Buy-to-let: bets with the housekeeping

Last week I posted an item about the implications of unsustainable house prices for owner occupiers. Buy-to-let investors merit a special entry.

10% of the UK housing stock is accounted for by the privately-rented sector. The buy-to-let fashion has not increased this proportion – only facilitated a shift from some pretty tough landlords, private but very professional, to a lot of amateurs. About 75% of privately-rented homes are owned by individuals with fewer than 5 properties. They are effectively running a business inside their household finances. It’s now a bad business to be in. They are also likely to be the wrong people to be running it.

REITs: hot property?

A commissioning editor for a business book publisher is looking for someone to write a book on REITs: ‘closed-ended’ investment trusts investing in properties which (with new HMRC concessions) will be able to pass income and gains through to investors without double taxation. Was I interested? No. I don’t have the time. But hang on. This could be a very short book. So here it is.

House prices: crash postponed or crash avoided?

The Nationwide House Price Index for the UK ‘average’ property reached £165,000 in June, was up another 0.8% in July and Nationwide have just announced the same increase for August. In real terms, adjusted by general inflation, the new level is 4% above the peak immediately preceding the dip in 2004/5 but it is too early to call either the bulls or the bears back then right. London dipped earlier and rallied more, tied intimately to the stockmarket and bonuses.

Does Fidelity Special Situations manager Anthony Bolton disprove active management sceptics?

The performance myth persists partly because of the emergence from time to time of ‘legendary’ managers. One such is Anthony Bolton, soon to retire as manager of Fidelity’s Special Situations fund. How does he fare when measured against such tests? He’s good but not good enough to replace a tracker, even to the extent of 20%. He also demonstrates the fatal practical flaw of active management:even for the best managers after the event, relative performance is so inconsistent along the way that most advisers, let alone their clients, cannot stay the course.

Approaching old peaks: so what?

Stock markets around the world are closing in on the index levels achieved before the last bull market turned into a bear market. With hindsight, we can view the old peaks as bubble territory, inflated by foolish notions about technology. Six years later, it is tempting to think the same levels must again be dangerous [...]