Buy-to-let investing: the outlook for 2011

Good God Its looking good for BTL

That will upset a lot of Citywire readers BUT I TOLD YOU SO

its never been better but ive said it before but im a nasty landlord who is takeing the bread from first time buyers self centered and greedy and un educated

Thats some of the comments that have been made about me and other Landlords on the blogs on here

Well Doom mungers BTL is here to stay get used to it look at the facts

Great Yeilds and getting better

BTL Mortgages are comeing back

Tenant demand is fantastic

Riseing Rents

Very Low Voids

I could go on (OH before someone thinks im a LHA landlord im not )

Im looking forward to a great 2011 but keep it quite dont tell everyone

Have a great New Year folks

(Cant wait to see the Comments NOW ???)

This article is factually incorrect. The statement 'you would of course struggle to find a 2 bedroom flat for around £240,000 anywhere within half a hour's travelling time of London' is not correct. The National Rail journey planner and property websites reveal an abundance of 2 bedroom flats for around £215,000 in Wimbledon (17 minutes from London), for around £200,000 in Stratford (10 minutes) and for around £150,000 in Croydon (17 minutes). These are examples and there are many more. Dislexic Landlord is absolutely correct k.o.

...and I completely endorse Dislexic landlord's comments.

Rents are high and rising

Borrowing costs low and for me will fall further

Cashflow never better...and the tax breaks are still fantastic...

In fact lettings generally are booming

No I do not take LHA or HB tenants as too high risk - and plenty of good quality private sector tenants around these days

This is the best time to be a landlord

And if property prices do soften over the coming year...it means bargains galore to add to the portfolio

However I do like the article above as it puts people off investing in property - so less competition for me

House prices can only achieve the mortgages banks offer and buyers are willing to risk.

Mortgage providers believe houses are overpriced. Buyers think the same.

The BoE have given up using base rate to control inflation because they think we are in a long term spiral of falling relative wages and GDP, lower tax income, rising taxes, contracting public services.

So for the Landlords here. Sell high, buy low, churn.

Add this to accelerating student debt with nowhere to go but falling house prices, even with a housing shortage.

The alternative is we become a society of Landlords and Tenants with growing tenants rights including rent control. Can anyone here see the Tories opting for permanent Labour govts.

Dislexic Landlord is spot on yet again. With the forthcoming doom & gloom that we are told to expect, it will be the private BTL landlord that will be offering some stability to the housing situation. More often than not, we the private landlords are portrayed as villainous vultures praying on the young and vulnerable of society; but if it was not for us then alot of people would suffer. The nicest thing would be for everybody to buy thier own home.... then perhaps things would be better all round. There are easier and less stressfull ways to make money; but I for one am glad to be offering homes to society. I would like to wish you all a happy new year....... and let's hope it's a good one [J Lennon]

Brand new 3 bed semi-detached houses for less than £125k, cost £70 per annum to heat, low maintenance, good rents.....

‘There is little evidence to suggest that house price declines are likely to accelerate in the months ahead,’ is the view of Martin Gahbauer, Nationwide's chief economist.

All mortgage company economists make statements that paint a position to try and maintain a position, usually to the upside. And I feel it is lazy investigative journalism to simply ring round the usual suspects.

I would like to see Citywire tracking down non-partisan economists for their views on the current housing market – like the Office for National Statistics economists for example.

I agree with 'antigricer' that Lorna is off-beam about the price of flats in London. A leafy, low-crime outer suburb known to me, with fast trains to London in 20 minutes, has plenty of two-bed flats on offer for a quarter-million or less- and that's been the going rate in a dull market since before the credit crunch, since they had already become overpriced.

Her rent v. interest comparison is off, too. She says you can get 'nearly 5%' gross on deposit without the hassle of being a landlord. I'd love to know where:

http://www.moneysupermarket.com/savings/fixed-rate-bonds/

As UK property is generally over-priced and first-time buyers struggle to find a way in, you might just find that this is a bubble waiting to be burst, as is generally the case when so many are encouraging us to climb aboard a bandwagon.

The Government will have to address the problem and the easiest way to do that could be to suppress demand by making buy-to-let less attractive.

