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The Mortgage Works (owned by Portman BS I think) has pulled the plug on new build B2L due to adverse risk. I heard this from a City contact but have no links.

Only yesterday a freind of a B2L contact told me he was about to put £1000 deposit on a new build flat 'investors B2L project' near the Olympic site costing £270000. He went on to say you only part with a further £6000 and the property is yours. He said the B2L mortgage is guaranteed to be accepted and the property is really worth £350000. I told him to steer well clear as I smell a rat, but he said lots of his wealthy (bouncers / boxers) mates had already reserved several units by paying the £1000 initial reserve fee. I asked him what rental were they basing the sums on, he replied he hadnt asked!

This guy told me Im missing out, but my gut tells me otherwise.

Edited by dogbox

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The Mortgage Works (owned by Portman BS I think) has pulled the plug on new build B2L due to adverse risk. I heard this from a City contact but have no links.

Only yesterday a freind of a B2L contact told me he was about to put £1000 deposit on a new build flat 'investors B2L project' near the Olympic site costing £270000. He went on to say you only part with a further £6000 and the property is yours. He said the B2L mortgage is guaranteed to be accepted and the property is really worth £350000. I told him to steer well clear as I smell a rat, but he said lots of his wealthy (bouncers / boxers) mates had already reserved several units by paying the £1000 initial reserve fee. I asked him what rental were they basing the sums on, he replied he hadnt asked!

This guy told me Im missing out, but my gut tells me otherwise.

There is no mention of this on their Web-Site. This is the kind of thing they would normally publish on their web-site so this is surprising if it is factual.

I have a few mortgages with TMW and again I’ve had no information regarding changes to their lending criteria (if anything at the moment they are being particularly aggressive with their BTL lending but of course this can change in a moment). TMW has the lowest BTL headline fixed rate for 3 yrs of 4.79% at the moment (recently increased from their aggressive 3 yr fixed at 4.55% BTL product). To me this doesn't indicate a reluctance to lend to the BTL market.

BTW Agree with your other comments regarding off-plan buying in Stratford. it is highly speculative and may or may not result in profits for the "investors". Unless you treat it as an out and out punt and can afford to lose the money best not to even contemplate.

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There is no mention of this on their Web-Site.

I just called them on the pretense I wanted a B2L mortgage on a new build and they confirmed they will no longer accept any newbuild.

This could be the start. Other lenders may follow suite.

BTW, the guy I mentioned asking me whether the 'pay just £1000 now and £6000 on completion for a £270000 new build B2L with B2L mortgage already arranged' has reserved. I said to him no lender can guarantee offering a B2L mortgage, what if they discover the whole development has all been sold to B2Lers and they pull the lending plug? He insists he cant go wrong and that the investment company that originally bought all the units will even buy back from him at a £20000 profit if he wants to sell in December.

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There is no mention of this on their Web-Site. This is the kind of thing they would normally publish on their web-site so this is surprising if it is factual.

I have a few mortgages with TMW and again I’ve had no information regarding changes to their lending criteria (if anything at the moment they are being particularly aggressive with their BTL lending but of course this can change in a moment). TMW has the lowest BTL headline fixed rate for 3 yrs of 4.79% at the moment (recently increased from their aggressive 3 yr fixed at 4.55% BTL product). To me this doesn't indicate a reluctance to lend to the BTL market.

BTW Agree with your other comments regarding off-plan buying in Stratford. it is highly speculative and may or may not result in profits for the "investors". Unless you treat it as an out and out punt and can afford to lose the money best not to even contemplate.

It's here

http://www.mfgonline.co.uk/news/newsarticl...p?unqueid=15526

The Mortgage Works has announced it will cease to accept applications for buy-to-let (BTL) mortgages on newly-built properties.

The lender will only accept buy-to-let applications on properties aged over one year from now on.

All current applications in the pipeline will be honoured. The change only affects new buy-to-let mortgage applications.

