Buy to Let: the horror still to come

[Jeddo]

Buy to let loans fuelled the upward spiral in property prices, and they will play a central role in sending them down again. The buy to let speculators saw only the chance to make money, not to lose it. Now losing is not only a real possibility, it is a near certainty for anyone who is not in it for the long-term, which could mean 10-15 years.

There are now officially one million buy-to-let mortgages. Unless the people who burdened themselves with these loans know what they're doing, and few buy-to-let punters really do, the most sensible thing to do in the face of continuing rising interest rates and falling property values, is head for the exit. Sooner rather than later. Trouble is the price they will get for their 'investment' will be whatever someone is prepared to pay in the present climate. That could be painful enough. But the longer they wait to sell, and the further values continue to fall, the more likely we are to see a panic.

It's a classic crash scenario.

[Paul Carcone]

The really clever buy-to-let investors are actually coining it in at the moment...There is a very little known scheme buy which these companies can acquire new build properties for a fraction of the asking price and are renting the properties out until this current cycle comes out of the Bear phase.

It is the really greedy (or stupid) buy to letters that are losing as they overstretched themselves and are being forced to sell as interest rates increased and their equity ratio dropped.

However, it is true that the buy to let market is a long term gain invstment at the moment and should only really be entered with this in mind. Any amateurs in it for a quick buck will be sorely disappointed.

[Tony]

There will be bargains to be had in the new build sector as the developers try to raise much needed cash. I see that George Wimpey are offering guaranteed rental yield until 2012, pretty good as long as you can raise enough cash to buy one. With rents going up and property going down it must be a good time to enter this market.

There are also lots of buy-to-let property clubs with hard sell seminars that misled a lot of amateurs. See: Champion of buy-to-let boom succumbs to credit crunch | Money | The Guardian

You just wouldn't trust a company with a background in pyramid schemes.

[Paul Carcone]

No...Absolutely no...to anyone who has ever had anything to do with Pyramid Schemes or any sort of MLM.

It's all very seedy and anyone who buys a property from a company who engage in these sectors deserves all the negative equity that they get!

Paul Carcone

[Jeddo]

I really would beware anything innovative in the buy-to-let market, or for that matter in the new-build sector unless you are 100% sure of what you are doing.

Let's face it, with the housing market in its present state, there will be no shortage of businesses coming up with plans to 'help' buyers. All they are doing is capitalising on people's fears and ignorance.