The Brutal Impact Of M M R

[Si1]

you could use the h2b isa with newbuy or htb1 or just htb2 and fairly sure you could use newbuy and htb2 and yes I am sure you could use h2m even if you have htb 1 or 2 but may need to cash in the h2b isa.

and no no no do not think about pensions!!! any income should be used to buy a BTL flat to get (indirectly) housing benefit which is again re-cycled taxpayer cash

Don't forget inheriting mummy's 900k house tax free, being entirely a result of being a hard working striver

[long time lurking]

agreed its greedy OO's that are causing the blockage - not BTL.

Nope it`s OO`s hanging on by their fingernails trying to keep a roof over their heads admittedly it`s a roof they could never really afford

The IO BTL brigade have been doing the same thing for the best part of a decade praying for HPI that has not happened those who can admit to themselves they were sold a pup are getting out now some will be losing their deposits as well as their ten years worth of unpaid caretaking duties for the banks

Around my way. 80-90%.of the places forsale at the bottom end of the market are BTL properties the lower priced ones sell the greedy kite flyers go back up to rent after a few months and the owners dusts off the thread bare prayer mat for another year .

[happyrichie]

you could use the h2b isa with newbuy or htb1 or just htb2 and fairly sure you could use newbuy and htb2 and yes I am sure you could use h2m even if you have htb 1 or 2 but may need to cash in the h2b isa.

and no no no do not think about pensions!!! any income should be used to buy a BTL flat to get (indirectly) housing benefit which is again re-cycled taxpayer cash

ow dam i see now silly me, so when i use htm i can get several btl and then just cash that in so i can retire and play circles all day long

[long time lurking]

I'm inclined to agree, however the bottom end of the market (starter homes as opposed to ex-council) near me seems to have gone up in price disproportionally and I suspect that the sellers need to sell for to get together a big enough deposit to "move up the ladder". But the sales of these starter homes keep falling through (my guess OO buyers as opposed to BTL) as obviously FTBs are struggling to get mortgages.

MMR seems to have caused an almighty stalemate.

Would agree withe the starter home bit ,BTL places around myway are typically 2=3 bed terraces most were bought for 90-100k 05-07 the smart money bailed out at that time the ones that are selling tend to be tatty ones and they are makeing 70-80k anything above that don`t sell tidy ones that are oo owned may make 90k

[winkie]

There will need to be another HtB scheme where the taxpayer helps these people out so they can move. In the current situation if people want to downsize and reduce their debt their mortgage payments could actually increase so Dave and George will need to introduce HelpToMove to supplement HtB 1 and 2 and NewBuy and the HtB ISA ... not forgetting HtB 6 and 7 to help the people who have taken out HtB 1 and 2.

All this help is no help when prices of homes have been increasing faster than incomes.....stalemate is because so many in the past bought homes they could only in effect rent ie interest only or spent the equity converting and repayment into just interest....they are stuck unless they can start paying the debt off.....rising prices for movers is bad for people who want to move, only creating own equity can create real equity, real equity reduces costs and gives more freedom and choices....

BTL is now for some first time buyers their first mortgage....the only way of buying a home they can not afford to live in.....renting or living at home and renting out their first home.

[Hairy1305]

I think BTL should start getting properly hit with a big stick.

[Milkshock]

Maybe you're right but remember the govt don't want the hassle of housing the people which is why BTL get so many breaks.

[Blod]

Maybe you're right but remember the govt don't want the hassle of housing the people which is why BTL get so many breaks.

"Government" doesn't care about housing people. They care about themselves and friends, if the sums add up on taxing BTL then they'll jump in with both feet. Right now doing so parks the Tory's comfortably in the centre ground.

[Roman Roady]

This HPI nonsense has been going on for nearly 20 years now. It should have corrected itself 7 years ago.

As a result an entire generation of adults do not understand that getting in massive debt to "invest" in bricks and mortar is not a guarantee of future wealth.

It can be a way to future poverty.

If you are up to 40 years old then HPI is all you have known in the housing market.

So the coming correction (and it is coming) will be a bit of a shock for many.

[Hairy1305]

I think with all the artificial propping up of the housing market, if we get a global event completely out of the control of the government, then we should see a massive correction. I sold everything in 2013 thinking that it couldn't possibly get much worse, but it has, artificially. I do think if it goes pop, it will be massive. But I do not discount the idiots propping it up further and further.

[sleepwello'nights]

Around my way. 80-90%.of the places forsale at the bottom end of the market are BTL properties the lower priced ones sell the greedy kite flyers go back up to rent after a few months and the owners dusts off the thread bare prayer mat for another year .

Whereabouts are you?

