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little fish

Margin Calls For Btl? Any New Info..

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Away back in 2008 I posted this...

http://www.housepricecrash.co.uk/forum/index.php?showtopic=81288&st=60 (post 70)

clearly showing that BTL lenders could use margin calls. I expected to hear more about this especially in Northern Ireland where the majority of BTL's were done on an 85% LTV.(own experience and anecdotal evidence only). Certainly the majority of purchases from 2004 onwards completed on more than a 50% LTV would be eligible for a lump sum 're-investment' payable to the lender?

I am aware, again, of anecdotal only tales of ME (Mortgage Express) excusing early repayment funds and ignoring LTV's limits to 'allow' landlords to re-mortgage to another lender ( get it off the books!).

Surely this must be happening - it's been 5 long years - any body any info on landlords being chased for funds or repossessed for exceeding LTV status?

Go on make my day... :D

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Hi Buckers,

So if lenders were to take this action they would have already done it by now - in Northern Ireland anyway. Your summary is quite probably correct then. If the mortgage is paid, the lenders will leave well alone.

I was thinking that the banks own reporting would have required all assets to be properly valued and LTV limits adhered to?

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I was thinking that the banks own reporting would have required all assets to be properly valued and LTV limits adhered to?

Check out Certus and West Register. The banks can just take the liabilities off balance sheet and transfer to one of their wholly owned service companies. No need for margin calls anymore.

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Repossessions are taking up to 3 years (from missed payments) in some cases. The banks have more than they can deal with. There's no way margin calls are taking place. I heard of one guy with an extensive portfolio in Co.Antrim, stopped paying all his mortgages and banked all the money, for 2 years. He was mad bankrupt, still works self-employed as a tradesman and employs a few people. Drives around in a nice car, the house was obviously in the wife’s name.

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Thanks 2buyornottobuy,

I will check out Certus and West Register. I don't have any real problem with slow repossessions for residential mortgage holders. I think I would almost prefer them not to have to become renters in private properties. Disappointed that the landlords just keep 'winning' though.

https://www.google.co.uk/search?q=making+the+most+of+the+NI+private+rental+&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&channel=np&source=hp&gws_rd=cr

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Unintended consequences

Interesting chat this morning with a BTL lender who confirmed few, if any margin calls in NI to date, also discussed briefly how forbearance in the BTL sector in NI is active. This is being revisited in light of our apparent increase in house prices. If the 'upward' trend in prices continues, this lender may change their current strategy, discontinue forbearance and reassess the LTV's of landlords.

Be interesting to know the current arrears situation in NI on BTL mortgages.

No link - anecdotal only.

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Buy-to-let fuels house price boom

Lending to landlords and mortgage subsidies pull market to record level as investors cash in on cheap deal

http://www.theguardian.com/money/2013/aug/09/buy-to-let-house-price-boom-mortgages

More than one in 10 mortgages are now being handed to a would-be landlord while first-time buyers are still struggling to get on the housing ladder.

About 40,000 buy-to-let mortgages were advanced in the three months to June, up from 33,000 in the first quarter of the year, as landlords cashed in on cheap mortgage deals and investors sought higher returns than they could get from putting their cash in the bank.

Housebuilders are also reporting a rush to take advantage of government mortgage subsidies for new homes and a top London estate agent said the value of prestige homes in the capital had risen by 18% – adding £500,000 to the price of a central London home in the past year.

Mark Carney, the new Bank of England governor, admits that Threadneedle Street's commitment on borrowing costs is designed to reassure consumers and businesses that the cost of borrowing is not going up, which should encourage them to borrow, spend and invest.

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Thanks Shotoflight

1 in 10 mortgages for landlords is scary stuff.

Read recently that in 2006 1 in 12 'newly formed' families in NI were housed in the private rental sector - in 2012 this jumped to 1 in 5.

The increase is particularly concerning when you take Shelter's report Growing up renting into account.

http://england.shelter.org.uk/news/may_2013/volatile_rental_market_is_damaging_childhoods

I am still amazed that the EU directive on credit agreements relating to residential property (CARRP) has not and is unlikely to be implemented. Fairly sure the figures would be very different if it had been.

:(

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Thanks Shotoflight

1 in 10 mortgages for landlords is scary stuff.

Read recently that in 2006 1 in 12 'newly formed' families in NI were housed in the private rental sector - in 2012 this jumped to 1 in 5.

The increase is particularly concerning when you take Shelter's report Growing up renting into account.

http://england.shelter.org.uk/news/may_2013/volatile_rental_market_is_damaging_childhoods

:(

This is something I am interested in and it is something society should be looking at going forward. How do we want to house the people. 20% of new households in the private rented sector. 20% are in the social sector and the remainder are in houses they own (many with mortgages). The increase in the private rented sector is due to social sector not building enough and lack of credit to buy. Lucky there were plenty of accidental landlords to pick up the overflow.