I am in the process of buying a new property [at a discount] rather than sell my existing property at a declining price I am going to retain and let it - What I really want to see is for residential property to be allowed in a SIPP - it would transform the pensions market and greatly reduce State dependency

Do you remember the programme series on tele' "The good life" well it's happening for real in our street.

I live in an area where 75% of houses are owner occupied. During the period 2007-2010 I have seen a marked deterioration in the condition of these freehold properties. The signs of owners being strapped for cash becomes more evident as time progresses. Many of them would like "out" and be only too pleased to hand the responsibility over to a landlord, but they can't. The residual capital realised after selling expenses would not cover their mortgage and other debts. They're stuck.

You cannot accuse them of not being inovative. With the relaxation of planning regulations has come a plethora of garden sheds, and garages, which to all intents and purposes are storage buildings, and workshops for "hobbies" and twilight businesses. Another development has been the installation of wood burning stoves, which of course requires the storage of suitable fuel.

The development of all this cranium scratching, and financial manouvreing has led to the transformation of back gardens into untidy eyesores, and parking spaces being taken over by trucks and vans.

This has resulted in a general down grade of the residential status of the area and the quality of life that can be enjoyed here.

On the other hand. The houses which are owned by landlords have had money spent on them. Bad tenants have been kicked out, and gardens tidied up. The new tenants which have come, are in general fairly responsible. They know what they can and cannot do.

A number of houses have been for sale for quite some time, so far very little interest has been shown in them. None of them have gone to auction as yet, but I think, for some of them, that will be the next move in 2011.

If my hunch materializes, the odds are that a landlord will buy them.

Now that may not be a bad thing after all. He/she will make sure the property is in a fit condition to live in, and are unlikely to tolerate tenants who cause a nuisance to neighbours.

I have properties in the North West and Surrey. Despite falling rents in the north west there are far higher yields. There are fantastic bargains if you look hard enough and you know your market. I have just bought a two double bed two bath conversion for £60000 at auction in one of the best suburbs of Liverpool - I already have a tenant lined up @£500 per month .I have had the property valued by three agents and they are all in excess of £100 k and £525 -£600 for rent per month. I am happy to rent at £500 per month as a 10 % yield is not bad !

Don't care about funding as I paid cash - sorry first time buyers us cash buyers are taking your homes.I am planning to add 3 more more similar properties to my portfolio this year its a no brainer but shhhh keep it quite.

I hope it is not inappropriate to mention that France has attractive buy to let schemes, spreading the risk.

I understand the views of landlords,but overall house prices nationally are still far too high.Sooner or later prices will collapse and in time it will pay to buy rather than rent.

I have been a landlord for 20 years with a small percentage of HB tenants who have been with us for some time. At no time did we ever increase our rents or take advantage of the LHA system. I also know many other landlords who being similar to us operate in a similar manner. The market rent is the market rent for any particular area.

I have over the months read many comments about the so-called 'greedy' landlords. Many of these comments are 'ill-advised' and without substance.

As a landlord we take on many risks, for example; a tenant informs us the boiler is not working. We investigate and in some cases the boiler is beyond economical repair. Hence we install a new 'combi-boiler'....... Average cost = £1600.00.

The recent weather has caused numerous problems with our properties and again we have as landlords taken full responsibility.

Landlords provide a service which is vital and many who are not landlords forget very conveniently.

I guess Sainsbury's and other super markets wont put their prices up when they get the chance. They also provide a service.

Broomtree - Well said about letting residential property into SIPPs. Excellent idea.

Buy-to-let will always be here and long may it continue!

Good luck to all GOOD landlords and a Prosperous 2011

well said chris and all the best to you too

As a Landlord with a substantial portfolio in London I don't gloat when I add to my portfolio. I keep my mouth shut and get on with it.

Happy New year!

shaon

Well done for you Most of us would keep our Mouths shut

But we love to wind up Citywire Readers because they hate to see Landlords makeing money and we are hated by some (LOL)

And Guss what they bite every time

Good Luck to you my freind and maybe you are right we shoukd keep quite because you know as I do this is a golden time to be a Landlord

I fail to see how coming here to brag can be remotely connected to keeping your mouth shut.

If there is to be a shortage of housing, both private and social----which there will be;could it be that the government have a cunning plan. I always suspected that the upper echelons of Whitehall are full of people who,quite frankly, could show Arthur Daly a thing or two.

