The U.K.’s largest property sellers are getting ready this year for an explosion in real estate for sale, via distressed sellers of Buy-to-let landlords, struggling with repayments. A wave of repossessions this year are expected, as more and more borrowers hit the wall after years of never-ending price increases in the U.K.’s housing market.
Seasoned auctioneers are claiming interest in their sales have been rising rapidly over the last few months, and many are expecting more to come. The Buy-to-let phenomenon of the 1990’s, has come to a crashing end since the beginning of the property slump, towrds the end of 2008. The end of 2009, and 2010 will prove to be a lucrative hunting ground for many bargain hunters in the U.K. commentators in the U.S. are already claiming that the ‘bottom’ of the housing has already been met, and now is the time to buy. http://www.cnbc.com/id/31388528
The Council of Mortgage Lenders revealed that in the first quarter of 2009 house repossessions rose to 12,800. The Bank of England now estimates that around 1 in 10 borrowers in the U.K are in negative equity - where the value of their loans exceed the current value of their homes. the situation in the U.S is far more severe, where 1 in 10 households are in a state of default on their mortgages - either late in payment or moving into foreclosure.
One of the U.K.’s leading auctioneers, said that out of 430 houses they were advertising, 300 were from distressed properties, and they are expecting more - the majority of these are from failed buy-to-let investments.
Lending Criteria
In the 1990’s, the buy-to-let bonanza took off, when affluent investors looked to supplement incomes with more investment properties, fuelled with added bonus of rising equity values. Re-financing was welcomed with opened arms from the banks, and easy cash made everyone happy. Prices soared, and confidence in the market boomed, creating the inevitable bubble, with banks offering incredible amounts of cash to buyers with little capital to back them up, when times got tough. As soon as re-financing dried up, around the start of 2009, the buy-to-let market collapsed, as many were simply re-financing to extract cash from their properties. Many buy-to-let landlords simply couldn’t make the repayments. As the recession worsens, in the U.K. and the U.S., many banks behind the scenes remain in extrordianry trouble, and desparately try and shore up the hige debt issues. In the U.S., banks have been allowed relaxed accounting rules to fudge thier figures and report extrordinary financial profits, on the back of losses that make the eyes water, running into trillions. The recession, believe it or not, has a long way to run. U.K. banks are currently picking investors to lend to who have immaculate lending records, and very large deposits. Any excuse they can give to avoid lending, they will pounce on - if you have an immaculate repayement record, but too many houses - you’re out. All of this doesn’t lay well at downing st., after their attempt to rejeuventate the lending market by helping the banks with financial stimulous, the banks still refuse to play ball.
Market Saturation
With the stagnant housing market, rental properties have begun to spring up all over the country, as sellers turn to renting as a way of reducing repayments. As the rental market has now become saturated, this has in turn driven down the amounts potential landlords can demand for the properties.
Britons now believe that buy-to-let is a financial breakeven stratgey, as interst rates are increasing, with unwelcome thought if inflation on the horizon. Many investors had been dazzled by high yields offered by 2nd and 3rd homes and rental values, but inevitably, there were many who didn’t consider the down side. As cash was cheap, and property priced were doubling every 10 years, it seemed inevitable that there was money to be made. Many expect this year to be an extrordianary one for investments. In the last two years, many people who have been sidelined as prices were reaching their peak levels, have now come to the fore and are looking to return to the market. Has the market reached it’s bottom? Have a look at the current houses for sale in your area: http://www.sell-my-house-quick.com/search