Countdown to leveraged BTL going bust thread

[spyguy]

On 2017-6-15 at 1:37 PM, Ah-so said:

It is not really a shortfall but another case of being too dim to realise what dying intestate means.

His girlfriend is not his widow, as the article states. His estate will go directly to his children. Buy to let speculations are not suitable investments for  children.

Its a vague article. You have to read it twice to realise that the bank is liquidating the btl rather than the oo.

It implied that the gf was subbing the mortgage with rent and money from family i.e. its cash flow negative/voids. Itllprobably be an io too. Good help her if theirs a short fall on the btl - likely as this is the nw.

[frederico]

44 minutes ago, spyguy said:

I think fed ir raises are not the biggy. The fed is unwinding qe poisitions i.e selling stuff it bought.

I would add that inflation won't concern the fed too much either way (correct me if I'm wrong)

The fed is all about normalisation with out crashing the economy and they appear to think the economy can take it. The lack of squealing indicates they may be correct.

Our idiots at the BOE are going to look even more like a bunch of wallies, 

Don't forget with the BOE it's all about appearing magnificent and aloof. In reality they are handling all this really badly and have no idea what they are doing.

I think the referendum and the last couple of elections have shown that more and more people are recognising the emperor has no clothes. Unfortunately the choice is always binary between two bad choices.

[Society of fools]

18 minutes ago, frederico said:

I would add that inflation won't concern the fed too much either way (correct me if I'm wrong)

The Fed is concerned about low inflation, but the low unemployment rate and decent GDP growth are far weightier factors for them when it comes to the raising IR decision.  From my understanding, its because of their confidence that if the US economy is growing at 2.5% + and unemployment is low then a decent positive inflation rate is certain to eventually flow through. 

21 minutes ago, frederico said:

The fed is all about normalisation with out crashing the economy and they appear to think the economy can take it. The lack of squealing indicates they may be correct

Indeed. There appears to be underlying confidence in the Fed posture that is quite simply absent in the BOE. I am fairly sure that the Trump Presidency has at least something to do with it. Yellen and co know that at least some of his reflationary agenda- lower corporate and personal tax rates, a tax repatriation, the elimination of much stifling regulation, massive infrastructure spending- is going to get through, and that takes the heat right off the Fed.

For once in recent American history, the stimulus will be coming from the WH and Congress, not the Federal reserve, so that gives them a chance of wipe out at least some of huge QE balance sheet. 

The BOE, on the other hand, are constantly giving the impression that the slightest move towards tightening is going to give the whole fu**ing circus away.......

[spyguy]

36 minutes ago, frederico said:

I would add that inflation won't concern the fed too much either way (correct me if I'm wrong)

The fed is all about normalisation with out crashing the economy and they appear to think the economy can take it. The lack of squealing indicates they may be correct.

Our idiots at the BOE are going to look even more like a bunch of wallies, 

Don't forget with the BOE it's all about appearing magnificent and aloof. In reality they are handling all this really badly and have no idea what they are doing.

I think the referendum and the last couple of elections have shown that more and more people are recognising the emperor has no clothes. Unfortunately the choice is always binary between two bad choices.

Quite.

Whatever QE was meant to do, they can see yhe result - asset inflation, economic drawbridge drawn up for the under 50s and subject to feudal levels of debt.

The whole low rates while ukgov tries to pay fown the debt has bliwn up in their face. Furst gidiot failed to reduce browns massuce defucit quickly enough, and then blew up more debt on his watch.

Now thrir Corbyn who failed to read yhe Never again memo. Jezza on about a huge spending boom to sort the economy out. The the voters believe him!

[spyguy]

14 minutes ago, Society of fools said:

The Fed is concerned about low inflation, but the low unemployment rate and decent GDP growth are far weightier factors for them when it comes to the raising IR decision.  From my understanding, its because of their confidence that if the US economy is growing at 2.5% + and unemployment is low then a decent positive inflation rate is certain to eventually flow through. 

