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Investors in north east England still trying to recover from 'fake' promises from some buy-to-let investment seminar firms
Just before the house price bubble burst in the summer of 2008 buy-to-let seminar firms were promoting the north east of England as the holy grail for Landlords.
Investors were signed-up with the promise that they would become "property millionaires". It was all too good to be true but many UK and Northern Ireland investors were caught-up in the ‘dream’ and invested their money.
From 2002, these companies advertised free "workshops" in newspapers, on the radio and via a mailshot campaigns. Thousands signed up, sometimes handing over £10,000s in seminar, membership and sourcing fees.
Once hooked by the promise of property wealth, the companies stoked the frenzy even further, promising a fast road to riches via sales of flats bought "off-plan" in Spain and Florida, as well as the UK. These properties were often little more than a developer's intention for the future.
Since 2008 many of these firms went bust, leaving many would-be landlords nursing losses ranging from about £50,000 to more than £500,000.
After the firms went to the wall, thousands of property owners were left with assets worth far less than they had paid for them and in the current economic climate they are struggling to financially recover.
Some had title to, or had paid deposits on, properties which remain unfinished or not even started. Others were not worth the purchase price and remain in negative equity.
Investors from 2005-2008 were hit with the double-whammy of paying for overpriced properties back then and now the North East property market is still well behind other regions, with price growth hardly registering as prices are now 10% lower than they were in 2007, which is 12 years ago (according to the Office of National Statistics).
The Demos-PwC Good Growth for Cities Index 2018 measures the performance of 42 of the UK’s largest cities against 10 indicators including employment, health, income and skills, housing affordability and environmental factors.
The latest index has Newcastle Middlesbrough/Stockton and Sunderland all in the bottom 10, with all three areas being ranked poorly on income levels, health and home ownership.
Newcastle has also improved from 38th in the UK 10 years ago to 33rd now, though Sunderland is now ranked joint bottom with Swansea.
The prospects of getting a return on these investments are not favourable and investors are losing money. Many properties are in run-down areas and are hard to sell as the ‘dream makers’ oversold the locations when they were trying to off-load them.
Landlord Debt Advisory has grown into the UK’s leading Non-Statutory and Statutory property debt specialist.
We are ideally placed to represent clients in all aspects of property debt having unparalleled experience in negotiating sales and settlements for Landlords with insurmountable negative equity throughout out the UK.
Since 2013 we have completed debt settlements leading to over £70million of debt written down for their clients.
As a CD Fairfield Capital brand, Landlord Debt Advisory operate under the regulatory framework of both the Financial Conduct Authority and Chartered Accountants Ireland, this gives our clients the highest possible degree of protection and comfort.
Every client receives a bespoke, personally tailored service and proposal that meet their specific needs and the criteria of their lenders.
Landlord Debt Advisory has developed strong insight and relationships with all the main UK lenders, due to our transparency and consistent approach.
We have been assisting clients with these problematic portfolios – advising them on which properties to retain and which to resolve or sell.
As a company we have successfully completed sale and settlement cases for 100% of all Landlords who have instructed us to assist them since 2013.
CD Fairfield Managing Director Phil Davison said: "There won't be a situation that we have not seen before and there is an answer to any situation. It depends on the client and what he or she wants to do.
"Before our clients make any decisions we are going to look at all of the options available to them. Using our experience and tried and tested case review process we’ll then make the appropriate recommendation but it is up to the client to decide what way we move forward from there.
"The other option after being informed of all options is that they take no action and wait and see what happens with the market long term. At the end of the day none of us know what is going to happen eight to ten years down the line.
"Looking at some parts of the UK that haven't recovered from 2008 it does not look great. So, for the sake of having a conversation with us and being better informed it makes sense to get in touch. Our team is comprised of CeMAP qualified mortgage advisers, ex-bank staff, Chartered Accountants, an Insolvency Practitioner, asset management and legal professionals who have completed 100s of cases for Landlords and homeowners. We currently have over 700 ongoing cases, with well north of 1000 properties being worked on as we speak.
