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Posts posted by ingermany

  1. 5 hours ago, Confusion of VIs said:

    I am not so sure about courts deciding all BTL is commercial.

    The people I know who have these IO loans are owner occupiers, they both thought/were told that by the time the loan matured it would have been inflated away to next to nothing. One now earns enough to easily pay it off the other is widowed and will probably lose her house on retirement.

    In some cases concerning interest rate swops the courts have decided that a small business did not have the necessary knowledge/legal advice to make an informed decision and have held the banks liable for losses. I can see something similar happening with BTL, I assume that's what the people in this case are hoping.      

    Correct. These cases appear to be fraud.  Investors have borrowed money by exaggerating their assets and income, and have pocketed gains. When the time has come to repay the amounts borrowed or if losses occur the investors play the debutant card,  saying that they didn't realise the 500k they borrowed was actually a loan rather than a gift. Although all this looks like fraud, it has been an integral feature of the prosperity of UK property owners. It is the only way that 7 trillion in assets could have accrued. In that sense this type of fraud is an essential part of the business model, so it's not surprising that prosecutions are non-existent, even in cases like this where BTL borrowers admit that they obtained money by lying. The fraud is so endemic, it can't be called a criminal offence.  I guess much like Greek tax evasion.   

  2. Do We know the outcome. Last I can find is that the court ordered arbitration. That would be an ominous outcome as it would be an out of court settlement with no bearing on future cases. What is needed is a firm principle of repaying what you borrow, and "your house is at risk" etc.  These numpties are challenging that principle and there seems some danger they are being successful. 

    I still shudder at the language used in 2008 when Brown called people with large mortgages and a falling house price "victims of something that happened in America" ....like it was Hurricane Irma.  Sure enough, taxpayers had to organise a relief and rescue effort. 

    And, as someone has already said here, if this couple cla8m they were loaned money on false premises of an inflated self cert income, they are fraudsters. Not victims. 

  3. The independence of BoE is a total fallacy. Their remit has been constantly adjusted to suit their political masters. Inflation targets get altered. The way inflation is measured gets fudged.  Priorities get altered for political ends.  Like,  forget inflation, it's a lowered unemployment target that the Bank needs to hit. Once that was reached, another reason was found not to increase rates....Brexit. Mervyn King already set the precedent for ignoring "external inflation"....inflation caused by currency collapse.   So inflation caused by stg. devaluation won't bring rate rises. There is a decision already taken that interest rates will be zero for the foreseeable future. They just need to create the arguments to support the conclusion. And they will.  Meanwhile, US and EU will get growth and monetary tightening. Just as well we all voted to cut ourselves off from the outside world. The UK economy will be running on the monetary equivalent of British Homes Stores vouchers by the end of 2019. Only to be redeemed "in store".

    Hope I'm wrong of course, but I can feel the fear index rising. 

  4. 1 hour ago, Toast said:

    If they go down that path (which I'm happy to say I doubt), I would guess the end-point after 5 or 6 years will be total loss of faith in the currency. We will have to beg both to rejoin the EU and to adopt the euro: the latter may be refused officially, but could happen anyway, as we will need a medium of exchange not subject to hyperinflation. The US dollar is used in Zimbabwe for the same reason.

    I agree. I was just pointing to the path we are currently on and where it would logically lead.  Once they started bail outs and subsidies it's hard to see a way of withdrawing them. It's pretty clear that 40% HTB is not enough for builders, bankers, property experts and some Conservative politicians, like Rees-Mogg.  

  5. 1 hour ago, insertcoinstocontinue said:

    I've heard it mentioned that HTB will be written off for anyone who has HTB. I really wouldn't rule that out....

    Well, most people with HTB loans of up to 240k would only be able to repay if their property has increased in value , enabling them to remortgage and release equity. That has been the assumption of the whole ponzi. If prices don't rise by 40% in 5 years then those loans won't be repaid. Now government may decide to make sure prices rise, by increasing HTB.....they will probably think that is cheaper than writing off the original HTB loans. So I expect the HTB % and maximum purchase price to escalate, perhaps to FTB property price of 1 million, with 600k underwritten by the taxpayer. That might keep the system rolling for 5 or 6 years. 

  6. From another thread...a link to a London "property expert" also seems to be a view backed by the Bank of England....

    "Andrew warns that isn’t just something for estate agents to worry about. He says, “Should turnover continue at these present levels then there is going to be a significant glut of new build property languishing un-sold on the open market which will be damaging to the short term fortunes of London housebuilders, probably causing them to ‘mothball’ future schemes which in turn could have a real negative impact on employment in the construction industry and finally hamper the wider economy. “ "

    And this is the situation on the "open market" with a huge 40% taxpayer subsidy. It is obvious that prices can only be maintained by an escalation of government subsidies to home owners. And that is just to keep prices static. It is ironic that the free market Tories hated the idea of EU farming subsidies that paid farmers billions in order to maintain scarcity of food and drive up prices. The same Tories have applied the same model of government subsidies to drive up house prices and protect builders profits. 


