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Smell the Fear

Btl Madness

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Chatting to a friend of a friend at a party this weekend. She has purchased her first BTL property in the past few weeks, and has let it out already (and is already shelling out on repairs etc).

She has bought with a small deposit (5%) and a residential mortgage. I probed a little for the specifics, and she was not exactly what you would call clued up. She was basically of the opinion that because her financial advisor and solicitor were aware of what she was doing, it was all legal and above board.

I told her that her building insurance was probably not valid - she didn't seem too bothered with such technicalities. She also intends not to declare the income, so the IR do not become aware of her business and hit her with CGT if she sells.

As if this wasn't bad enough, she revealed what had prompted her little venture - a colleague at work has purchased TEN properties which he lets, on a residential mortgage basis.

This is not the first person I have come across to be involved in this. Let's be honest, all the VIs (EAs, solicitors, surveyors, banks) all know exactly what is going on. I didn't realise we had such a bent business culture in this country. Every b*stard is happy to turn a blind eye as long as the buck doesn't stop with them.

Unfortunately the buck stops with the BTLer. I predict there will be massive repurcussions in every workplace across the land, every street, every family and group of friends.

But quite frankly, they all deserve it. I'm beginning to see that playing by the rules in this country gets you knowwhere. Unfortunately I value my honesty, so I'll have to work for a living.

I have to say, I have lost all respect for almost anyone who is wealthy. Is there such a thing as an honest fortune?

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yup,could be in for a painful lesson there I think.

as far as I understand,even if the IR are not aware,if they were to fall behind on repayments and the mortgage company issued proceedings against them,they would be demanding the return of THE WHOLE sum lent.

would f*** up the guy with 10 props dontcha think?

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There are plenty of correct ways of doing the BTL thang..problem is lenders currently want proof that the rent is x above the mortgage payment, the only way of achieving this is by having a 15-20% dipper, which most havn`t got...not big not clever, lenders can get very nasty if they repossess and find misbehaviour, I hope for her sake that she keeps up her payments.

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The whole craze is riddled with corruption. All speculative booms have a dark side and this one is no better. Think of Enron, WorldCom etc. Everyone is happy when things are rosy. But, once the banks have started losing money from defaults they might start auditing BTLs to try to recoup some losses. I believe if they find a landlord who has a BTL residential mortgage, that landlord is technically in breach. Then, the lender can require the landlord to repay the difference in interest payments between a BTL and residential mortgage over the period that the property has been let. Ouch!


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