Indeed. There appears to be underlying confidence in the Fed posture that is quite simply absent in the BOE. I am fairly sure that the Trump Presidency has at least something to do with it. Yellen and co know that at least some of his reflationary agenda- lower corporate and personal tax rates, a tax repatriation, the elimination of much stifling regulation, massive infrastructure spending- is going to get through, and that takes the heat right off the Fed.

For once in recent American history, the stimulus will be coming from the WH and Congress, not the Federal reserve, so that gives them a chance of wipe out at least some of huge QE balance sheet. 

The BOE, on the other hand, are constantly givinLTVg the impression that the slightest move towards tightening is going to give the whole fu**ing circus away.......

US does need a massive infrastructure refresh. A realigment of new transport link. Better telecoms infrastructure wont go amiss either.

Theres a lot better things for the US to spend money in other than tax breaks fir billionaires.

Fed was too slow. They should have been raising p.25 a quarter 2 years ago. Were not talking 10%, 4% base  will do. Othereise theres no stimulus.

BoE are idiots. UK is in a lot of trouble. 

MMR LTVs are 20 years too late. If average uk wage rise is negative then banks should not be lending more than 2x household income.

[BorrowToLeech]

On 6/15/2017 at 1:37 PM, Ah-so said:

It is not really a shortfall but another case of being too dim to realise what dying intestate means.

His girlfriend is not his widow, as the article states. His estate will go directly to his children. Buy to let speculations are not suitable investments for  children.

I'm convinced, based upon anecdotal evidence and the history of financial manias, that the housing market is riddled with corruption, fraud and dodginess from top to bottom, and we haven't even scratched the surface of this sort of thing.

So when I read this story, what occurs to me is the difficulties that are going to arise from houses 'put in someone else's name innit'.

Edited June 17, 2017 by DrBuyToLeech

[frederico]

4 hours ago, spyguy said:

US does need a massive infrastructure refresh. A realigment of new transport link. Better telecoms infrastructure wont go amiss either.

Theres a lot better things for the US to spend money in other than tax breaks fir billionaires.

Fed was too slow. They should have been raising p.25 a quarter 2 years ago. Were not talking 10%, 4% base  will do. Othereise theres no stimulus.

BoE are idiots. UK is in a lot of trouble. 

MMR LTVs are 20 years too late. If average uk wage rise is negative then banks should not be lending more than 2x household income.

Exactly on all counts, negative wage increase is a killer.

As long as the rich are getting richer, the BOE don't see a problem,

[jiltedjen]

Updated, sorry for the delay! life has been very busy an unpleasant recently so not had much of a change to indulge in thinking about BTL going bust, but today finally managed to sit down and cheer myself up with an update. Starting to see news articles where mortgage lenders are moaning about the tax changes actually working which is a good sign. Not sure if anything much changes on the list post election or Brexit talks starting?

August 2017 -  38 days, 1 lots of rent away 

• Term Funding Scheme - to be reviewed (this is currently keeping mortgage SVR rates lower)

September 2017 - 75 days, 2 lots of rent away.

• Banks forced to assess whole portfolio when remortgaging, this is already starting to happen

December 2017 - 166 days, 5 lots of rent away. 

• For those selling CGT due within 30 days 
• All estate agent letting fees passed onto landlords
• Fed expected to raise rates again putting more pressure on the BOE

January 2018 - 192 days, 6 lots of rent away.

• The 'Funding for Lending scheme', which has artificially forced down mortgage rates since its introduction in 2012

Feb 2018 - 222 days 7 lots of rents away. 

• The 'Term Funding Scheme' due to end - higher SVR rates for those who can’t remortgage 

April 2018 - 287 days, 9 lots of rent away 

• Start to build up even more tax liabilities 
• Landlords have to shell out loads to achieve reasonable EPC rating
• Landlords pushed into higher tax brackets lose child benefits. 
• Support for Mortgage Interest (SMI) is only available as a LOAN from this point on, secured by a second charge on the property.
• Glut of mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 2-year introductory rate will go onto SVR. 
• Interest payments for Help to Buy equity loan start becoming due.

