Getting into buy to let property business

[Greebo]

Why is this neccesarily a bad thing?

Actually I do think it;'s a good thing.

However the argument seems to be that some people claim that its just as cheap to buy a house now as in past years.

With the massively higher despoits required, a much bigger percentage of your income needed even with all time low interest rates, it;s now one of the most expensive times in decades to buy a house.

Buying one at the beginning of 2001 was the time to buy one

Which is around when I bought mine.

Cost £94,000 in 2000. Values today at £395,000. We couldn;t afford to buy our house today as our salaries haven;t increased four fold in those 12 years.

 

[Greebo]

yes and we know how that would end... btw they were introduced in the later part of the 1990s during the housing boom and its probably not a good thing to bring them back...

.

I don;t mean bring tham back, far from it. Just pointing out that even if the percentage of dispoable income is the same, it;s much more costly compared to wages to buy a house today.

 

[dowie]

With the massively higher despoits required, a much bigger percentage of your income needed even with all time low interest rates, it;s now one of the most expensive times in decades to buy a house.

data I provided previously only went up to 2008

in 2010 this was the picture:

http://www.ifaonline.co.uk/ifaonline/news/1722081/mortgages-lowest-percentage-income-35-cml

Homemovers in May saw their mortgage payments account for the lowest proportion of their income in 35 years, according to the CML.

also look at 1990 - 27%

currently we're at 19%... tis a bit higher than a far few years in the past but you're not getting into crash territory at all - more prices stagnating or dropping a bit...

like I've been saying all along - interest rates are key here...

 

[Greebo]

1st time buyers though. As I have shown, average house price mortgage is 67% of average earnings which is the highest for 37 years..............

 

[PMKeates]

1st time buyers though. As I have shown, average house price mortgage is 67% of average earnings which is the highest for 37 years..............

Is comparing average earnings to average house price a sensible comparison? For this to be a comparison for the 'average buyer', it would rely on the spread of house prices and the spread of salaries remaining exactly the same, which it certainly hasn't.

 

[Collider]

No problem with people making good for themselves, until it comes at the expense of other people/rest of society.

Bill Gates earning a ton of money is cool with me, he's employing people and providing a product people like/need to use.

A landlord who buys up all the property in his area leaving first time buyers with nothing left isn't really the same.

Again, I'm not a communist or even socialist and housing is one of the only areas I'd support some form of restrictions in what you can and can't do because, call me Che Gevera here but, I tend to think it's more important to have a society where housing is affordable for all then one where a select few can feather their pension pots whilst watching everyone else around them struggle and paying them rent.

I think you have a very narrow minded view that does suggest that everyone being slightly poorer is better than some people daring to make some money. But the money made can go back into the economy, creating jobs and so creating the means for more housing.

Housing is not going to be affordable for everyone in a market economy like we have. Housing should be liveable and decent for the price paid and landlords held to a standard, but the idea that everyone will suddenly give away properties and that that would, in itself, create more afforable housing, has to be a misnomer.

 

[Slam62]

We are definitely in a house price bubble and the economy is far from sorted,

Buy a house because you can easily afford it and want to live in it, BTL days are over, the party has long since finished, the place is in a mess though.

As regards affordable housing, this is required to allow the economy to rebalance. So it will happen in the end one way or another.

 

[Collider]

I think it depends how long you want to keep the property for. I would certainly say as a quick way to make a fast buck its not a good idea but the general trend on a long term investment is pretty secure and its not a bad way to invest (there are higher returns obviously but as a very long term bet its not a bad one).

 

[estebanrey]

I think you have a very narrow minded view that does suggest that everyone being slightly poorer is better than some people daring to make some money.

I'm not making that statement at all. I'm saying I'd rather live in a world (as unrealistic and hard to achieve as it maybe) where there was little money to be made from BTLing but everyone could afford even the most basic of houses, than in one where vast swathes of the population will never get on the property ladder but a few people here and there are making a few quid from renting to people who'd like to buy but can't get a mortgage because of the current house prices in this country.

But the money made can go back into the economy, creating jobs and so creating the means for more housing.

Sorry but that is a lame argument. On that basis what Jimmy Carr was doing was alright because the money he saved in taxes can go back into the economy anyway, or the money a crack dealer makes is morally sound as it'll only end up back in the economy at some point.

But what you are forgetting here is an abundance of BTL landlords creates a lack of available housing which in turn pushes the threshold for those that need social housing up, thus creating creating a bigger dent in the treasuries coffers.

Housing is not going to be affordable for everyone in a market economy like we have.

Why not? It was from circa WW2 up to the early 2000s, did we not have a market economy too then?

All I'm asking for is affordable housing for people who earn at least the average wage, obviously expecting the unemployed or very low paid workers to be able to afford a mortgage on a decent house is asking a bit much.