Why spend public money on house building when the private investor is willing to invest his/her own money?

Far better to allow private investment to exceed £1billion and then apply more tenant -friedly regulation and rent control.

What can landlords do about it ----nothing is the sad answer.

No government is going to concerned about the private landlord vote,and if implemented is likely to prove politically popular.

Of course , the present government will not do this---- will they?

Better the devil you know perhaps Iwonder.

Sleep well.

The current housing market is obviously distorted in favour of BTL landlords as can be seen from the recently published BOE figures. Therefore I believe that the Government is going to have to utilise the levers that the Housing Minister mentioned last week. I believe the Housing Minister’s action on self build schemes and improving the availability of funds for FTBs is just the tip of the ice berg. The new collation Government obviously recognises that there is currently not a "level playing field" between FTBs and BTL landlords and it is obviously considering all its options. The growing daily evidence of the advantage that BTL landlords enjoy over FTBs means future action by the Government in curtailing the BTL market is I believe inevitable. This will force lenders to concentrate in assisting FTBs rather than BTL landlords.

Colin with the greatest Respect your talking rubbish

Any landlord worth there salt can tell you getting money from banks today is at best difficult

Ive just checked today there are 219 products for BTL before 2007 there was over 3000??

Only one lender is giveig 80% LTV

A few More 75% LTV

and the rest are about 60% LTV

The fees chargeable are very high as are valuations

To say we have the upper edge on FTB is totaly wrong

What I do find is that the press is driveing FTB away doom and gloom ,The only edge BTL Landlords have is we are willing to take a chance and buy for long term investment and of course Yeild

I can never compete against FTB they will always win if they really need a house or have the guts to buy one

Dislexic Landlord I can only tell you why I feel the housing market is currently stuck (the PMs comment not mine) and what action I think Government will take. I would have thought it a good time for many landlords to reduce their property portfolios before the 2011 Finance Act.

colin please think about your last statement

landlords to reduce their property portfolios before the 2011 Finance Act.

If Landlords were to do this where do the Teanants Go??

Councils cant house them

Houseing assoacations cant house them

So I ask you where do they go

I was a landlords meeting and get this for a fig the city Council has less than 200 houses

and the city council has a waiteing list of 11000

BTL is the only part of the houseing market that is expeanding for rentals its a fact

BTL is now larger than Houseing accosations

Belive me Councils are working with BTL landlords

all I would say is the Goverment has to be very carefull with the rental sector

The fact of the matter is the goverment need Landlords

Going back to FTB we also need them too I like nothing better than a mix of rented and owners

Dislexic Landlord once private landlords like you start puting property onto the market there will be an over supply of housing that tenants and a generation living at home with parents will at last be able to afford.

Some action needs to occur that will force landlords to sell their properties to tenants or FTBs. I believe that it will occur sooner rather than later. I am sorry if this is not good news for landlords but I think that action will be taken by the Government which may force your hand to sell.

Colin you assume that landlords will want to see and You may be right

I think you may be on the Tracks of the Higher Taxes on profits when you sell a house

I for one will never sell property and the reason I wont sell is it never makes sence and if the taxs do rise on the sale of second home more landlords wont sell either

I can only speak for myself I wont sell and never will i at present all my properties yeild of 9% and rents are riseing

If I were to sell the net fig after all costs would never give me the same return so whats the point in selling

I hope you can see my point im not very good at writeing but you know that by now

I want my assets to go to the next generation

Property will always make money in the long term

But you may be right about other Landlord they may sell which will bring prices down more so there may be a silver lineing in what you say

Dislexic Landlord I believe the Chancellor will not just attack your capital gains on sale but your income through removing tax concessions on loan interest which are not available to any other sector of the housing market.

The "level playing field" is coming and the Goverment could possibly make changes to the Rent Act. Sorry to be the messenger of bad news.

