How you can own 20 houses with salary of £20K only in UK ?

Yes.. you can do it with Mortgage equity withdrawal  or MEW...
My landlord owns now 8 houses making a salary of 12k per year. Can you believe it?


MEW stands for Mortgage Equity Withdrawal. It is also known by the term Equity Release. It means cashing in on the locked up equity in your home.

For example if you bought a house for £100,000 and over the years the market price of your property increased to £150,000 then you would have equity in your house of £50,000. This does not take into account any mortgage repayments and any deposit that you intially put down on the purchase.

With record low interest rate levels, credit has become cheap and people have rushed in their masses to withdraw equity from their homes. They have seen how much extra their mortgage payments are after they have withdrawn their equity and used their homes as cash machines. Sometime not just once but twice or more as they have seen the value of their home increase.
I never heard about this pratice in USA, but it is very common in UK...

The questions now is
If the equity in the home is below than the outstanding mortgage, Do yo make up the shortfall ?


kal..

see this nice link  http://www.parkerchris.pwp.blueyonder.co.uk/vocationvocationvocation.html

Yep, its a dog eat dog state over here....I think its crap but then you have to wonder why there are so many BTL pimps over here (i.e. - bad, money hungry landlords in for a quick buck).

Why....because salaries are beyond dismal for so many people so they have to do everything that they can to survive. Even the more fortunate have jumped on the band wagon....its absurd! I have posted my thoughts on many threads about this topic. Very sad because they lock a lot of people out of buying homes and have tax advantages on top of it.  Yes its a free market economy but its terrible...no other way to describe it. 

That was very loud

That was very loud

It may have been loud but there is a lot of truth in it. 

My mother does something quite similiar in the states but to be honest I don't fully understand it all.  She has very little money yet has managed to buy up at least 3 houses I know of at the moment.  What she does is buy houses that have been repossessed at a low cost, fix them up, sells them and makes money out of it to turn around and buy more property.  She is on a very low income and I don't like to ask many questions regarding her finances but I just don't see how she gets the money in the first place or the approval from the bank to buy the house.  She has bought some gorgeous houses I could only dream of because they have sat empty for a while. Maybe it is a totally different scheme as she doesn't own these houses for years.

My MIL does this as well.  It started out as her way of earning a living as the young divorced mother of two boys when she had no work experience.

Not everyone is a bad BTL'er but the ones that own several and keep going at it....its just too much considering this island is over crowded and there are so many people that have to resort to renting rather than having a chance to be able to purchase their own house because property prices keep rising. I have seen several people on the property shows that own 100+ rentals.

There was an article in the paper a few months ago about a couple based in Ashford, Kent who were the biggest BTL homeowners in the UK.  Their model was to buy as many standard 2-3 bedroom terraced and certain cheaper semi-detached houses in the greater Ashford area.  I can't quite remember how many they owned, it might have been closer to 500 but their fortune was over £50 million or some such outrageously large amount - mega millionaires.

I just saw a clip on cnn.com about the property market in Denver and this estate agent had a list of houses and half of them must have been owned by the bank, repossessed or had been sitting on the market for ages.  The prediction for 2007 in the US is an almost 1% drop in house prices, the first drop in about 40 years!  I wonder if this will happen in the UK anytime in the near future?  I suspect the dynamics of the UK market are quite different.

We live near Headingley in Leeds, an area with many student rentals, which has skewed the whole balance of the area over the last few years, even causing schools to close. However, in the last year or two, a lot of new blocks of flats have been built in the middle of town, specifically for students, which are proving very popular and for the first time there are a lot of empty houses with To Let signs in the area.

It will be very interesting to see if these houses start to come up for sale, if landlords can't afford to pay the mortgage without a rental income. They may have to reduce the asking price as well, as they tend to be quite run down, and may need a lot of work to convert back to family houses.

Why....because salaries are beyond dismal for so many people so they have to do everything that they can to survive. Even the more fortunate have jumped on the band wagon....its absurd! I have posted my thoughts on many threads about this topic. Very sad because they lock a lot of people out of buying homes and have tax advantages on top of it.  Yes its a free market economy but its terrible...no other way to describe it. 

I agree with you Jules, whole heartedly. 

My great-grandmother had amassed quite a fortune by doing this very thing way back in the 20s.

Now, and especially here in the UK, so many of us are priced right out of the housing market; it is so high that we can never hope to get on the ladder.  With people getting tax breaks to buy up more than one property, it is no wonder.  I'm not holding my breath for a collapse in the housing market.   

can someone briefly explain what tax breaks there are for BTL purchases?

House price rises show signs of slowing
The lender found that key workers were unable to afford a property in 363 towns out of 517 across Britain.

http://www.ft.com/cms/s/555bf61c-e8f8-11db-a162-000b5df10621.html

Now, and especially here in the UK, so many of us are priced right out of the housing market; it is so high that we can never hope to get on the ladder.  With people getting tax breaks to buy up more than one property, it is no wonder.  I'm not holding my breath for a collapse in the housing market.   

Another issue is that people who already own homes use the wealth they have gained from their property to pay for their  children's mortgages.

Which reduces the possiblity of social mobility for those who weren't fortunate enough to be born into the right families.