Commenting on the decision, Matthew Wyles, group development director, said: "Owing to the current over-supply of newly built property, valuation in this sector is more of an art than a science. Some developers are now prepared to do deals on price outside of the formal contract. In these cases the lender may be unaware of the actual price being paid and ends up relying on a valuation which may in turn be based on erroneous assumptions. We will go back into new build buy-to-let when we believe that the market forces of supply and demand have reached equilibrium."

This announcement relates exclusively to buy-to-let.

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There is no mention of this on their Web-Site. This is the kind of thing they would normally publish on their web-site so this is surprising if it is factual.

I have a few mortgages with TMW and again I’ve had no information regarding changes to their lending criteria (if anything at the moment they are being particularly aggressive with their BTL lending but of course this can change in a moment). TMW has the lowest BTL headline fixed rate for 3 yrs of 4.79% at the moment (recently increased from their aggressive 3 yr fixed at 4.55% BTL product). To me this doesn't indicate a reluctance to lend to the BTL market.

Reported here...

http://www.mfgonline.co.uk/news/newsarticl...p?unqueid=15526

The Mortgage Works has announced it will cease to accept applications for buy-to-let (BTL) mortgages on newly-built properties.

The lender will only accept buy-to-let applications on properties aged over one year from now on.

All current applications in the pipeline will be honoured. The change only affects new buy-to-let mortgage applications.

Commenting on the decision, Matthew Wyles, group development director, said: "Owing to the current over-supply of newly built property, valuation in this sector is more of an art than a science. Some developers are now prepared to do deals on price outside of the formal contract. In these cases the lender may be unaware of the actual price being paid and ends up relying on a valuation which may in turn be based on erroneous assumptions. We will go back into new build buy-to-let when we believe that the market forces of supply and demand have reached equilibrium."

Edit: Sorry KoN..posted at same time.

Edited by Spirit

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It's here

http://www.mfgonline.co.uk/news/newsarticl...p?unqueid=15526

The Mortgage Works has announced it will cease to accept applications for buy-to-let (BTL) mortgages on newly-built properties.

The lender will only accept buy-to-let applications on properties aged over one year from now on.

All current applications in the pipeline will be honoured. The change only affects new buy-to-let mortgage applications.

Commenting on the decision, Matthew Wyles, group development director, said: "Owing to the current over-supply of newly built property, valuation in this sector is more of an art than a science. Some developers are now prepared to do deals on price outside of the formal contract. In these cases the lender may be unaware of the actual price being paid and ends up relying on a valuation which may in turn be based on erroneous assumptions. We will go back into new build buy-to-let when we believe that the market forces of supply and demand have reached equilibrium."

This announcement relates exclusively to buy-to-let.

Thanks for that.

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It's here

http://www.mfgonline.co.uk/news/newsarticl...p?unqueid=15526

Commenting on the decision, Matthew Wyles, group development director, said: "Owing to the current over-supply of newly built property, valuation in this sector is more of an art than a science. Some developers are now prepared to do deals on price outside of the formal contract.

Exactly the situation I describe with the buyer above (1st post). He is only putting £6000 into a £270000 deal and achieving a B2L mortgage, so someone somewhere is having the wool pulled over eyes. I suspect this is rife and a good argument for the 'market is overheated' proponents.

From what I can gather this is happening on a huge scale so I suspect other lenders will also pull the rug, which may mean my freind above ends up being unable to complete if the lender lending on every unit in the site gets wind.

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Commenting on the decision, Matthew Wyles, group development director, said: "Owing to the current over-supply of newly built property, valuation in this sector is more of an art than a science. Some developers are now prepared to do deals on price outside of the formal contract. In these cases the lender may be unaware of the actual price being paid and ends up relying on a valuation which may in turn be based on erroneous assumptions. We will go back into new build buy-to-let when we believe that the market forces of supply and demand have reached equilibrium."

