Buy to let Clubs
November 7th, 2008
Buy to let clubs take advantage of distressed homeowners
07/11/2008
Several buy-to-let clubs are striking sale-and-rent-back deals with desperate homeowners, encouraging members to profit from rising repossessions.
Investors Chronicle publishes an investigation today showing there are more than 20 groups in the UK using free seminars to promote the practice.
The method is being used despite assurances from the government that the Financial Services Authority will regulate the sale-and-rent-back sector.
07/11/08 Financial Times
HomeMove.co.uk – The UK’s independent property help portal.
Comment: This is a direct case of striking while the iron is hot for the purchasers. Groups of investors will be able to obtain favourable loans with loan to value (LTV) ratios possibly at around 60%. The banks feel this is a safe level to invest at and desperate sellers may have few other choices than to except a very low bid or go through the process of House repossession. However someone with house repossession issues could play off one large group against another and get a better deal for themselves.
In the most parts of the UK the house prices have dropped almost 15% on average since their peak last year. Some economists predicted this crash back in 2005 and are expecting a further 20% drop. The sale and rent back market has been growing at phenomenal rate due to the rising number of homeowners struggling with their mortgages.