Where I am in North Hampshire lower priced properties are selling very quickly. To give an example a two bedroom terraced house sold in 2013 for £180K. The identical house next door sold last month for £230K. Apartments at under £200K don't stay on the market for long.

It has now been rented for £1000 per month. That's a 5.2% yield, no letting agent involved and maintenance costs on a 10 year old house are unlikely to be very high. If the new owner has financed it themself that's a much higher yield than cash on deposit. And its an investment as safe as houses.

I know you lot will flame me, but this is the mindset you are disparaging. So far this has prevailed over your hopes for an HPC. If the owner is looking at the investment as a future pension then in 16 years the cost will have been recovered, in nominal terms. Thereon it looks to be a better investment than letting the financial services industry pick your pocket. Even if the capital value falls there isn't really a problem as long as rents stay in line with RPI or CPI.

[19 year mortgage 8itch]

Whereabouts are you?

Where I am in North Hampshire lower priced properties are selling very quickly. To give an example a two bedroom terraced house sold in 2013 for £180K. The identical house next door sold last month for £230K. Apartments at under £200K don't stay on the market for long.

It has now been rented for £1000 per month. That's a 5.2% yield, no letting agent involved and maintenance costs on a 10 year old house are unlikely to be very high. If the new owner has financed it themself that's a much higher yield than cash on deposit. And its an investment as safe as houses.

I know you lot will flame me, but this is the mindset you are disparaging. So far this has prevailed over your hopes for an HPC. If the owner is looking at the investment as a future pension then in 16 years the cost will have been recovered, in nominal terms. Thereon it looks to be a better investment than letting the financial services industry pick your pocket. Even if the capital value falls there isn't really a problem as long as rents stay in line with RPI or CPI.

I'm sure the investment returns on slaves were great for a long time too.

[Si1]

Whereabouts are you?

Where I am in North Hampshire lower priced properties are selling very quickly. To give an example a two bedroom terraced house sold in 2013 for £180K. The identical house next door sold last month for £230K. Apartments at under £200K don't stay on the market for long.

It has now been rented for £1000 per month. That's a 5.2% yield, no letting agent involved and maintenance costs on a 10 year old house are unlikely to be very high. If the new owner has financed it themself that's a much higher yield than cash on deposit. And its an investment as safe as houses.

I know you lot will flame me, but this is the mindset you are disparaging. So far this has prevailed over your hopes for an HPC. If the owner is looking at the investment as a future pension then in 16 years the cost will have been recovered, in nominal terms. Thereon it looks to be a better investment than letting the financial services industry pick your pocket. Even if the capital value falls there isn't really a problem as long as rents stay in line with RPI or CPI.

Yawn

[Si1]

I'm sure the investment returns on slaves were great for a long time too.

Sleepyboy didn't even come up with an argument for good returns, he basically argued they could be poor but that's actually good. I suspect he doesn't read his own posts.

[BorrowToLeech]

Maybe you're right but remember the govt don't want the hassle of housing the people which is why BTL get so many breaks.

BTL is the reason so many people 'need housing'. Without BTL they would simply have homes.

[Bland Unsight]

...

So far this has prevailed over your hopes for an HPC.

...

This is actually the daftest post I have read in a long time. I just love the idea that it is the mindset of the aspirant BTLer that is holding the bottom of the market out of reach of MMR constrained aspirant owner-occupiers. Not emergency Bank policy rate, not the low gilts rates of the QE driven bond bubble, not the impact on funding costs of FLS and not the failure to regulate the BTL lending. "It was the BTLers wot won it."

BTLers are stooges, puppets, quislings; they are the mark not the card sharp. You don't need to worry about being flamed; knowledge-free 'conventional wisdom' drivel like this will get you ignored. You're going on the list.

[long time lurking]

Whereabouts are you?

Where I am in North Hampshire lower priced properties are selling very quickly. To give an example a two bedroom terraced house sold in 2013 for £180K. The identical house next door sold last month for £230K. Apartments at under £200K don't stay on the market for long.

It has now been rented for £1000 per month. That's a 5.2% yield, no letting agent involved and maintenance costs on a 10 year old house are unlikely to be very high. If the new owner has financed it themself that's a much higher yield than cash on deposit. And its an investment as safe as houses.

I know you lot will flame me, but this is the mindset you are disparaging. So far this has prevailed over your hopes for an HPC. If the owner is looking at the investment as a future pension then in 16 years the cost will have been recovered, in nominal terms. Thereon it looks to be a better investment than letting the financial services industry pick your pocket. Even if the capital value falls there isn't really a problem as long as rents stay in line with RPI or CPI.

