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BTL Landmine BOOM

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    BTL Landmine BOOM

    It pay to learn from other peoples mistakes, There was a BTL boom in Ireland that ended badly for a lot of people

    Many of the borrowers enjoyed high incomes or bonuses during the boom - accountants, lawyers, doctors, builders, mortgage brokers but took big hits in the crash.
    I really don't know why people would pay from their own income for someone else to live in their apartment. If someone would not pay enought rent to cover your mortgage, you were paying too much for the apartment.

    A lot of residential investment property was subsidised out of normal income in the hope of future equity gains, but that surplus income is no longer available.

    Due to the more than 40 per cent fall in property prices since 2007, the option of selling the property and discharging the debt is not an option for those who find themselves in difficulty. One investor who spoke to The Sunday Business Post had four properties mortgaged with one lender for €1.8 million. He wants to sell the properties for €800,000 and service the remaining unsecured debt from his non-property business income, but the bank will not approve the deal.

    I would call that a BIG boom.

    In the worst case scenario, the losses would exceed €6 billion for the four institutions alone. Across the whole sector, that translates roughly to a €12 billion hit.
    The buy-to-let landmine | The Post
    Fiscal nomad it's legal.

    #2
    If you get in the situation you can't get anyone to pay rent equal to your mortgage and you can't sell the property... what else can you do but get the most rent possible and pay the deficit? Default on the mortgage? Wouldn't that imply bankruptcy and screw over any contractor working through a Ltd?
    Originally posted by MaryPoppins
    I'd still not breastfeed a nazi
    Originally posted by vetran
    Urine is quite nourishing

    Comment


      #3
      Hopefully whatever triggered the collapse in property prices in Ireland will come to the UK soon, if it's not here already.

      Just got to look at sites like NetHousePrices to see how much even the most mundane of properties has shot up in price over the last 10 years. Doubling and tripling of prices. Unbelievable, and unsustainable. Ask any first time buyer.
      Feist - 1234. One camera, one take, no editing. Superb. How they did it
      Feist - I Feel It All
      Feist - The Bad In Each Other (Later With Jools Holland)

      Comment


        #4
        Also, as a freelancer, you not be in the position of remaining in the same location and have no other choice but to subsidise your apartment whilst let.

        Happen once to myself, although the apartment was empty, so not really but similar. Could not sell. As any good investor should know the value of your investments can go down as well as up. I'm guessing many of those landlords who now find themselves in trouble did not consider this.
        "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

        Comment


          #5
          Any landlord who's finding themselves in trouble with the interest rates as they are at the moment is a muppet.
          While you're waiting, read the free novel we sent you. It's a Spanish story about a guy named 'Manual.'

          Comment


            #6
            Originally posted by scooterscot View Post
            Also, as a freelancer, you not be in the position of remaining in the same location
            That was my reasoning behind not getting on the ladder in the late 90s and early 00s.

            Decided to spend it on fast cars and women instead. The rest I just wasted.

            Could have had a mortgage free mansion by now if I'd thought of the future instead of more immediate gratification. Didn't expect house prices to triple practically overnight though.

            So now I've built up a decent warchest whilst renting where the contracts were I'm now waiting for the bubble to burst, hoping it doesn't take my savings with it.
            Feist - 1234. One camera, one take, no editing. Superb. How they did it
            Feist - I Feel It All
            Feist - The Bad In Each Other (Later With Jools Holland)

            Comment


              #7
              Originally posted by doodab View Post
              Any landlord who's finding themselves in trouble with the interest rates as they are at the moment is a muppet.

              Yeah, probably over-leveraged and didn't save any for the rainy day when the property (or properties) in their portfolio is experiencing a rental void.

              If there weren't so many MPs with vested interests in BTLs I expect they'd have introduced additional taxes on them by now.

              They do keep banging on about house shortages so why allow all the BTL-ers and second/holiday home owners get off without significant penalty, seeing as they'd be an easy and maybe popular target?
              Feist - 1234. One camera, one take, no editing. Superb. How they did it
              Feist - I Feel It All
              Feist - The Bad In Each Other (Later With Jools Holland)

              Comment


                #8
                Originally posted by doodab View Post
                Any landlord who's finding themselves in trouble with the interest rates as they are at the moment is a muppet.
                What a helpful contribution. Being a muppet isn't exactly illegal or uncommon, and letting a large number of people go bankrupt "because they deserve it" doesn't exactly help the economy.
                Originally posted by MaryPoppins
                I'd still not breastfeed a nazi
                Originally posted by vetran
                Urine is quite nourishing

                Comment


                  #9
                  BTL

                  I had an interview around 1.5 years ago and that was at a large data company working on a project with HMRC. They were setting up a database that would suck in data such as:

                  Council tax names
                  Mortgage names
                  Home insurance
                  Letting agency details

                  And using this to identify the BTL landlords who were not paying any income tax.

                  I'm just casting my mind over the people I know with BTL's (including my landlord) and I 90% sure vast majority do not pay any tax on the income.

                  Wouldn't be surprised if HMRC bring out a target on BTL landlords soon.

                  Comment


                    #10
                    Originally posted by d000hg View Post
                    If you get in the situation you can't get anyone to pay rent equal to your mortgage and you can't sell the property... what else can you do but get the most rent possible and pay the deficit? Default on the mortgage? Wouldn't that imply bankruptcy and screw over any contractor working through a Ltd?
                    The point was a lot of the people going into BTL started off with a shortfall between their rental income and the mortgage. This was part of their investment strategy:
                    Buy apartment rent it out, pay the difference between rent and mortgage.
                    Sell apartment £50K profit, after extra mortgage payments still have profit. Simples.

                    I discussed this several times with people going down this route, they would not be talked out of it. They looked at me like I was trying to steal money from them.
                    Fiscal nomad it's legal.

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