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As a society we need to take a long hard look at this situation. My experience of working with families who live in PRS and have experienced poor housing (in too many forms to detail)is that, firstly, tenants expect to lose at least part of their deposit money on every change of tenancy, whether damage has been done or not (hopefully this will change with TDS from April 13). Secondly families move into sub standard or expensive properties, just to be 'allowed' to have their children live with them or to be in catchment areas for doctors, schools etc. In my experience it is more likely to be the accidental LL's or the letting agents who 'cause' or contribute to the problems.

PSR is growing at a phenomenal rate - while there may be minor improvements to the current PRS strategy coming, there is little in the way of a long term housing scheme that will provide any security for those unable to buy (landlords excluded)

http://www.dsdni.gov.uk/index/hsdiv-housing/private_rented_sector/private_rented_sector-_strategy.htm

Do you know of anything more recent?

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This is something I am interested in and it is something society should be looking at going forward. How do we want to house the people. 20% of new households in the private rented sector. 20% are in the social sector and the remainder are in houses they own (many with mortgages). The increase in the private rented sector is due to social sector not building enough and lack of credit to buy. Lucky there were plenty of accidental landlords to pick up the overflow.

On the contrary I would argue that the reason for the increase in private BTL landlords is too much credit provided to landlords, rather than not enough credit to homebuyers.

A better solution would be to restrict availablity of finance for BTL, rather than increase it to homeonwers, which is what has got us into this mess in the 1st place.

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On the contrary I would argue that the reason for the increase in private BTL landlords is too much credit provided to landlords, rather than not enough credit to homebuyers.

A better solution would be to restrict availablity of finance for BTL, rather than increase it to homeonwers, which is what has got us into this mess in the 1st place.

I agree with this. BTL mortgages should be regulated by the FSA - LL's should have to prove stability for the prospective tenants, by, say, a long term business plan, two years of mortgage payments frozen on top of the deposit (in case of funding shortages). All LL's should be licensed and verified 'fit for purpose'. That would soon dampen the BTL urge - after all, if a LL's house is repossessed, there is still a family left homeless. The only difference is that, it is rarely the LL's family that has no home.

The prices in NI would never have reached the level they did if it were not for the BTL brigade. In 2006 my office had 1 FTB purchase that was not funded by family. Most FTB couldn't afford to buy and those that tried were outbid by BTL.

The regulator has consistently refused to regulate BTL mortgages - why?

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I agree with this. BTL mortgages should be regulated by the FSA - LL's should have to prove stability for the prospective tenants, by, say, a long term business plan, two years of mortgage payments frozen on top of the deposit (in case of funding shortages). All LL's should be licensed and verified 'fit for purpose'. That would soon dampen the BTL urge - after all, if a LL's house is repossessed, there is still a family left homeless. The only difference is that, it is rarely the LL's family that has no home.

The prices in NI would never have reached the level they did if it were not for the BTL brigade. In 2006 my office had 1 FTB purchase that was not funded by family. Most FTB couldn't afford to buy and those that tried were outbid by BTL.

The regulator has consistently refused to regulate BTL mortgages - why?

I'd go one step further and simply ban BTL mortgages altogether - what benefit do they bring to society? If someone wants to invest in property, then by all means do so, if they have the cash to buy the property outright (and if so should be regulated as a landlord as you suggest).

By allowing BTL mortages, this allows property an advantage over most other forms of investment in that leverage can be used to increase the profits to be made (or indeed to magnify the losses). If I want to buy shares in the FTSE, I can't borrow to increase my exposure, yet I can with property. Why?

I would imainge the reason this doesn't happen is that BTL mortages are generally at higher rate, and therefore more profiable than residental mortgages, and so are very popular with our banking friends.

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I'd go one step further and simply ban BTL mortgages altogether - what benefit do they bring to society? If someone wants to invest in property, then by all means do so, if they have the cash to buy the property outright (and if so should be regulated as a landlord as you suggest).

By allowing BTL mortages, this allows property an advantage over most other forms of investment in that leverage can be used to increase the profits to be made (or indeed to magnify the losses). If I want to buy shares in the FTSE, I can't borrow to increase my exposure, yet I can with property. Why?

I would imainge the reason this doesn't happen is that BTL mortages are generally at higher rate, and therefore more profiable than residental mortgages, and so are very popular with our banking friends.

I like your thinking mcfly...

There is a paradox within the investment world - BTL is completely unregulated (unless a family member is declared as the tenant on the mortgage application), yet it is an 'investment' that has a direct effect on the life of a third party (the renters) and yet, as you say, for share purchase you can not borrow to increase your exposure. The sellers of investments are regulated, supposed to be qualified and have insurances to compensate. BTL can be done by anybody and there is no come back.

Residential mortgages are subject to the FSA guidance on repossession - making it a drawn out affair for the lender, in the hope that the borrower can resolve their financial position. BTL mortgage repossession is held only to the term on the lease or 28 days (NI) (if the tenancy is rolling) and then the tenants are evicted.

