Today, the FT reported:
"Rescue plans for buy-to-let landlords, who face the prospect of seeing properties in their portfolios repossessed, are now being launched as the housing market continues to collapse.
Egerton Partners, an advisory firm, is one of the first groups to set up a plan. It is seeking out wealthy investors who might be interested in putting up capital to help struggling buy-to-let owners with property portfolios of £5m to £30m.
With such “partnership-agreements”, the buy-to-let landlord would retain ownership of the property, but the investor would receive any return up to a stated threshold. The original owner, however, would have the chance to benefit if rental yields on the property exceeded the threshold laid out in the contract.
"The arrangement allows the buy-to-let owner to maintain an ongoing role in the management of the portfolio and have a chance to gain a slice of the upside, if it is impressive,” explains Chris Fleming-Brown, a managing partner with Egerton."
There is well over one million officially recognised BTL mortgages in the UK, with many more hiding as owner-occupier mortgages. Overall, BTL accounts for over 10 percent of all outstanding mortgages. It is going to take an army of "wealthy investors" to bail out the BTL mountain of bad investments.
With UK house prices already down 15 percent, and the economy in recession, it is only a matter of time before the BTL market is gripped by an historically unprecedented panic.
To coin useful old cliche, it is going to be a race for the fire exit. If you are first through the door, you might survive. Everyone else will be destroyed as the whole rotten structure comes crashing down in flames.
I wish it were otherwise, but BTL was always a scam. It was always going to end this way, with far too many naive investors losing everything.