So, that is a lender officially saying it believes there is an OVERSUPPLY of new-build property and that the valuation of new-build property is essentially fantasy and that the property market has ceased to function in this area?

OUCH!

Now, I'm finding it hard to understand how there can be an oversupply of new-build property without there being a general oversupply of property. Either people need the property or they don't... whether it was built last week, last year or 50 years ago is surely a detail.

And, as I read it, essentially the lender is saying it no longer wants to lend on these properties since it fears it is being conned and it is not confident its loan is supported by the true value of the property and the equity the BTL claims to have in the property.

It is saying it believes the value of these new builds needs to fall (to remove the oversupply and re-balance supply and demand). Now, you may argue this is just one lender but that is pretty grim I would have thought.

And whether you like new-builds or not falling prices here must have a negative impact on house prices generally.

Edited by London-loser

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I just called them on the pretense I wanted a B2L mortgage on a new build and they confirmed they will no longer accept any newbuild.

This could be the start. Other lenders may follow suite.

BTW, the guy I mentioned asking me whether the 'pay just £1000 now and £6000 on completion for a £270000 new build B2L with B2L mortgage already arranged' has reserved. I said to him no lender can guarantee offering a B2L mortgage, what if they discover the whole development has all been sold to B2Lers and they pull the lending plug? He insists he cant go wrong and that the investment company that originally bought all the units will even buy back from him at a £20000 profit if he wants to sell in December.

If other Lenders follow this lead then it could have a very significant effect on new builds. It may mean some (many?) new developments don't go ahead (many proposed developments are already looking uncertain as margins are squeezed by rising costs, falling/flat prices and agressive taxation).

Having said that the TMW are one of the more agresive lenders so perhaps this is them just pulling back slightly. They have done so in the past and then come back more agressively again.

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So, that is a lender officially saying it believes there is an OVERSUPPLY of new-build property and that the valuation of new-build property is essentially fantasy and that the property market has ceased to function in this area?

OUCH!

And, as I read it, essentially the lender is saying it no longer wants to lend on these properties since it fears it is being conned and it is not confident its loan is supported by the true value of the property and the equity the BTL claims to have in the property.

You can't get a more IN YOUR FACE - WARNING!

Property is Kaputt. It is going to halve in price!

The lender is now covering it's ass to limit future bad debts.

Boy they must have had a shock when they did the risk analysis on their present loans to publish stuff like that!

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Ive just spoken again to the guy who last night reserved on one of these errr 'creative' B2Ls where only a small deposit is ever paid (as opposed to the 15%+ required on all B2L mortgages). Turns out nothing is in writing and the whole thing is a stitch - up between the investment company (ie salespeople), a Solicitor, surveyor and mortgage broker. I just looked at thier website, no company address etc.

Either the investment company are going to run - off with lots of £6000 deposits or the deals will complete in March but the lender will have been conned into thinking the price was more than the actual price paid.

I wonder what the shareholders of the lenders exposed to this type of lending would think? Can you imagine the approar? It really would make the headlines.

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Ive just spoken again to the guy who last night reserved on one of these errr 'creative' B2Ls where only a small deposit is ever paid (as opposed to the 15%+ required on all B2L mortgages). Turns out nothing is in writing and the whole thing is a stitch - up between the investment company (ie salespeople), a Solicitor, surveyor and mortgage broker. I just looked at thier website, no company address etc.

Either the investment company are going to run - off with lots of £6000 deposits or the deals will complete in March but the lender will have been conned into thinking the price was more than the actual price paid.

I wonder what the shareholders of the lenders exposed to this type of lending would think? Can you imagine the approar? It really would make the headlines.

Don't worry - as we all know it will probably be in the papers by Sunday - at the latest! ;)

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A friend was telling me about his plans in this area:

The flats are priced above market, and the developer gives discounts, which cover the deposit, and sometimes, if you're pushy, even a bit more to 'buy yerself sumfin nice' so anyone can get going in buy to let and we can all be millionaires with no imagination or effort...