Jan 2019 - 562 days 18 lots of rent away

•   Last chance to pay 2017/2018 tax bills this is the FIRST Section 24 (75%/25%) implementation tax year

April 2019 - 652 days 22 lots of rent away

• Start to build up even more tax liabilities
• Potential implementation date for Basel 3 rules killing a lot of high LTV lending. 
• Mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 3-year introductory rate will go onto SVR.

January 2020 - 927 days 32 lots of rent away 

• Last chance to pay 2018/2019 tax bills
• 600,000 people have interest-only mortgages due to mature (a large % will be forced sellers) - this will be ramping up so technically this is already happening. 

April 2020 - 1018 days 34 lots of rent away 

• Start to build up even more tax liabilities

January 2021 - 1293 days 43 lots of rent away 

• Last chance to pay 2019/2018 tax bills

April 2021 - 1377 days, 46 lots of rent away

• Glut of Mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 5-year introductory rate will go onto SVR

January 2022 - 1667 days 55 lots of rent away 

• Last chance to pay 2020/2021 tax bills

Other stuff:

• Landlords expecting 13+ weeks to sell, coupled with long voids as tenants leave when 'for sale' signs are stuck up.
• Brexit, job losses, inflation, EU workers heading home
• Due to new 'Insolvency check' Those BTL trying to go bankrupt who have potential access to good pensions, will find HRMC could take % of said pension funds. 

Plus already in play:

• MMR rules
• Fed raising rates, BOE to follow soon 
•  3% second home charge
• Political risk,
• End of one version of HTB
• Removed HB for 18-21 year old`s
• FPC have now been granted powers of direction over BTL lending
• Universities building own custom accommodation destroying the market for Uni BTL. (ongoing)

On hold until after election:

• Landlords have to file 5 tax returns a year. (is this going to happen?)

[monkey100]

From what I can tell at work (maintenance co for BTL) lots of the university landlords bought biggish ex council houses and paid a premium as the valuation was done on potential letting income eg 500 per month per room in a bog standard 3 bed which they fiddled into a 5 bed by using living and dining rooms as bedrooms. This meant houses in not great areas here in brighton were selling for 400k plus and were being sold in days. Most of the landlords we do work for are now trying to spruce up to sell and cancelling ongoing maintenance contracts with us but they are selling into owner occupier market and value has dropped sharply to around 300k and they re freaking out 

[jiltedjen]

ah very nice! thank you for the anecdote. 

it always surprised me that it took so long for universities to build their own accommodation. Some universities always had some accommodation on site to get people started but it didn't seem the fashion to cater for 2nd/3rd/4th year students. 

I suppose when the first accommodation blocks were built it just did not make financial sense to support housing needs past the first year as rents were cheaper elsewhere as housing was not too expensive? 

there are plenty of companies which seem pretty massive 'unite' for example which seemed to be filly this void until universities pulled their fingers out. 

Also i think 20% drop in price seems a fair estimation of HPI effects greedy BTL have had on the market. I can see those 20% drops perhaps compounding next year to 30% drops, however the 2014-2016 bubble was basically BTL buying.

the key to finding fair value is around 2012-2013 prices plus a little for inflation. 

[Sancho Panza]

11 hours ago, monkey100 said:

From what I can tell at work (maintenance co for BTL) lots of the university landlords bought biggish ex council houses and paid a premium as the valuation was done on potential letting income eg 500 per month per room in a bog standard 3 bed which they fiddled into a 5 bed by using living and dining rooms as bedrooms. This meant houses in not great areas here in brighton were selling for 400k plus and were being sold in days. Most of the landlords we do work for are now trying to spruce up to sell and cancelling ongoing maintenance contracts with us but they are selling into owner occupier market and value has dropped sharply to around 300k and they re freaking out 

Muhahahaha...................