  7. 'Andrew warns that isn’t just something for estate agents to worry about. He says, “Should turnover continue at these present levels then there is going to be a significant glut of new build property languishing un-sold on the open market '


    So this is how an open and free market works?  Never mind that the taxpayer is already stumping up  a 40% subsidy of the purchase price, 240k, for every house languishing on the "open" market. This is money already paid by taxpayers in order to artificially pump up the selling price.  So selling prices are already 40% above the "open market" value.  Perhaps he should consult a few manufacturing bosses and retailers to learn something about how to deal with a glut of unsold stock.  That paragraph just underlined for me what a level of insanity we have reached. 






  8. 26 minutes ago, ingermany said:

    Sounds like old Farepak Hampers Christmas savings scheme. You make regular monthly payments until Christmas,  and then they send you a letter explaining that there's no money left.  I can't understand why people have a problem with this. 

    It's not really a new or untried concept. In the case of Farepak, Cristmas came before the end of September for some individuals connected to the scheme. 

  9. For the past 10 years bad economic news had tended to send stock markets and property higher based on the belief that BoE and HMG will coordinate stimulus ad infinitum. That paradox will take time to shake. Sooner or later though people will realise that bad economic news really is bad economic news. And there seems to be a lot of it about. 

    HPI is now flat. Direction of travel will be down, but how far? 


  10. 43 minutes ago, Ballyk said:

    The official Help to Buy video explains what happens when you sell your house, assuming only that the price rises.  

    However, it neglects to mention what happens if the price falls.  Is that miss selling?  I smell a rat.


    It is mis-selling irrespective of the details. The same as if government offers you 50% interest free loan to buy a Range Rover turbo diesel on a never never credit arrangement with JLR. The devil isn't in the detail. He's inside the head of the jackass who started the scheme. 

  11.  " The report has called for action to help those on less than average incomes and the establishment of setting regional levels to benefit those facing the financial pressures of London’s house prices."

    So, they are saying that a government commitment of 40% is no longer enough, and people on low incomes need more help (to buy houses at 600k a time).  It is shocking how quickly this sort of thinking has become the new normal. The new "free market economics" involves an escalating nationalization and socialization of money lending on a massive scale.  Whatever happened to the concept of the price of something being set by what the market will support? It is now economic orthodoxy that this rule doesn't apply to housing, and through financial instruments linked to mortgages, it indirectly transfers to new cars and all other consumer items. Government paying rich people to buy more stuff. 

  12. 16 hours ago, lombardo said:

    " In principle, debt is good for the economy. More debt means more spending "


    What a joke.

    It's an interesting point with an element of truth. Debt pushes up growth, even if borrowers can't repay it. In fact, especially if they can't repay it because it is free money. When BoE main mandate became pushing up GDP instead of price stability, this gave every incentive to promote irresponsible borrowing with cyclical borrower bail outs and resets. That has been the paradigm for over 15 years. Very different from 90s HPC when money seemed more real. 

  13. 15 hours ago, TheCountOfNowhere said:

    All seems a bit too contrived to me, like many of these types of things in the past have been shown to.

    Plus, I tried to find the man in question on t'internet, wasn't an obvious player in the BTL game

    Since when did people start believing the s**t they put in the papers ?

    Next you'll be telling me fungus and his missus are now sold up and have banked that mythical £100M profit.

    I doubt everything i see in the MSM, everyone should.

    I dont doubt people have "BTLers/Landlords now own around 1 in 5 homes."  I know 2.  Both on I/O mortgages, both not paying down the capital but taking the money every month, both trying to get deeper and deeper into debt, because you/they just can't loose.

    I've not come across the 40 property magnet with 2.5 million in profit.

    I'm not saying they dont exist, i'm sure they do, but I just dont see them in my day to day life.


    Lastly, one thing is for sure, if I wanted to offload my 37 pwopatees, I wouldn't be going to a MSM paper to get advice, even more so if I were due a couple of million quid profit in my back pocket.


    Agree with that last paragraph. Why would a landlord go public as  a distressed seller? I anticipate a rescue. If landlords can't sell then government will underwrite values.  Properties will end up with corporate or HA landlord. BTL will be compensated to prevent a "lost pension" scandal. Despite not having the cash to write off student debt, government will deploy a similar sum to that,  for the second time in 10 years, to rescue property investors and bankers. 

  14. 15 hours ago, TheCountOfNowhere said:

    Does this bloke even exist ?



    Good question. Yes he does exist....by the thousand.  If he was the only one of a kind he might be financially safe. However because he is one of a multitude his 1.5 million in debt is a problem when added to his escalating debts to HMRC. He will be one of many struggling to offload unattractive property into a falling market with mounting debts enforcing rapid sales. His portfolio isn't worth what he thinks. It's not even worth what the banks think. And that is a systemic risk.   I do wonder whether government will ride in to "rescue" these "victims" as has happened so often since 2008. 

  15. 3 hours ago, doahh said:

    Can anyone help me to understand why he is screwed?