Colin

If you are right I think you will find a lot of homeless Tenants

Ask your self the question what will happen to them

Its a Tory Govt look at the backers of that Goverment its folks like the Duke Of Westminster ect

And you know your wrong when you mention its only BTL who gain from Tax Relife what about Holiday Homes and Hotels and Bed and Breckfast

They all get tax relife on Bussiness Expences

This would If you are right not only BTL would suffer all existing home owners too house prices will fall and fall

But there again if that was to happen because of drops Large Landlords such as my self could clear up once again

If your buying Cheap priced property it could be even more worth while being a Landlord

We will have to waite and see but I do hope you are wrong

Landlords always win what ever the market you just have to revalueate and move on

But lets see it will be intresting

Dislexic Landlord you are right in stating most house prices will have to fall significantly 20-30%. It will give an opportunity for some professional Landlords ie Grosvenor Estates that you mention to buy however it will deter the speculative non professional who think a BTL will make a suitable pension vehicle. Many of these landlords will loose much of the capital gains they have accured to date. FTBs however will be able to compete again as it will as it will shrink the size of the private landlord market and create a "level playing field". It will also help reduce much of the inflation we saw in the last decade up to the credit crunch when FTBs were vying with BTL landlords and pushing up prices.

As for the tenants there is not a problem they will be the ones buying the private landlords property as better deals will be encouraged by the Government. in the overal package they will probably announce. From all my discussions with landlords they seem to think there will be thousands of tenants on the street however I can reassure you that will not be an issue!

The government will also enjoy some windfall CGT and additional income tax much needed by the exchequer.

Hi Colin again I would like you to show me where you get your facts ?????

I think its wishfull thinking on your part unless you can prove otherwise

and you have just shot yourself in the foot

Large Landlords will expand as you have just admited and I for one will move forward and clean up

and dont forget a lot of folks cant buy for one reason and another we well always have landlords

If prices are to fall as Ive said we will all be affected and in a way a big drop in property prices would be a great thing

I stopped buying in 2005 until last year ive bought some great property since the crash and I want more

Im happy to chase this market down the lower the better for me because as I have said time and time I never sell

Can I ask if its not to personal what do you do for a liveing in thease hard times

Dear Colin are you the IFA from Global Life

http://www.globaluklife.com/

If so show your true colurs please

You have a vested intrest in seeing the down fall in Landlords

Im sure you would advise us all to come and see someone like yourself to invest our hard erned cash

A life insurance sales man

hes probably on housing benefit - theres a lot of them about

Tim

I have had dealings with Life Insurance sales men for years oh sorry IFA,s

and in general I find them east end boys in west end suits (NOT PERSONALY COLIN) but thats what I thik most IFA,s are

I thought Colin was some thing high up in the tresury and I was listening to what was said with great intrest

Turns out Its what HE THINKS

mind he may have children liveing at home which he wants to of load when thay buy a house

Dislexic,

You are right I have spent the last 46 years in the Life Pensions and Investment industry.

However when was the last time you heard a Prime Minister talk about the housing market in the way the Prime Minister did earlier this week. It was probably Margaret Thatcher and I believe that one of David Camerons legacies could be to provide a "level playing field" in the housing market. He would be certainly remembered for it!

It will mean a lot of people including myself will loose 20-30% of the current equity in their properties but it will mean a generation of tenants and adults living at home with parents will be able to buy for the first time. It will stabilise the property market in the longer term once the initial shock goes through the system.

If I was in David Camerons shoes I would have no hesitation in implementing the policy as it is only my children's inheritance that is "going up in smoke" and Dislexic you are right again I will be able to get them out of the house a lot quicker!

Hi colin

Ive just been reading more about the work you do and by what I can see you help your Cliants Avoid paying taxes ???????

so you are guilty of what you say your against

You sell tax efficiiant ways of avoiding Taxs this is your

You Sell IHT Free Investments

http://www.rubii.co.uk/content/advisers/iht-free-investments/colin-cloy

Talk about the kettle calling the pan Black

Hi Colin

I see this is an old chestnut with you

http://www.mortgagesolutions.co.uk/mortgage-solutions/news/1933945/ifa-calls-abolition-landlord-benefits

Dislexic it is nothing personal against you but as you say the kids will have to find some where to go!

Having been an employee virtually all my working life I do not have to capital to get them started on the housing ladder so it was either help sort out the housing market or the children will have to wait for an inheritance!

I have done all I can and I believe that the PM and Government Ministers are fully well aware of all the issues affecting the housing market. We can only wait to see what may occur during the lifetime of the Parliament.