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Exactly the situation I describe with the buyer above (1st post). He is only putting £6000 into a £270000 deal and achieving a B2L mortgage, so someone somewhere is having the wool pulled over eyes. I suspect this is rife and a good argument for the 'market is overheated' proponents.

Indeed, it's a false market, amazing to see a lender actually admit they're overvalued and ripe for a correction, usually they just try and lend as much as possible, obviously without run away inflation the risk is all too real for them.

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Now, I'm finding it hard to understand how there can be an oversupply of new-build property without there being a general oversupply of property. Either people need the property or they don't... whether it was built last week, last year or 50 years ago is surely a detail.

Depends what you mean by shortage, if Rolls Royces were priced at £10k there would be a shortage, if they cranked that price up to £150k there would nolonger be a shortage thanks to demand destruction. Once you get to this level the only shortage is a lack of buyers.

A shortage of affordable housing is different from a simple shortage of housing, this is what happends when a function of the market over extends, affordability follows a linear and things will revert to trend eventually.

sp.

Edited by BuyingBear

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Depends what you mean by shortage, if Rolls Royces were priced at £10k there would be a shortage, if they cranked that price up to £150k there would nolonger be a shortage thanks to demand destruction. Once you get to this level the only shortage is a lack of buyers.

A shortage of affordable housing is different from a simple shortage of housing, this is what happends when a function of the market over extends, affordability follows a linear and things will revert to trend eventually.

sp.

Hi BuyingBear,

I agree... but I think they MEANT to say prices are too high (the difference between there being too many new builds and there being too many new builds at a price "the market" can bear).

It is a back-handed way of saying new-builds are over-priced.

I'll have one if the price drops sufficiently... if not they can stay on the market as far as I'm concerned.

:D

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Now, I'm finding it hard to understand how there can be an oversupply of new-build property without there being a general oversupply of property. Either people need the property or they don't... whether it was built last week, last year or 50 years ago is surely a detail.

Yes and no. Everyone agrees 2-bed new-build urban flats will crash due to oversupply and BTL overspeculation. These obviously compete directly with 2-bed old-build urban flats. The fit is almost perfect since many old-build flats are not that old, and urbanites do not really care that much whether the property is period or not (they are mainly buying for the location). So, I feel I was right to sell my 2-bed old-build central London flat in autumn 2004.

However, it does not necessarily follow that suburban, small-town or rural houses will crash so much from their current prices (which annoys me as my next property might be one of these). My reasoning is:

- There may well have been oversupply of newbuild in these areas, especially since land is easier to come by. However in this sector of the market, "period" premium counts for more. A lot of people are sniffy about post-1950 houses. So the newbuilds are not competing with a lot of the pre-1950 stock. On the other hand some ugly carbuncle built in 1970 may well plummet in value since it must compete with a spangly new property.

- BTL has had less of an effect in these areas. This is because the sector is lower-occupancy (i.e. 1-2 incomes per household as opposed to multiple incomes in urban areas). Occupants are less likely to be transient, and therefore the pool of tenants is much smaller.

- Sentiment is probably more of a factor than fundamentals in the non-urban areas. So I think the downturn in the non-urban areas may come later.

frugalista

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Hi Frugalista,

I agree with what you are saying.

My point was that the guy selling his old-built two-bedder has to compete with the new-build two-bedder and so he can see the value of his property dragged down by an oversupply of new-build (for precisely the reasons you point out), which in turn means he has less equity to help support his offer on the out of town place or whatever (so he must be willing/able to borrow more to maintain the same price of the other place).

Essentially, the more the market is built on swapping bubble equity in one place for bubble equity in another the more it is at risk from falling prices anywhere along the chain.