    Surely he bought a long time ago so most of the properties should have a low mortgage figure. Does he not just sell a property (or 10), and from the capital gains pay the associated tax? He will have fees of an extra few thousand but surely as long as his left over profit is more than his cost of sale he is OK ... what am I missing other than:

    • bank insists he sells all or none at the same time;
    • he had them all on IO and has extracted the equity and so won't make a profit and hence can't pay the GCT - however it sounds like he lives frugully and so that seems unlikely;
    • he is in negative equity and doesn't have capital to pay the difference. Again sounds unlikely as he bought so long ago, but then it is impossible to know.

    Even if he has all the properties in the same location and is worried about crashing the local market, it still sounds like he will make out like a bandit for what is clearly very little effort.

    As everyone else has pointed out, he has a large debt compared to the likely realistic selling prices of his assets. He needs to pay interest to the banks, and tax on gross rental income,  and cover voids and pay CGT each time he makes a profit.  It looks like he had been remortgaging....taking more and more debt secured on the properties. 

    Assets are only worth what you can sell them for. The BHS chain of stores in UK was only worth £1 When Sir Philip Green sold them. That was all the business was worth. I would be amazed if his properties are worth more than his debts (loan capital plus interest plus taxes). 

  16. 1 hour ago, Monkey said:



    how do you go through the process of viewing a house, discussing with the Estate Agent about the house, making an offer, getting the offer accepted, instructing your bank and solicitor, them going through all sorts of paperwork and at no point did anyone realise it was rented out? How?


    the story is total bullsh!t

    I agree. It's just a sob story about stamp duty surcharge affecting normal hard working families. Actually, this is just the sort of person it should affect. As a deterrence. 

  17. On 15/07/2017 at 9:59 AM, dugsbody said:

    That is crazy. When we see rents falling, properly falling, then I think a big house price adjustment isn't far away. Can you link to an example of the above?

    It is. I can't link because it's been removed from RM lettings now we are in it. Rent had been reduced and reduced with no takers. Owners are abroad. It is a unusual, quirky,  old, but large listed building with land, 5 bedrooms, outbuildings. In winter I am guessing fuel might exceed rent. In a village with zero land reg sales recorded in this postcode. I was crious to see what owners paid, but must have been before land reg e stats.  There are 2 houses for sale locally , around 600k. My guess is that valuation here is 700 to 900, although owners aren't selling. They've invested massively in renovation and extension. I took 6m rental, because I know I'll never again get to live somewhere like this. Actual rental is same as for a standard 3 to 4 bedroom modern box.  Team of gardeners included in rent. I am dreading the fuel bills though. Hope the sun keeps shining. 

    I guess the general point is that lots of people hang on to properties that are really a financial liability.  They have been holding on because they dont want to crystallize a loss, or for sentimental reasons. Tax changes, stamp duty, falling rental values, increasing letting regulation, tighter finance.....are all biting for those who find themselves owning a property that they don't live in. Agents seem to have lots of houses with no upward chain.  And on the sales side, the agent mantra is now...."make an offer because the seller will negotiate". Sold prices are starting to reflect this. I have to buy now because I need somewhere to live. I fully expect to see my home fall in value. 

  18. 48 minutes ago, newgi said:

    That's a tough one but I wouldn't presume that they are falling yet.

    Nationwide's latest report says that "Prices rose month on month by 1.1% in June":


    Halifax says "Annual house price growth eases to 2.6% in June".


    How many times has CountofNowhere called the top?



    Indices won't pick up the fall until it is an established trend. The index methodology of sampling and seasonal correction, together with small volumes creates a lag. However, all indices are now heading in the same direction, so I think its a safe bet that prices are falling, either as a temporary phenomenon or maybe, just maybe, as a secular trend. The media is stoking the fear almost as much on the way down as on the way up. The fear of owning a 500k mortgage,  secured on a house that's worth 350k is a potent disincentive to buy now. This in itself, is likely to drive the price falls. As in the 1989 to 1995 crash, it won't be obvious until it's too late. Many people in UK are maxed out on credit that is backed only by make-believe assets. If those assets need to be sold, they are worth a fraction of those imaginary valuations. Anyone who bought in the last 2 years (including me), is likely to have bought at the top of the market, and is already in negative equity......although they probably won't realise this yet. Meanwhile, I can rent a 900k house for 1200pcm, because there were no takers at 1800, 1600 or 1400. When you see so many crazy anomalies it is likely that something significant is afoot. 

    I honestly think the HPC will hurt as many people on this forum as it helps. It would have been better if the insanity of runaway inflation, HPI and liar loans had never been allowed to happen. 

  19. When average house was 125k, it was just about credible that it could double. Now at 250k, nobody believes an average house can hit 500k.  Prices can only fall. Ordinary people have woken up to the fact now. Fear of NE will deter buyers. Discounts will be needed if anyone needs to sell. Will create a vicious (virtuous) circle. Houses will again be seen as a liability to own, especially if tied to a mortgage that exceeds the value. 

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