Searching for the Truth About Buy to Let on Google

Searching for the Truth About Buy to Let on Google

10:04 AM, 13th January 2012, About 12 years ago 4

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Buy to let pundits fill acres of space online and in the media talking up property investment – but most of them have a vested interest in pushing products on landlords.

The main offenders are mortgage lenders forever talking up the market in surveys and house price reports – and including sly details of their buy to let mortgage deals at the same time.

The standard ‘buy to let is booming’ story relies on a survey showing tenant demand is high and highlights the profits landlords can make from rising rents.

The chart is from Google Trends based on searches for the term ‘buy to let mortgages’ – and this suggests landlords have a different agenda than the industry pundits who live off their fees and commissions.

Looking at the search volumes, it’s easy to see that buy to let mortgage queries follow an annual trend, with regular peaks and troughs around the same time of the year.

The figures do not show the full story until mortgage searches are compared to the number of buy to let properties according to the government’s Office of National Statistics figures.

These figures show a steady growth in the number of homes to let until the market peaked in 2006-07.

Since the late 1990s, the number of buy to let properties in England has almost doubled from around 2.1 million to around 3.8 million, with most added by 2007.

Lately, the demand for buy to let property from tenants has not increased the number of properties or mortgages pro rata, which suggests the majority of buy to let mortgage activity over recent months is for refinancing rather than purchase, aborted deals or rejected loans.

That makes sense in the current market.

Few landlords are buying. Many would like to but cannot raise the finance, while savvy investors can remortgage their buy to lets, and in many cases claw back their investment while setting the mortgage interest off against rental profits.

At the same time, they can build a cash fund or pay down their own mortgage to save money.

The chart also shows that despite a booming buy to let market, the underlying search activity for loans by landlords is significantly below the level at the top of the market – and is hanging around at the lowest level since the credit crunch, discounting the annual low each Christmas.

  1. New high in number of buy-to-let mortgages – – Aug 14 2007
  2. Buy-to-let mortgages fall by 85 per cent in the past year – – May 6 2008
  3. B&B Buy-to-let mortgages: Your tales – BBC News – Sep 30 2008
  4. FSA may take over regulation of market for buy-to-let mortgages – Times Online – Oct 19 2009
  5. Buy-to-let mortgages at highest since recession – Belfast Telegraph – Aug 13 2010
  6. Paragon restarts buy-to-let mortgages – Reuters UK – Sep 28 2010

Source: Google Trends

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3:52 AM, 14th January 2012, About 12 years ago

A former colleague of mine who was a part-time landlord had over a million in equity and asked his broker to remortgage to pull out £400000.00 to carry out some refurbishment work on his properties this  was in 2008/9
He was refused.
These mortgage companioes when it gets down to the nitty-gritty willl not lend.
So how are they making their money if they are not doing new business.
It would be great to hear from a lender how they expect to remain in business if they don't grow.
Otherwise they will be zombie lenders existing on what existing loans they have already.
I don't think their share value will hold up if they carry on this way.
Therefore they will surely have to start reducing their criteria to enable landlords to buy.

Mark Alexander - Founder of Property118

4:06 AM, 14th January 2012, About 12 years ago

The lenders that remain in business are comfortably hitting their targets Paul which is why they can afford to be so picky and very pricey compared to the fees and margins they used to charge pre credit crunch.

Mark Alexander - Founder of Property118

4:08 AM, 14th January 2012, About 12 years ago

Paul, do a search on "bunch of robbing bankers". It was written by my business partner over a year ago.

1:25 AM, 16th January 2012, About 12 years ago

I read that Mark; however it wasn't mentioned that if the bank suffers any losses they are allowed to offset the majority of their losses against corporation tax.
If they were prevented from doing this or the relief was considerably less than it is presently there would be a rapid contraction in the amount of monies advanced..
This as the banks would actually have lost their capital.
The govt will never allow this as reduced credit availability would impact on the economy so much that they would probably be  guaranteed  to lose the next election.
Remember govt castigates business for short-termism but they only do what the politicians have been doing for hundre4ds of years!!?
Being able to offset one's losses creates a false market of reduced moral hazard as the banks don't actually lose that much;  it is the taxpayer who loses.
So whether responsible or irresponsible the banks don't really lose whatever the ilending practices.
A lot of this is all do do with fractional banking and the big con that banking actually is.
If wages were at decent rates then people could revert to that old fashioned house purchase methodology.of saving hard for a deposit and then stuggling to obtain a mortgage;  but actually succeeding.
Or am I a bit behind the times!!?
If the government actually advised the populace as to how much corporation tax the govt had lost due to the irresponsible banks there would be riots in the streets;  this time by the middle-classes who are the one's bailing out the govt in increased taxes.

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