her property taken over and sold: nobody is going to allow years of nonpayment, this long term strategy is only okayish if you have the means to support yourself in case of troubles. But most people don't - I am not saying you specifically will have to be forced to sell your property at a loss, no - most likely not, but enough people who overstretched themselves will be in big trouble and have to sell at a big loss.

Come on the woman was an accident waiting to happen. She blames everyone but herself.
Next time she'll invest in shares, there will be a stock market crash and she'll blame her stockbroker for not warning her of the risks. And getting her pregnant so she can't work.

[oraclesmith]

"5 or 10 grand better off after 5 years by renting than buying."

It depends on WHICH five years. The last five years ? The next five years ? Interest rates are currently far below their historical average and the housing market tends to be cyclical.

Historically, the rental market has reciprocated the purchase market - people rent when purchase prices are going down because of an interest rate peak, buy when prices are increasing. At the moment, buy-to-letters are needing to pay a mortgage with the rent income, which artificially skews the market. ie. If there are further interest rate hikes, most people with buy to lets will need to pay a higher mortgage, so they would need to set a higher rent. But if there is an oversupply of buy to lets this will surely trigger a house price crash.

One thing that will keep pressure on the housing market (ie. keep prices up) will be the influx of people from Eastern Europe and elsewhere.

[AtW]

I think influx of people from there is overrated - these people will share houses and its not uncommon to share rooms, so 5-6 people in a house with 3 bedrooms: this keeps their costs down, and you will never get more efficient house usage than that.

[Jefferson]

I think influx of people from there is overrated - these people will share houses and its not uncommon to share rooms, so 5-6 people in a house with 3 bedrooms: this keeps their costs down, and you will never get more efficient house usage than that.

That may be the case for some of the people at the moment, but intime as some progress to higher paid jobs (Which they undoubtably will) surely they will demand better living standards and housing...

[AtW]

Yes if they move into higher paid jobs - but that's unlikely as they primarily take low paid jobs due to language difficulties and lack of desire from locals to do such jobs (for minimum wage that is).

And if they get higher money this means they will pay pretty high taxes - this country needs more working hands rather than less to prevent pension system from collapsing, the only alternatives to this to pay more taxes and/or increase age for pension which would mean you will enjoy your hard earned pension less time.

[Phoenix]

People have to get more into credit card debt (or remorgage house for cheap loan) in order to sustain their spendings.

1% increase in rate will be £160 more every month on average house, £240 more in London - now that's not a small change at all (well, not for IT contractors).

Number of personal bankrupcies is already at all times high - and it won't get any smaller.

You keep it up AtW,
I can recall a proper Price crash in the 80's (Conservative driven by the way!)now 15% would be something to cry about, however I need someone like you to pay my Mortgage, so you keep renting....And I will take the small risk, and ensure I don't over stretch myself

[Ardesco]

Case in point - that BBC debt woman. She has got BTL property and since she got in cashflow troubles she defaulted on her morgage payments. Now she is about to get her property taken over and sold: nobody is going to allow years of nonpayment, this long term strategy is only okayish if you have the means to support yourself in case of troubles. But most people don't - I am not saying you specifically will have to be forced to sell your property at a loss, no - most likely not, but enough people who overstretched themselves will be in big trouble and have to sell at a big loss.

Arrggg, how many times do I have to say I am not talking about BTL here, i'm simply comparing the mortgage rate to the rental rate of my BTL property and saying that over a period of time you would be saving money if you bought rather then rented.

As for that BBC woman, she is on a one way ticket to bankruptcy and deservedly so. if she couldn't afford the mortgage payments on a BTL she shouldn't have bought one, or she should get rid of it rather then bitching and moaning she can't afford it. As for taking her emplyer to court for unfair dismissal when she is contracting WTF?? somebody take her outside and shoot her. Maybe she should go get some help from the father or learn to keep her legs shut when she is self emplyed and the only bread winner....

[AtW]

As for that BBC woman, she is on a one way ticket to bankruptcy and deservedly so.

True, but are you going to suggest that she is one and only such silly person in the UK? IMO she is a sign of times - there are far more people like her and they will pay for their stupidity, and this will affect whole marketplace: it is those people who were responsible for fuelling the house pricing bubble and they will be the ones who will help pop it.

[Ardesco]

True, but are you going to suggest that she is one and only such silly person in the UK? IMO she is a sign of times - there are far more people like her and they will pay for their stupidity, and this will affect whole marketplace: it is those people who were responsible for fuelling the house pricing bubble and they will be the ones who will help pop it.

Maybe so, but as stated befoe that bubble has been going to burst for the past 5 years and still hasn't. My argument remains, for people who purchase 1 property and are sensible with thier finances it makes more long term sense to buy than it does to rent (if you are looking at staying in the same area for the forseeable future). Somehow i think you are arguing about BTL which I am not, i'm just saying in my experiance it is a better financial choice to buy than it is to rent.