 

[spyguy]

17 hours ago, monkey100 said:

From what I can tell at work (maintenance co for BTL) lots of the university landlords bought biggish ex council houses and paid a premium as the valuation was done on potential letting income eg 500 per month per room in a bog standard 3 bed which they fiddled into a 5 bed by using living and dining rooms as bedrooms. This meant houses in not great areas here in brighton were selling for 400k plus and were being sold in days. Most of the landlords we do work for are now trying to spruce up to sell and cancelling ongoing maintenance contracts with us but they are selling into owner occupier market and value has dropped sharply to around 300k and they re freaking out 

Hardly surprising.

~5 years ago all the personal finance pages werefull of 'Buy a house in a university town!'

Loads of stuff about having Tarquin living in the house whilst he oversaw the other students who paid the mortgage.

[Si1]

On 24/06/2017 at 1:50 PM, monkey100 said:

From what I can tell at work (maintenance co for BTL) lots of the university landlords bought biggish ex council houses and paid a premium as the valuation was done on potential letting income eg 500 per month per room in a bog standard 3 bed which they fiddled into a 5 bed by using living and dining rooms as bedrooms. This meant houses in not great areas here in brighton were selling for 400k plus and were being sold in days. Most of the landlords we do work for are now trying to spruce up to sell and cancelling ongoing maintenance contracts with us but they are selling into owner occupier market and value has dropped sharply to around 300k and they re freaking out 

I've seen nice sized family homes coming up in student areas at reasonably good prices in Leeds. But as you say they've been made, cheaply, into maximal HMO housing for students and it doesn't look worth the hassle converting them back to a family format, also considering that landlordism has wrecked the communities that used to exist there.

 

All considering that the North doesn't have a shortage of housing.

Edited June 25, 2017 by Si1

[Habeas Domus]

Someone needs to make a super cut of all the times Mark Carney has threatened to raise interest rates, while actually doing nothing.

[mrtickle]

6 hours ago, spyguy said:

Hardly surprising.

~5 years ago all the personal finance pages werefull of 'Buy a house in a university town!'

Loads of stuff about having Tarquin living in the house whilst he oversaw the other students who paid the mortgage.

Yes, and I guarantee those same articles would've used the hated word "nest-egg" 

[mrtickle]

12 minutes ago, Habeas Domus said:

Someone needs to make a super cut of all the times Mark Carney has threatened to raise interest rates, while actually doing nothing.

That would be great, including Pat McFadden calling him an unreliable boyfriend

http://www.bbc.co.uk/news/business-27994179

[highcontrast]

2 hours ago, Si1 said:

I've seen nice sized family homes coming up in student areas at reasonably good prices in Leeds. But as you say they've been made, cheaply, into maximal HMO housing for students and it doesn't look worth the hassle converting them back to a family format, also considering that landlordism he's wrecked the communities that used to exist there.

 

All considering that the North doesn't have a shortage of housing.

Such an important point that gets overlooked

[Society of fools]

On 6/24/2017 at 4:23 PM, jiltedjen said:

Updated, sorry for the delay! life has been very busy an unpleasant recently so not had much of a change to indulge in thinking about BTL going bust

December 2017 - 166 days, 5 lots of rent away. 

• For those selling CGT due within 30 days 
• All estate agent letting fees passed onto landlords
• Fed expected to raise rates again putting more pressure on the BOE

Here's a pleasant change for you Jiltedjen. I noted above that the traders reckoned the chances of a September US Fed rate hike were 16.4%. That's now gone up just a tiny tiny bit to 18%. 

BUT, much better news on the prospects of a December rate hike. That's now up from 40% to 50.4%. So more than half of US trader's reckon there'll be another 25 BP rise before the end of the year.

I want to watch Carney's face over the next couple of months if those bets rise to 60% to 75%........I'd like to see him sweat, just a little.....

