Beary McBearface

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About Beary McBearface

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    All cruelty springs from weakness

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  1. From the thread: Source Nice example of how lending criteria have tightened (in terms of the income other than rental income). The age thing is also quite interesting. Source: CML, December 2016 - The profile of UK private landlords Never really thought about the number of people who will find it difficult to remortgage because a new mortgage would take them past the age of 75 but eye-balling those figures suggests it is going to be a big issues for lots of borrowers over the next five years.
  2. I see that tax exile has not yet robbed the wonderful Mr Alexander of his peerless judgement regarding what to say and when.
  3. Amir Sufi: household debt and business cycles

    Short video with Sufi discussing his research. The book he wrote in 2014 with his colleague Atif Mian, House of Debt, has been influential in policy circles and reflects the kind of analysis which is responsible for macroprudential measures like the Mortgage Market Review and the PRA's work on buy-to-let credit underwriting (SS13/16). There are two key differences between US and UK mortgage lending. Firstly, US mortgage lending is non-recourse; you can drop the keys to the house with the lender and they cannot pursue you for the debt. The same trick won't work in the UK. Secondly the core mortgage product in the US is a thirty year fixed rate mortgage and floating rate mortgages (what we call trackers and fixed rate mortgages which convert to SVR after an initial two, three or five year fixed period) are far less common. In the US what we call fixed rate (for an initial period) they call adjustable rate mortgage (ARM) reflecting that once the fixed rate period expires the mortgage resets to a floating (adjustable) rate. Source The "3/1" etc simply describes the length of the initial fixed rate period before the mortgage resets to the adjustable rate so a 3/1 ARM is what we'd call a 3 year fixed rate mortgage resetting to the lenders SVR at the end of the fixed rate period. In the US a big part of the crisis was home loans which households (and leveraged investors) could service on the initial fixed rate which they could not service on the adjustable rate one the initial fixed term expired and the mortgage reset to a higher adjustable rate. (There had been a treadmill of people refinancing at the end of each fixed rate period but when it all went awry there were no longer cheap refinancing deals to be had.) For UK borrowers in 2009 mortgages reset from relatively high fixed rates to SVRs, but the SVRs had fallen sharply (with a fair amount of help from the Bank of England) Source The main bonkers UK mortgage product of the 1997-2008 lending boom was the interest-only mortgage. Because of the fundamentally different structure of the two mortgage markets things played out very differently in the UK and the US in response to the recession that occurred alongside the 2008 crisis. In the UK, enormous volumes (as in hundreds of billions) of daft interest-only mortgages written before 2008 are still being serviced today (as of the latest figures CML analysis in June 2017 21% of mortgaged owner-occupiers are on interest-only terms), which is probably something like £200bn of mortgages. And then there's about £200bn+ of interest-only buy-to-let. These mortgages are easy to service at prevailing low mortgage interest rates so these boom mortgages are still with us. Residential Interest-only mortgages outstanding Source
  4. In the trade we call it "take-up time". A learner of modest talent needs time to assimilate new ideas or instructions.
  5. Hello. I hunt trolls. Do you too have a hobby?
  6. Worth noting that the CML analysis Neverwhere links to above was published in June 2017. All the changes that these leveraged portfolio landlord muppets are complaining about now in January 2018 were totally baked into the cake nearly 18 months ago when the PRA published SS13/16 in September 2016. Their 'business' amounts to betting on property with borrowed money and nothing else. Given the importance of leverage to their gamble the extent to which they take no serious interest in their lenders or the regulatory environment that determines the actions of their lenders has always astonished me. These people are clowns. Just like every other over-leveraged cretin allowed to bet with money on a rising asset, they never give a moment's thought to what happens if their lenders stop lending.
  7. I think it was Ah-so who pointed out that the cool thing about PRA SS13/16 is that it brought forward the full effect of section 24 from April 2020 to September 2017. Also worth noting that it makes them behave as if they were living in a world where the interest rate on a BTL mortgage was 5.5% A lot of what is going on here is covered by the analysis by the CML which Neverwhere posted about the other day on the AGTATBTL thread.
  8. The BTL IO mortgage rates thread

    5.04% mortgage interest rate and section 24 would be a spicy meatball. That financing will work for a lower rate tax payer holding a property in one of the more 'exciting' geographical markets with so-called 'gross yields' to reflect the anticipated levels of excitement (e.g. a tenant doing a moonlight flit and taking the carpets and the boiler). Provided the voids and bad debts don't add to your negative equity worries you can hang on to your terrible investment. Woo-hoo! You can't go wrong with pwoperdee
  9. A Goodbye To All That Buy To Let

    Compare the 2017 accounts to the 2014 accounts. The 2017 accounts describe themselves as "unaudited abridged financial statements" and include a directors report, a balance sheet, a P&L and notes (and a statement of changes in equity). The 2014 accounts describe themselves as "micro-entity accounts" and include only a balance sheet. There are £5.2m of assets on the 2014 balance sheet. You'd need a gross yield of over 12% to breach the £632k turnover threshold on those assets. It seems likely that at some point in the last four years the rent coming into the company breached the micro-entity turnover thresholds. Obviously if they've got 160 houses then a lot of the property is still held in their own names; even in the West Midlands £6m won't buy 160 houses.
  10. Merryn Somerset Webb - changed her tune

    Reading the article? An interesting novel approach lastlaugh. Seems like a harmless and even reasonable innovation, but where will your madness end?
  11. A Goodbye To All That Buy To Let

    The 2016 charges I looked at were Lloyds but the 2017 charges are NatWest (i.e. RBS)
  12. A Goodbye To All That Buy To Let

    I don't think they're filing as a micro-company. They look to comfortably meet the criteria for the section 477 of the Companies Act 2006 small company exemption from the requirement to present audited accounts: Source If the balance sheet assets are all property and the properties are giving a so-called 'gross yield' of something like 10% you'd still only be showing about £600k of turnover. As the leverage looks to be only about 50% if they've got access to reasonably cheap finance - say 4% - that gives you an interest bill of about £120k/year on your £3m worth of mortgages and a gross profit of about £480k, and they are reporting £450k so they are well withing the turnover criteria. If they have fewer than 50 employees (and administrative expenses of £300k/year they must have fewer than 50 employees) then they're fine to go without an audit.
  13. A Goodbye To All That Buy To Let

    The Stewardsons seem to be all over the place. Apparently they were looking to offload the whole lot to the mythical Chinese investor back in 2014: Source: PovertyTribes
  14. A Goodbye To All That Buy To Let

    Phil Stewardson, accidental landlord, speculating on how they might yet "build the portfolio to a reasonable size to float on AIM" (January 2017). This is obviously the definition of accidental landlord.
  15. A Goodbye To All That Buy To Let

    I mention the Stewardsons in the shobolerant, citing a July 2014 Richard Dyson article in the Telegraph, Buy-to-let gurus reveal their formula for making millions. The '"gurus" discussed in Dyson's piece are Jim Halliburton (the self-styled HMO Daddy, offering an odd brand of parenting to his HMO tenants which requires that Jim makes all visits to tenants with his cuddly Alsatian at his side), Steve Bolton (the brains and face of the idiotic Axe the Tenant Tax campaign against section 24) and the Stewardson brothers. Having bought their first BTL in 1995, owing ten just 18 months later and having accumulated 135 by July 2014 guess what news was presented to the Telegraph's readers on 11 January 2018... Source: Is this the end of Britain's buy-to-let love affair?, Telegraph 11 January 2018, emphasis added.