Jump to content
House Price Crash Forum

Search the Community

Showing results for tags 'Bankruptcy'.



More search options

  • Search By Tags

    Type tags separated by commas.
  • Search By Author

Content Type


Forums

  • House Prices
    • House prices and the economy
    • Regional House Prices
    • All about renting
    • Anecdotals
    • All about self-build
    • All about buying, selling and mortgages
    • The classics
    • Market psychology
    • Economics
    • House Price Crash photo gallery
  • Current Affairs
    • Current affairs
    • Politics
    • Living overseas
  • Investment
    • Cash ISA's and Savings Accounts
    • Investment in general
    • Financial markets
    • Overseas property investment
    • Gold and other precious metals
  • About housepricecrash.co.uk
    • housepricecrash.co.uk in the media
    • About housepricecrash.co.uk
    • Ideas and Suggestions for Fubra
    • Wiki Discussions/Ideas
  • Trolls
    • Troll sub-forum
  • Off Topic
    • The off-topic forum

Find results in...

Find results that contain...


Date Created

  • Start

    End


Last Updated

  • Start

    End


Filter by number of...

Joined

  • Start

    End


Group


AIM


MSN


Website URL


ICQ


Yahoo


Jabber


Skype


Location


About Me

Found 1 result

  1. Very speculative thread. Not so much counting chickens before they've hatched as speculating on the mechanics of their demise whilst it conjectured, but before it arrives. Some thoughts from a conversation. We assume the following: At some point between 2016 and 2020 BCBS risk-weights start to widen the difference between mortgage interest rates on interest-only buy-to-let mortgages and rates on repayment mortgages offered to owner-occupiers, i.e. BTL mortgage rates go up Over the same time scale, Clause 24 of the Finance Act 2015 is applied in its current form turning cash flows on leveraged property portfolios net negative as the rents are inadequate to cover the mortgage interest and the tax, (any ability of leveraged landlords to raise rents is assumed to be inadequate to cover the rising cash outflows). There are then two end games. Either the landlord pays the mortgage interest but starts to build up a debt to the Revenue on the income tax they owe or they pay the Revenue in full and slip into arrears with their lenders. As discussed on the Tax Relief thread (h/t pipllman for the reference), where a creditor makes a bankruptcy petition against a debtor, as assets are disposed of by the trustee, when a CGT liability arises, the CGT represents the first charge, (i.e. AFAIK the Revenue skips in front of the secured creditor and gets paid first). Considering a portfolio landlord, this means that once the Revenue make a bankruptcy petition and the landlord is declared bankrupt then as the BTL properties are sold, the Revenue are paid off and then the banks get what is left. Now, some more speculation. A leveraged landlord in denial will presumably pay the mortgage interest charges as they arise and not make adequate provision for the income tax bill, hence when the bill arrives they won't be able to pay it, i.e. the supposition is that denial leads to a debt to the Revenue. The bank know that if the Revenue can force bankruptcy before the bank can repossess, the bank will face larger losses as the CGT has to be paid first, hence the bank are highly motivated to call in the loan before the Revenue can petition for bankruptcy The Revenue will know that if the bank get to repossess before the Revenue can petition for bankruptcy, then the bank may leave nothing but an asset-less ex landlord unable to pay their CGT. The thing that is new is Clause 24. Before that, with low mortgage interest rates, you had nothing to rapidly bankrupt portfolio leveraged landlords, but now you do.
×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.