[jiltedjen]

http://www.independent.co.uk/news/business/news/bank-of-england-governor-mark-carney-rate-rise-a7812606.html

Even Mark is starting to make noises on a rate rise, reads to me like hes basically saying 'if every other central bank is doing it so will i, but for now i will use the poor UK growth as an excuse until i cant wait longer (hand is forced by the fed)'

im pretty sure he has a number in his head which will force a rise, probably December time will start the wheels in motion for a rise by next summer. 

[jfk]

[jiltedjen]

Updated

August 2017 -  26 days, 0 lots of rent away 

• Term Funding Scheme - to be reviewed (this is currently keeping mortgage SVR rates lower)

September 2017 - 63 days, 1 lots of rent away.

• Banks forced to assess whole portfolio when remortgaging, this is already starting to happen

December 2017 - 154 days, 4 lots of rent away. 

• For those selling CGT due within 30 days 
• All estate agent letting fees passed onto landlords
• Fed expected to raise rates again putting more pressure on the BOE

January 2018 - 180 days, 5 lots of rent away.

• The 'Funding for Lending scheme', which has artificially forced down mortgage rates since its introduction in 2012

Feb 2018 - 210 days 6 lots of rents away. 

• The 'Term Funding Scheme' due to end - higher SVR rates for those who can’t remortgage 

April 2018 - 275 days, 8 lots of rent away 

• Start to build up even more tax liabilities 
• Landlords have to shell out loads to achieve reasonable EPC rating
• Landlords pushed into higher tax brackets lose child benefits. 
• Support for Mortgage Interest (SMI) is only available as a LOAN from this point on, secured by a second charge on the property.
• Glut of mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 2-year introductory rate will go onto SVR. 
• Interest payments for Help to Buy equity loan start becoming due.

Jan 2019 - 550 days 17 lots of rent away

•   Last chance to pay 2017/2018 tax bills this is the FIRST Section 24 (75%/25%) implementation tax year

April 2019 - 640 days 21 lots of rent away

• Start to build up even more tax liabilities
• Potential implementation date for Basel 3 rules killing a lot of high LTV lending. 
• Mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 3-year introductory rate will go onto SVR.

January 2020 - 915 days 31 lots of rent away 

• Last chance to pay 2018/2019 tax bills
• 600,000 people have interest-only mortgages due to mature (a large % will be forced sellers) - this will be ramping up so technically this is already happening. 

April 2020 - 1006 days 33 lots of rent away 

• Start to build up even more tax liabilities

January 2021 - 1281 days 42 lots of rent away 

• Last chance to pay 2019/2018 tax bills

April 2021 - 1365 days, 45 lots of rent away

• Glut of Mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 5-year introductory rate will go onto SVR

January 2022 - 1655 days 54 lots of rent away 

• Last chance to pay 2020/2021 tax bills

Other stuff:

• Landlords expecting 13+ weeks to sell, coupled with long voids as tenants leave when 'for sale' signs are stuck up.
• Brexit, job losses, inflation, EU workers heading home
• Due to new 'Insolvency check' Those BTL trying to go bankrupt who have potential access to good pensions, will find HRMC could take % of said pension funds. 

Plus already in play:

• MMR rules
• Fed raising rates, BOE to follow soon 
•  3% second home charge
• Political risk,
• End of one version of HTB
• Removed HB for 18-21 year old`s
• FPC have now been granted powers of direction over BTL lending
• Universities building own custom accommodation destroying the market for Uni BTL. (ongoing)

On hold until after election:

• Landlords have to file 5 tax returns a year. (is this going to happen?)

[mrpleasant]

On 25/06/2017 at 0:57 AM, Sancho Panza said:

Muhahahaha...................

 

That made me laugh out loud. Happy days. We've been waiting far too long.

[Sancho Panza]

On 25/06/2017 at 11:45 AM, Si1 said:

I've seen nice sized family homes coming up in student areas at reasonably good prices in Leeds. But as you say they've been made, cheaply, into maximal HMO housing for students and it doesn't look worth the hassle converting them back to a family format, also considering that landlordism has wrecked the communities that used to exist there.