"Naturally people who chose to get into investment are doing it looking for a positive outcome. In most cases, they get that but in some they don't. We are here to assist when it hasn’t worked out.
“It’s sad that many clients have been clinging on for many years to buy to let investments that will never work out. Unscrupulous property sourcing and investment firms have a lot to answer for.
"We tell people what their options are which can include selling some negative equity properties and negotiating affordable settlements in respect of the shortfall or re-financing to reduce the cost of debt to put the client into a sustainable long term position.
“It's not about doom-mongering. Situations can improve and get worse. but this is about informing people and giving them the right advice."
If you are concerned about any of your properties in your portfolio that are in Negative Equity see how we can help you today on 0161 222 4311.
Landlord Debt Advisory are a commercial partner of Property Tribes.
I stopped buying in the NE in 2005 because I saw house prices rising so fact
I saw the Southen and the Irish investors lose houses on end in the crash and I purchased quite a few
at one point I was one of the few Landlords buying
Houses that were sold for 145k were mine for 75K
Flats which were sold for 95K were down to 50k
today the houses are worth around 110k
flats are worth 75K
The same thing is happening now I am seeing small operations finding houses for Southen investors again
My Guess is the market will run out of steam again one way or another
The Likes of Inside track were involved with new builds sold way over value and again a lot have not recovered
You really need to know what your doing in the NE
street by street and you can be so easily mislead with a high yield
fools and there money are soon parted
My own business is strong but even I have a hand full of properties which are now on LTV of 100%
but yield is good and I have made the cash available to pay down the Mortages in 7 years if we see no more recovery.
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
I'm from Teesside and can echo the original post. Since 2008 the prices on street houses plummetted by 30% and haven't recovered. As I've stated in previous posts they will be thousands of investors/house owners on interest only mortgages coming to the end of their mortgage, and having to find the balance.
I cant see property prices rising in the North East by much in the next 5 years. Fortunately I can pay off the balances but it sticks in my throat having to do so.
Its a ticking time bomb ready to explode and I hope people realise that fact.
when the crash happen I piled back in buying low priced property
all of the property purchased after 2008 has made money
in 7 years I have some Mortgages with ME coming to an end and I will re balance my portfolio at year 6
I will also have my Directors pension so I will be less dependent on BTL
I was very worried at one time but with the actions I have taken S24 should be less of a problem
I wont say its been an easy ride because it has not But If all goes to plan it will work out fine
I am glad I had my time and Im sure new Investors will look at our experiences and say God you had it easy
I would rather be a Northern Landlord than a southern landlord going forward there battles are just starting now
The SE is going to see some hard times where property prices will stagnate or fall and S24 kicks in ...
How do you come to that conclusion DL? Seems to be the same "Sound bite" approach to the SE.
If you mean my view on the SE
I think there are headwinds for the south east
If you look at every reason why the SE has done well since the last crash
you will see the Ball Park has changed
Low Interest Rates
NO PRA lending
NO Stamp duty or low stamp duty
Less overseas money coming into London
S24 and Stamp Duty alone would slow the Landlord market but with the rest of the changes its going to struggle
We have already seen a post of London landlord on how a property was down valued
The smart money in the SE would have sold by now taken good profits and ran for the hills
and dont forget the EU Factor on top of the changes
It may turn out badly for highly leveraged BTL Investors and I always said PRA and S24 would have a much harder effect because of the size of mortgages
and thats why the Govt introduced PRA and S24 because they knew it would effect the SE Bubble where first time buys struggle to buy a home
all that is needed now is a Rent Cap to add to the misery of landlords in the SE
London is a different beast to the rest of the SE, home counties in particular.
what ever happens in London effects all parts of the UK at some point
The closer to London PRA Stamp Duty and S24 has more effect
it has less effect the further an investor is away ???