BTL is a win win for the bankers. Larger deposits paid into the bank for them to borrow against, higher interest rates paid, less paper work, no duty of care or responsibility to either the 'investor' or the tenants and a swifter exit if required.

They really stitched us up with this one....

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I'd go one step further and simply ban BTL mortgages altogether - what benefit do they bring to society? If someone wants to invest in property, then by all means do so, if they have the cash to buy the property outright (and if so should be regulated as a landlord as you suggest).

By allowing BTL mortages, this allows property an advantage over most other forms of investment in that leverage can be used to increase the profits to be made (or indeed to magnify the losses). If I want to buy shares in the FTSE, I can't borrow to increase my exposure, yet I can with property. Why?

I would imainge the reason this doesn't happen is that BTL mortages are generally at higher rate, and therefore more profiable than residental mortgages, and so are very popular with our banking friends.

First step could be to stop interest payment tax deductibility - just like for those who are buying a house to live in. That would probably sort it,

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First step could be to stop interest payment tax deductibility - just like for those who are buying a house to live in. That would probably sort it,

Yes - it would definitely make a substantial difference.

:)

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First step could be to stop interest payment tax deductibility - just like for those who are buying a house to live in. That would probably sort it,

100% - my "ban BTL mortgages" proposal is the nuclear option with no realistic chance of happening. But levelling the playing field so everyone is playing by the same rules would be a good start.

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I agree with this. BTL mortgages should be regulated by the FSA - LL's should have to prove stability for the prospective tenants, by, say, a long term business plan, two years of mortgage payments frozen on top of the deposit (in case of funding shortages). All LL's should be licensed and verified 'fit for purpose'. That would soon dampen the BTL urge - after all, if a LL's house is repossessed, there is still a family left homeless. The only difference is that, it is rarely the LL's family that has no home.

The prices in NI would never have reached the level they did if it were not for the BTL brigade. In 2006 my office had 1 FTB purchase that was not funded by family. Most FTB couldn't afford to buy and those that tried were outbid by BTL.

The regulator has consistently refused to regulate BTL mortgages - why?

IN NI we have roughly 120,000 Social housing units (90,000 NIHE and the rest a plethora of HA's). Along side that we have 120,000 private Lets. There is reported to be 30,000 to 40,000 people on the waiting list (we all question how accurate that list is).

Therefore we need the private sector to take up the slack unless we can find a way of reducing the amount of people seeking social housing. At the moment it is very difficult to get a B2L mortgage in NI. If you go onto the general websites showing the list of available mortgages they disappear once you select the Northern Ireland option.

Yes you can try to limit the options so only the rich can become Landlords. I dont think the wealthy have any great track record here.

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I'd go one step further and simply ban BTL mortgages altogether - what benefit do they bring to society? If someone wants to invest in property, then by all means do so, if they have the cash to buy the property outright (and if so should be regulated as a landlord as you suggest).

By allowing BTL mortages, this allows property an advantage over most other forms of investment in that leverage can be used to increase the profits to be made (or indeed to magnify the losses). If I want to buy shares in the FTSE, I can't borrow to increase my exposure, yet I can with property. Why?

I would imainge the reason this doesn't happen is that BTL mortages are generally at higher rate, and therefore more profiable than residental mortgages, and so are very popular with our banking friends.

Sometimes you have to be careful what you wish for. If people dont want to become home owners then they need to have the option to rent at an affordable level. The proce of property has more to do with the supply of credit than the supply of houses but rents are not credit driven and there is a purer relationship between the demand and supply forces. If we limit the amount of B2L mortgages then we will eventually effect the supply of properties to rent. With my VI hat on I should welcome this. However, I don't think it is a good thing.

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First step could be to stop interest payment tax deductibility - just like for those who are buying a house to live in. That would probably sort it,

yes you could try to do this but you would create a tax minefield. BTL is a busness. ie you pay tax on the profits you make from your rental business. As a tax payer we want that to continue. on all taxes of profits there are allowable deductions. In all business interest is a taxable deduction and I believe it would be impossible to exclude housing from this.

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yes you could try to do this but you would create a tax minefield. BTL is a busness. ie you pay tax on the profits you make from your rental business. As a tax payer we want that to continue. on all taxes of profits there are allowable deductions. In all business interest is a taxable deduction and I believe it would be impossible to exclude housing from this.

I believe it would be possible, since it's already the rule Down South - it was changed the year before last.

Dead easy - no interest relief on a mortgage, unless it can be specifically demonstrated it was used to raise money for a different "real" business.

Edited by yadayada

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yes you could try to do this but you would create a tax minefield. BTL is a busness. ie you pay tax on the profits you make from your rental business. As a tax payer we want that to continue. on all taxes of profits there are allowable deductions. In all business interest is a taxable deduction and I believe it would be impossible to exclude housing from this.

of course it's possible and very easy to implement. As a business man you'll be well aware of the mass of tax legislation, and the myriad of exemptions.

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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