The problem we have now is there are lots of people like me or who aren't rich enough to buy my own house, but aren't poor enough to be given one gratis by the government either.

Even if you can't sympathise with my inability to get on the housing ladder, surely you can see it's unfair that others poorer that me can get free houses often through their irresponsibility.

 

[[TW]Fox]

Why not? It was from circa WW2 up to the early 2000s, did we not have a market economy too then?

Housing was affordable to EVERYONE? Really?

 

[edscdk]

Why not? It was from circa WW2 up to the early 2000s, did we not have a market economy too then?
.

its always been hard / expensive to afford a house my mum and dad struggled to get £3000 for a house, it was a wreck, they were skint for years and it took years to do the house up - no double glazing no central heating 1 car no holidays, second had everything

today people expect everything a nice house, car holidays eating out etc etc...

my other half daughter (and husband) who have a £200k mortgage say they are skint but have the latest everything... (even two nice cars)

today people are better off.. I remember no central heating... second had wreck of a car, second had bikes once a year holiday to the coast, people jsut expect so much these days

 

[estebanrey]

Housing was affordable to EVERYONE? Really?

Way to quote mine there son....

a few lines later than the one you quoted...

All I'm asking for is affordable housing for people who earn at least the average wage, obviously expecting the unemployed or very low paid workers to be able to afford a mortgage on a decent house is asking a bit much.

 

[[TW]Fox]

You could always do something radical like... buy a house with a partner? Isn't that how it used to be done before everyone decided they ought to have the right to buy a house all by themselves?

 

[estebanrey]

You could always do something radical like... buy a house with a partner? Isn't that how it used to be done before everyone decided they ought to have the right to buy a house all by themselves?

Not really because in the 'old days' it was quite common for one of the partners (i.e the wife) not to work so it was still only one income paying the mortgage off.

 

[cm1179]

Not really because in the 'old days' it was quite common for one of the partners (i.e the wife) not to work so it was still only one income paying the mortgage off.

where do you expect this ''affordable housing to come from''?

do you want my house to suddenly drop in value by 50% so a first time buyer can easilier afford it and the next move for me (property wise) to be reduced by 50% too with the banks making up the difference?

there are 50/50 schemes and housing associations. people/families do get housing support. i know of two young mothers and one young father who have been given housing (and they're not bad, not what i would choose but certainly not to be sniffed at) though i still don't understand what will happen to them once their kids reach 18 if i'm honest.

 

[estebanrey]

do you want my house to suddenly drop in value by 50% so a first time buyer can easilier afford it and the next move for me (property wise) to be reduced by 50% too with the banks making up the difference?

Pretty much yeah, house prices have more than doubled in the last 20 years and that's taking inflation into account so someone has been making money they weren't back then.

 

[dowie]

1st time buyers though. As I have shown, average house price mortgage is 67% of average earnings which is the highest for 37 years..............

you haven't shown that at all, you simple guessed it, badly - how do you know what the average rate is for every mortgage currently? And compared to every year previously... lots of people on trackers taken out a few years ago are currently paying 0.75% interest - 40% of all mortgages are trackers - your guesstimate contained a blanket 5%???

 

[cm1179]

Pretty much yeah, house prices have more than doubled in the last 20 years and that's taking inflation into account so someone has been making money they weren't back then.

Anyway, ignore me because I clearly live in a unique area....



Full story: http://www.thisisoxfordshire.co.uk/news/4567123.print/

Least affordable place in the UK

oh right, cheers. ftr, i haven't been making money on houses. a lot of people lost their house in that 20 yr period.

i was brought up in a small village where house prices are ridiculous, i couldn't afford to live there and moved to the neighbouring town where prices are a lot more competitive and less than a 10 minute drive away. ever considered that?

 

[flibbage0]

Personally I can understand why 1st time buyers can get a bit frustrated by the situation, however if someone is doing up properties and then renting them, surely it is a service.

Also what about near universities, some have a big problem with regards to meeting the demand for students. They need a place to stay.

 

[Stretch]

I've not read the entire thread so I'm not sure what's been said already. It's very hard to make money out of buy-to-let without some capital.

However I was surprised recently by how easy it is to obtain a buy-to-let mortgage. The only 3 criteria is you need, a modest deposit, to be earning over £25k a year but most crucially you need a provable monthly rental income of 125% of the monthly repayments. Especially as btl interest rate are higher, not by as much as you'd think though. It also helps a lot if you already own property.

It's the third part that's tricky these days as very few properties will give you that rate of return. That is unless it's a large, cheep house where you rent the property as rooms. However, unless you already own and rent the property as rooms it won't be assessed by the banks that way. They'll look a rental income as the property was rented as a hole.