Here's an interesting piece on Reuters, predicting a buy-to-let-induced disaster. If Northern Rock's the pin, it says, buy-to-let's the bubble. The story offers plenty of common sense, comparing earnings to interest payments on buy-to-let and offering the scenario that capital growth doesn't continue to offset any difference. The story's told with the that undercurrent of triumphalism that pops up in the press occasionally... as if it has never occurred to the writer that everyone - evil coyote landlords, honest families alike - will suffer either directly or indirectly from a serious prolapse in the housing market. What's crucial to know is the proportion of buy-to-let property that was bought-to-let long enough ago to absorb the RICS's (much quoted this morning) estimates of a (4-to-1) 10% crash in the London market or a (much more likely) year of zero growth, and how many landlords are on 100% mortgages. I don't know. Do you?

RICS offers 9-to-1 on house price crash... any takers? [September 18, 2007]

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