Buy to Let Bubble
Discussion
You know bubbles, from tulips to Internet tech stocks over the years there has always been a bubble for the happy punter to fall into.
My sister in law was talking about doing a buy to let recently and my wife then suggested we do it when we retire. Now I have no thoughts on the matter for these two particular cases but it did strike me that the phenomena of
By word of mouth
was happily in swing as people continued getting on the bandwagon
By word of mouth is always a slightly risky way to do any transaction in my view. Especially if it leads to the masses trying to get into the act. Like with the tulips.
Of course the tulips were different. They flowered and withered but the housing market boom and bust seems to be a perennial, which goes on and on.
Do you think it is really heading for a really big bust this time or not?
My sister in law was talking about doing a buy to let recently and my wife then suggested we do it when we retire. Now I have no thoughts on the matter for these two particular cases but it did strike me that the phenomena of
By word of mouth
was happily in swing as people continued getting on the bandwagon
By word of mouth is always a slightly risky way to do any transaction in my view. Especially if it leads to the masses trying to get into the act. Like with the tulips.
Of course the tulips were different. They flowered and withered but the housing market boom and bust seems to be a perennial, which goes on and on.
Do you think it is really heading for a really big bust this time or not?
I think its a bit sad for the younger generations really. The older generations have already screwed them over by over borrowing and ultimately causing the recession setting everyone back 10-15 years. 18-24 year olds struggle to find work due to this as there's no jobs out there. Now they are being screwed over again due to the older generations buying up all the properties as well. I know its a dog eat dog world but the word 'greed' does spring to mind!
And don't even get me started on pensions!
Just saying...
And don't even get me started on pensions!
Just saying...
curlie467 said:
A Tulip is a perennial or do I need a massive parrot to smack me in the bonce?
Not a parrot, maybe just Wiki 
https://en.wikipedia.org/wiki/Tulip_mania
I think that when retail investors are considering investing 'because everyone else is' or similar, and when institutional investors are selling assets to retail investors via highly publicised crowdfunding and similar collective schemes, run by 'managers' for management fees, rather than coinvesting for investment return, it is fair to say that the bubble is near to the point of popping.
nikaiyo2 said:
To me BTL is a business if the figures work out on rental yield alone, you capital appreciation is required then it is speculation.
This. And it should be net net yield btw. After all costs, including a calculation for a nominal salary for the hours spent on it, and taxes.Are people all going to live with their relatives, buy property, leave the country or keep renting?
I'd suggest the rental market isn't going to end any time soon. Regulation of many shapes and sizes may make it less profitable, but the market isn't going to die out.
It's probably not a great time to be overburdened with debt, tho.
I'd suggest the rental market isn't going to end any time soon. Regulation of many shapes and sizes may make it less profitable, but the market isn't going to die out.
It's probably not a great time to be overburdened with debt, tho.
Behemoth said:
nikaiyo2 said:
To me BTL is a business if the figures work out on rental yield alone, you capital appreciation is required then it is speculation.
This. And it should be net net yield btw. After all costs, including a calculation for a nominal salary for the hours spent on it, and taxes.Gandahar said:
My sister in law was talking about doing a buy to let recently and my wife then suggested we do it when we retire.
I think it's weird the way a lot of women seem to have an incredibly simplistic and optimistic view of life. I wonder if it's because their husbands have insulated them from the real world?I can hear it now - "let's get a buy-to-let" - as if it's as simple as it is to say it.
From 1989 to 1993 average house prices fell about 20%.
Obviously property is usually bought with borrowed money, so when there is gearing involved, that 20% fall was magnified, with serious consequences for so many people.
There were far more repossessions during the 1990s property crash, than occurred after the debt boom in 2008, because interest rates reduced so sharply in 2009. Monthly mortgage payments reduced, unemployment was not so severe, therefore more people could still maintain their mortgage payments.
Behemoth said:
nikaiyo2 said:
To me BTL is a business if the figures work out on rental yield alone, you capital appreciation is required then it is speculation.
This. And it should be net net yield btw. After all costs, including a calculation for a nominal salary for the hours spent on it, and taxes.Gearing up to buy a house is speculation.
Not the same thing.
Around where I live I'd be surprised if you could make BTL's stack up at the moment. I've got 2 and if I bought them for what they would appear to be worth today they wouldn't be worth the risk.
Even if you where a cash buyer I think you'd make 4% return at best without anything going wrong.
Even if you where a cash buyer I think you'd make 4% return at best without anything going wrong.
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