 

On 25/06/2017 at 2:45 PM, deadlyavenger said:

Such an important point that gets overlooked

Happened up here in Leicester.Area I grew up in.Got destroyed by LL buying up council houses and terraces to let to students.

Now they're struggling to get students in they're renting to anyone,and I mean anyone.At night in the last few years.I had to make Mrs P get a cab back from the local bar area-about 600 metres.

You might laugh at that,but I lived there most of my life.There were combat indicators walking around everywhere.

Moved out a bit to the edge of the city like a lot of my childhood friends and it's a different world.

I might even buy a house here.

Keep trying to get the oldies to move but they're stuck in their ways.

As an example,this park at night has become a warzone.No end of muggings and occasionally a serious attack like the one below a few days back.This park is right next to the Uni and when I've been walking through at night you see young students walking on their own seemingly unaware of how dangerous it is.

http://news.sky.com/story/teen-held-over-horrific-attack-on-woman-in-leicester-park-10937302

'Teen held over 'horrific' attack on woman in Leicester park

The woman, who is in her 20s, was found with serious head and upper body injuries near the recycling bins in Victoria Park.'

14 hours ago, jiltedjen said:

Updated

August 2017 -  26 days, 0 lots of rent away 

• Term Funding Scheme - to be reviewed (this is currently keeping mortgage SVR rates lower)

 

Question for you.As the timeline moves through a point are you going to keep it on the updates so we can see what's happened?

Edited July 7, 2017 by Sancho Panza

[jiltedjen]

5 hours ago, Sancho Panza said:

 

Happened up here in Leicester.Area I grew up in.Got destroyed by LL buying up council houses and terraces to let to students.

Now they're struggling to get students in they're renting to anyone,and I mean anyone.At night in the last few years.I had to make Mrs P get a cab back from the local bar area-about 600 metres.

You might laugh at that,but I lived there most of my life.There were combat indicators walking around everywhere.

Moved out a bit to the edge of the city like a lot of my childhood friends and it's a different world.

I might even buy a house here.

Keep trying to get the oldies to move but they're stuck in their ways.

As an example,this park at night has become a warzone.No end of muggings and occasionally a serious attack like the one below a few days back.This park is right next to the Uni and when I've been walking through at night you see young students walking on their own seemingly unaware of how dangerous it is.

http://news.sky.com/story/teen-held-over-horrific-attack-on-woman-in-leicester-park-10937302

'Teen held over 'horrific' attack on woman in Leicester park

The woman, who is in her 20s, was found with serious head and upper body injuries near the recycling bins in Victoria Park.'

Question for you.As the timeline moves through a point are you going to keep it on the updates so we can see what's happened?

I add it to the 'already in play bit'

but even now we are seeking effects of the changes already in play. so although it's nice to see it, it's nicer to see the effects 

[highcontrast]

5 hours ago, Sancho Panza said:

 

Happened up here in Leicester.Area I grew up in.Got destroyed by LL buying up council houses and terraces to let to students.

Now they're struggling to get students in they're renting to anyone,and I mean anyone.At night in the last few years.I had to make Mrs P get a cab back from the local bar area-about 600 metres.

You might laugh at that,but I lived there most of my life.There were combat indicators walking around everywhere.

Moved out a bit to the edge of the city like a lot of my childhood friends and it's a different world.

I might even buy a house here.

Keep trying to get the oldies to move but they're stuck in their ways.

As an example,this park at night has become a warzone.No end of muggings and occasionally a serious attack like the one below a few days back.This park is right next to the Uni and when I've been walking through at night you see young students walking on their own seemingly unaware of how dangerous it is.

http://news.sky.com/story/teen-held-over-horrific-attack-on-woman-in-leicester-park-10937302

'Teen held over 'horrific' attack on woman in Leicester park

The woman, who is in her 20s, was found with serious head and upper body injuries near the recycling bins in Victoria Park.'

Question for you.As the timeline moves through a point are you going to keep it on the updates so we can see what's happened?

Sancho - Are you and me the same person!?