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The Options Band Waggon Has Rolled In To Town

Posted on September 22, 2009 by editor
Posted in Buy To Let Property, UK Property Market Comment Tagged , , , , , ,

The Property Options Band WaggonIf you are a regular property investor with deals coming in then you would probably have watched the demise of the NMD ( no money down) remortgage with a tear in your eye.


After the initial shock set in and the stunned silence which followed, there were then many reinventions of the NMD ideal. For months investors have been chasing convoluted schemes designed by brokers etc to enable similar outcomes.

Many of these schemes land the unsuspecting investor in some serious hot water tax wise, not to mention potential mortgage fraud.

However, as many of you should know by now, month on month, the few loopholes which were left by the banking system have been gradually closed one by one. Inevitably this will continue to happen until all those doors are firmly shut. A best guess-timate for this is within the next 12-18 months tops.

Option Contracts

So then, in the void which has been left by the NMD deal what has replaced it?

Allow me to introduce- The Option Contract. For those who don’t know, options allow you to effectively take over the asset without the need for a mortgage. They give you the option but not the obligation to buy at or within a certain timescale. Property Nirvana!

They are pretty common in commercial investing, but relatively new to residential in the UK. A different way to get in to property using very little or none of your own money has come to the fore.

Those marketeers who spent countless hours teaching new investors the advanced strategy of NMD are now on the latest band waggon- OPTIONS.

( Pause for trumpets and drum roll.)

Now, I don’t want you to get the wrong impression, Ive done some options, and they can be a useful tool. ( If you want to read about one of our option deals please click here.) However, they are ONE tool in the box, not the whole box full. Just as the NMD aspect was one tool.

Have We Learned Nothing From The Banking Crisis?

Do people never learn? Last night I was reading on a property forum a post from a well known options solicitor, who spends his time promoting options to the property investing masses. I’m sensing deja-vu here. It will all end in tears. This side of the property arena truly sickens me. The way unsuspecting newcomers are reeled in to the next big marketing hype. There are now a whole heap of brand new ‘experts’ doing seminars and networking clubs and charging handsomely for it too. These experts have been using options for a few months only at best. It makes my blood boil.

I am at a loss to understand where the ‘get rich quick’ mentality of modern Britain came from. Was it always there, or did it creep up on us when we were sleeping one night? Isn’t anyone prepared to work hard for their riches anymore? Big Brother has a lot to answer for.

Answers on a post card……

[climbs down from soapbox]


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  • Marcus

    Great observation on how options have been 'hijacked' by the marketing crowd. It's a shame because new investors have to go through the same shark invested waters as before.

  • Marcus

    Great observation on how options have been 'hijacked' by the marketing crowd. It's a shame because new investors have to go through the same shark invested waters as before.

  • http://www.propertybookwork.co.uk/ Gail

    This is important info for those considering investing in property. Buy-to-let is a business and requires you to work on it. Do not be fooled by the hype. Take care and research carefully to avoid the pitfalls. It is your money so take good care of it. There is always someone who would like to take it from you!

    Well done to Roberta for a terrific blog.

  • http://www.mypropertymentor.co.uk Roberta Ward

    Thanks again for commenting folks, Im glad it raised a question in some minds.That's what we are here for, so that everyone can see the clearly what goes on in property land.

  • http://www.mypropertymentor.co.uk Roberta Ward

    Thanks again for commenting folks, Im glad it raised a question in some minds.That's what we are here for, so that everyone can see the clearly what goes on in property land.

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  • davidlawrenson

    What a well informed post and what a good site you have. Well done.
    I have also commented on property lease options on my own blog. People entering into this arena should proceed with extreme care.

    • http://www.mypropertymentor.co.uk/ Roberta Ward

      Thanks for commenting on my lease options blog. I wrote this one some time ago now but it is still pertinent to the current climate of get rich quick types and the marketeers who pull them into the net.

  • marywaring

    Unfortunately there will always be some people desperate to do a “get rich quick scheme” and there will always be those willing to exploit that by charging them a fortune to attend a seminar to learn how.
    I agree……..I think it will all end in tears. Too many people will enter into it without fully understanding what they’re doing

    People need to understand that property is a long term investment- not a get rich quick. Like Gail said- it’s a business and like any business you’ll only be successful at it if you know what you’re doing.

    • http://www.mypropertymentor.co.uk/ Roberta Ward

      Yes we do seem to have created the 'golden egg' syndrome! People tend to forget that large golden eggs have to be pushed out first with effort ;-)
      Personally I think that some regulatory body along the line will spot what is going on and regulate the whole options thing-much as they did with SARB. Which has since died a death on investor circuits. Or, those using them will fall into a sense of false security thinking all is hunky dory until they come to exercise the option and find that Lad Reg has changed the documents and that theirs is no longer legal or worth the paper it's written on-let alone the money invested if any.

  • http://www.mypropertymentor.co.uk/ Roberta Ward

    Yes we do seem to have created the 'golden egg' syndrome! People tend to forget that large golden eggs have to be pushed out first with effort ;-)
    Personally I think that some regulatory body along the line will spot what is going on and regulate the whole options thing-much as they did with SARB. Which has since died a death on investor circuits. Or, those using them will fall into a sense of false security thinking all is hunky dory until they come to exercise the option and find that Lad Reg has changed the documents and that theirs is no longer legal or worth the paper it's written on-let alone the money invested if any.

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