Colin Im really sorry to here the problem you have and I do feel for you I have a son and im a Grandmother too

I work and live in the North East of England and I can tell you that FTB can get on the property ladder you can buy 2 bed flats in good areas up here for 60000

I dont know where you Children Live but it sounds as if your in the south where prices are totaly stuppid

Very High Prices help no body other that existing owners and un less there down sizing it is not helpfull

I have said I really want prices to drop and I think we have a way to go yet and hopefully this will help children to get on the Houseing Ladder

We need FTB and Landlords and I hope Mortgage lending gets better for FTB I dont think it will get a lot better for landlords 30% Deposits will be the norm for a long time to come

and if banks start lending to FTB at sensible leveles say 95% we can look forward to tham comeing into the market

The failings of the British houseing market has gone on for years and the blame in my opinion is the dear old banks lending to much

and this is the rea cause of hight inflation in houseing

Its been a great debate and I have enjoyed it as you can tell

Have a good weekend DL

this is from the ft today -Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/9ec00fc4-1aa3-11e0-b100-00144feab49a.html#ixzz1ARvdBFhw

In spite of fears over the rise of the 100 per cent mortgage, the data clearly show the UK as a whole has a relatively low leveraged housing market with a loan-to-value of property ratio of about 30 per cent. I Believe the market in london and the south east will recover in 2012 with growth of 10 % -there will be olympic effect and people foreget all bout all the cash rich foreign buyers especially from china. With the effects of globalisation there will be a further increase in foreing buyers in london and the south east. All these first time buyers only often consider there own situation and relate the situation to themselves and assume as they cant afford to buy a property therefore prices will fall. Lets wait and see.

Dear All, as my name suggests, I am considering entering into the buy-to-let market and would greatly welcome your advice. I don't know if this is the kind of forum to ask advice, however I have read your many comments with great interest, and hope you don't mind me learning from you.

My father owns a portfolio of 11 BTL flats, and this provides his entire pension income. I am in my mid 30's and hope to build up a modest portfolio of my own with the same goal in mind. Like Dyslexic Landlord, I wouldn't intend to trade or sell properties, rather to buy-and-hold. I would aim to pay down the mortgages over the years, and 20 years down the line, hope to own the properties outright, living off the rental income.

I am an international private banker (with only limited knowledge of UK finance) and agree entirely with the views of Tim Reynolds above. I see the UK property market strengthening from 2012 onwards.

My area of focus would be south London or possibly Brighton. My question to you is: is it better to buy two-bed flats or one-bed? I read conflicting articles, and am not sure whether anyone has a strong view that one is preferable to another. I could (mortgage permitting) buy 2 one-bed. However is it better to be less leveraged and buy one 2 bed with the aim of increasing this to more properties in the near future. Any strict "no-no's" when looking for properties? I hope it's ok for me to ask your views. Thanks.

Hi Trainee Landlord,

I hope you get some good responses here - but if not, you might find more people respond to discussions posted in our forums. I'd recommend putting up a similar post over here: http://www.citywire.co.uk/money/money-forum and we'll do what we can to get you some answers.

Hi Trainee Landlord

Just read your blog I cant tell you what to do but im happy shareing nmy thoughts

I never buy 0ne bed flats there harder to let and tenants move on a lot faster so you have more voids

Borrowing to buy is not a bad thing but yiu need to give it a lot of thought

at present I buy only with a 30% cash deposit and in genaral I would never go above 50% borrowing on my whole Portphlio

I always buy on Fixed Rates and look for a yeild of over 9%

Long term you will do well but you will have to find your market that suites you best

I know 100s of Landlords and we all do things differantly

Best of luck

DL

Thanks very much for your replies. DL: I agree entirely re: the borrowing levels and also that fixed mortages offer much more security. Thanks for your views on 2-bed vs 1-bed. I have now posted on the other site suggested by Mary Hamilton above. Hope to join you again soon to share my experiences!

yep must agree its hard getting BTL mortgages still,

its getting better all the time now prices are stablising in the derbyshire area,

personally ive not put rents up for the last year ,consentrating on looking after my tenants instead..

lets see if the interest rates go up then !!! i dont think they will though ..not for a while,

I am a small time residential landlord with a hand full of properties currently rented out. I feel that I have come to a stagnant point where buying seems to have tightened up. I would love to continue to expand as I have a good system for sourcing tennants and could fill a few more properties.

Can anyone offer a newbie advice on the best ways to expand with structure ?