We hear how people "have to get X because that's the only way I can afford Y" but can't get X... eventually they have to accept they are not getting X so they are not paying Y. The depth of price falls is sure to be different in different parts of the chain and in differnt areas of the country but all property is potentially affected by the "over-supply" of new-build.

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Hi Frugalista,

I agree with what you are saying.

My point was that the guy selling his old-built two-bedder has to compete with the new-build two-bedder and so he can see the value of his property dragged down by an oversupply of new-build (for precisely the reasons you point out), which in turn means he has less equity to help support his offer on the out of town place or whatever (so he must be willing/able to borrow more to maintain the same price of the other place).

Essentially, the more the market is built on swapping bubble equity in one place for bubble equity in another the more it is at risk from falling prices anywhere along the chain.

We hear how people "have to get X because that's the only way I can afford Y" but can't get X... eventually they have to accept they are not getting X so they are not paying Y. The depth of price falls is sure to be different in different parts of the chain and in differnt areas of the country but all property is potentially affected by the "over-supply" of new-build.

Smartnewhomes reckon there may be an over supply problem

http://firstrung.co.uk/articles.asp?pageid...1007&cat=47-0-0

David Bexon, md of SmartNewHomes.com, said: "These figures make it clear that there is currently a surplus of apartments on the market and this is having a negative effect on average prices. The shape of the new homes market has changed drastically over the last few years as a result of the government's limitations on homebuilders' activity.

"With limited greenfield sites made available for development and tight constraints on housing density, homebuilders have been forced to adjust their mix of property types but demand has not shifted in the same way. Homebuyers still prefer detached and semi-detached properties for family and starter homes but there is distinct shortage of these on the market."

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Guest Time 2 raise Interest Rates

The whole buy-to-let game could turn out to be a total disaster

for anyone who's bought in the last couple of years. Just had a

call from my brother, the new build house he bought in 2003 as

a buy-to-let for £350,000 excluding fees and is now trying to

sell for at best £320,000, has just had a right blow. He's been

to the development (South-east) and the developers have just

released a new phase and the're selling exactly the same property

as his for £320,000 with stamp duty, legal fees and x amount for

carpets. Not looking too good for him at the moment.

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Smartnewhomes reckon there may be an over supply problem

http://firstrung.co.uk/articles.asp?pageid...1007&cat=47-0-0

David Bexon, md of SmartNewHomes.com, said: "These figures make it clear that there is currently a surplus of apartments on the market and this is having a negative effect on average prices. The shape of the new homes market has changed drastically over the last few years as a result of the government's limitations on homebuilders' activity.

"With limited greenfield sites made available for development and tight constraints on housing density, homebuilders have been forced to adjust their mix of property types but demand has not shifted in the same way. Homebuyers still prefer detached and semi-detached properties for family and starter homes but there is distinct shortage of these on the market."

Well knock me down with a feather. People, in the main and for the greater proportion of their lives, prefer houses to flats. I'd never have thought that.

Pack 'em in like sardines said Prescott, 'cos he and the Government know best don't they.

They're only the proles.

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Well knock me down with a feather. People, in the main and for the greater proportion of their lives, prefer houses to flats. I'd never have thought that.

Pack 'em in like sardines said Prescott, 'cos he and the Government know best don't they.

They're only the proles.

Indeed, Prescott was on a Trev McDonut show a few months back about housing, he handed a gift to a young couple in their new but rather cramped system built flat, with the press in tow of course.

He shook the young man's hand and said "see, now you're alright now you're part of the property owning class".

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Check out the top headlines from Thursday's Ft.com...

- Portman refuses to lend on buy-to-let new flats

The Portman Building Society became the first lender in the UK to refuse buy-to-let mortgages on new flats in a sign of growing fears about the stability of the sector.

- Housing wealth not 'sufficient solution'

- UK house prices are overvalued, warns OECD

I'd say that's bearish.

Who has access to the full articles?

:)

ft.jpg

post-2436-1134001373_thumb.jpg

Edited by Nijo

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  • 335 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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