Trying to make an easy-money BTL and a recruitment agent....how much sympathy I have...
http://www.thisismoney.co.uk/mortgag...age_id=56&ct=5
Like so many young professionals hoping to cash in on Britain's property boom, Paula Collins, a 26-year-old recruitment consultant from London, thought her money would be safe.
The buy-to-let market was booming and the deal from a Manchester developer seemed too good to pass on.
The two-bedroom flat in the Castlefield area was valued at £175,950, but the developer was offering a 15% discount, taking the price down to £149,500 - and best of all, no downpayment was required.
He would pay the 15% deposit. Paula simply needed to cover her legal costs and stamp duty. If it sounded too good to be true, it was.
After 18 months, in which Manchester, like many northern cities, has seen a massive oversupply of new city centre apartments, Paula's flat is now worth just £140,000.
Her mortgage costs her £900 a month, but she receives only £600 a month in rent. That's when she could find a tenant. Now the flat is lying empty, so Paula has to stump up £900 a month just to cover costs.
'The offer seemed too good to refuse at the time. My boyfriend had some buy-to-let properties and I decided to do this one as a long-term investment, but I hadn't anticipated that the property would be so debilitating,' says Paula.
'I paid such a high price, partly because independent valuers told us it was worth a lot more, and now I can't sell because there are so many apartments in the area.
'I'm at a desperate stage. I've lost an enormous amount of money - about £14,000. I'm getting married in a few weeks, but this has put an enormous strain on the relationship and led to endless stress and tears. It has greatly affected our chances of being able to buy a house of our own now, and it has certainly left me disillusioned with the buy-to-let market.'
Paula is not alone. There are 900,000 buy-to-let landlords in Britain, many spurred on in the past few years by rising house prices and the accessibility of mortgages tailored for buy-to-let investors.
Many saw it as a get-rich- quick scheme in a buoyant market. But interest rates have risen, house prices are falling and people who have borrowed beyond their means, or didn't set aside money to cover periods when the property is empty, are finding themselves unable to pay the mortgage and being forced to hand back the keys to the bank.
Last week, Gordon Brown's adviser on the housing market, Kate Barker, confirmed that the buy-to-let market is heading for a slump. She said that higher interest rates, provoked in part by the sub-prime mortgage crisis in the U.S., combined with collapsing rental values, meant that small-time property speculators were 'vulnerable'.
She also indicated that the Bank of England was unlikely to cut interest rates to help the market recover.
For Britain's buy-to-let owners that is disastrous news. For these are not slick-suited property tycoons with money to burn: they are ordinary, middle-class people hoping that bricks and mortar would be the safest way to invest for their future - perhaps to help pay for children's university fees, or as a retirement nest-egg.
http://www.thisismoney.co.uk/mortgag...age_id=56&ct=5
Like so many young professionals hoping to cash in on Britain's property boom, Paula Collins, a 26-year-old recruitment consultant from London, thought her money would be safe.
The buy-to-let market was booming and the deal from a Manchester developer seemed too good to pass on.
The two-bedroom flat in the Castlefield area was valued at £175,950, but the developer was offering a 15% discount, taking the price down to £149,500 - and best of all, no downpayment was required.
He would pay the 15% deposit. Paula simply needed to cover her legal costs and stamp duty. If it sounded too good to be true, it was.
After 18 months, in which Manchester, like many northern cities, has seen a massive oversupply of new city centre apartments, Paula's flat is now worth just £140,000.
Her mortgage costs her £900 a month, but she receives only £600 a month in rent. That's when she could find a tenant. Now the flat is lying empty, so Paula has to stump up £900 a month just to cover costs.
'The offer seemed too good to refuse at the time. My boyfriend had some buy-to-let properties and I decided to do this one as a long-term investment, but I hadn't anticipated that the property would be so debilitating,' says Paula.
'I paid such a high price, partly because independent valuers told us it was worth a lot more, and now I can't sell because there are so many apartments in the area.
'I'm at a desperate stage. I've lost an enormous amount of money - about £14,000. I'm getting married in a few weeks, but this has put an enormous strain on the relationship and led to endless stress and tears. It has greatly affected our chances of being able to buy a house of our own now, and it has certainly left me disillusioned with the buy-to-let market.'
Paula is not alone. There are 900,000 buy-to-let landlords in Britain, many spurred on in the past few years by rising house prices and the accessibility of mortgages tailored for buy-to-let investors.
Many saw it as a get-rich- quick scheme in a buoyant market. But interest rates have risen, house prices are falling and people who have borrowed beyond their means, or didn't set aside money to cover periods when the property is empty, are finding themselves unable to pay the mortgage and being forced to hand back the keys to the bank.
Last week, Gordon Brown's adviser on the housing market, Kate Barker, confirmed that the buy-to-let market is heading for a slump. She said that higher interest rates, provoked in part by the sub-prime mortgage crisis in the U.S., combined with collapsing rental values, meant that small-time property speculators were 'vulnerable'.
She also indicated that the Bank of England was unlikely to cut interest rates to help the market recover.
For Britain's buy-to-let owners that is disastrous news. For these are not slick-suited property tycoons with money to burn: they are ordinary, middle-class people hoping that bricks and mortar would be the safest way to invest for their future - perhaps to help pay for children's university fees, or as a retirement nest-egg.
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