SE Wales would agree with if it was financed by themselves bit but the trouble is most are IO with such low yields before any costs there is never going to be enough left over to repay the capital

It`s been like watching a slow motion train crash around my way simple maths told me ten years ago that the game was not sustainable without HPI or huge increase in rent , the market i'm talking about the rent ceiling is set by the LHA rate so that was never going to happen

The only thing that has surprised me is the fact it`s taken the best part of a decade for them to realise it was not going to work . With MMR in place the escape route is limited to the amount of greater fools out there and with the Wales housing bill coming into force in the autumn that number looks to be shrinking by the month

IO BTL was and still is a leveraged bet on HPI there are double digit yields within fifteen miles of me but the auctions are full of repossessed or people desperate to off load BTL properties from these areas if it`s such a good investment WHY are there so many ?

Edited May 30, 2015 by long time lurking

[Bland Unsight]

..

The only thing that has surprised me is the fact it`s taken the best part of a decade for them to realise it was not going to work . With MMR in place the escape route is limited to the amount of greater fools out there and with the Wales housing bill coming into force in the autumn that number looks to be shrinking by the month

...

+1

This.

Also as fools are financing in part with bubble equity to serve as a deposit on the BTL, when the rain comes, the fools dry up. Empowering these cretins with mortgage credit is so dumb it hurts.

[sleepwello'nights]

SE Wales would agree with if it was financed by themselves bit but the trouble is most are IO with such low yields before any costs there is never going to be enough left over to repay the capital

Thanks for the polite and reasonable reply.

I look at the yields and take fright. But, its done OK so far. Let's not forget the BTL market were encouraged by Governments to step in and take the risk of providing rental property by various policies over the decades to curtail local authorities provision of rental property. It seems from remarks after the general election by a conservative politician, I don't recall who, that policies were going to be changed to encourage local authorities to build more homes to rent.

Perhaps the landscape will return to what it was when I was a child, and a large proportion of the population lived in homes rented from the council. There were some lovely tower blocks weren't there!

[Bland Unsight]

I look at the yields and take fright. But, its done OK so far. Let's not forget the BTL market were encouraged by Governments to step in and take the risk of providing rental property by various policies over the decades to curtail local authorities provision of rental property.

...

If you can provide a shred of evidence to support this claim, I'd be thrilled to see it. (It runs contrary to everything I have ever read.)

[Bland Unsight]

...

Perhaps the landscape will return to what it was when I was a child, and a large proportion of the population lived in homes rented from the council. There were some lovely tower blocks weren't there!

You're some kind of specious argument gold mine, speaking of gold mines...

Ex-council homes in London are a 'gold mine' for landlords.

In January, a two-bedroom flat in the Brunswick Centre, which was once owned by Camden council, changed hands for £850,000.

Surely nobody wants to live in an ex-council tower block? They must have spent all that money by accident.

Edited May 30, 2015 by bland unsight

[long time lurking]

Thanks for the polite and reasonable reply.

I look at the yields and take fright. But, its done OK so far. Let's not forget the BTL market were encouraged by Governments to step in and take the risk of providing rental property by various policies over the decades to curtail local authorities provision of rental property. It seems from remarks after the general election by a conservative politician, I don't recall who, that policies were going to be changed to encourage local authorities to build more homes to rent.

Perhaps the landscape will return to what it was when I was a child, and a large proportion of the population lived in homes rented from the council. There were some lovely tower blocks weren't there!

I think this is as much down to luck than judgment in most cases when talking about 5% yields before costs and tax one bad non paying tenant and a broken boiler could cost 2-3 years proffit

[Snugglybear]

You're some kind of specious argument gold mine, speaking of gold mines...

Ex-council homes in London are a 'gold mine' for landlords.

Surely nobody wants to live in an ex-council tower block? They must have spent all that money by accident.

Point of information - the Brunswick Centre flats aren't in a tower block. If I lived in London I'd rather fancy living there.

[Bland Unsight]

Getting a mortgage proves impossible for almost half of hopeful buyers

This looks to a be another case of this process:

• Commercial interest wants some cheap press
• Commercial interest commission rent-a-gob 'consultants' to generate 'content'
• Commercial interest issues press release
• Media companies disseminate the press release

Having looked at the company who did the May 2015 survey of 1500 people and the the two Experian reports, I'm inclined to hold my nose and walk past this.

My concern is that the key number is just totally undefined and there does not sit in a longitudinal data set, hence nothing can be inferred from its present level. Ray Boulger of John Charcol, not generally the best friend of bears, is reported in this Daily Telegraph piece of 27 April 2015 as pointing out that what banks usually offer up as a statistic for loans approval rates is the ratio of loans that are made to decisions in principle. Though the detail needed to make the judgement is not present, essentially making the Experian number useless, balance of probabilities what we are looking at here is people who got a no at the decision in principle stage. Without data on what that number was pre-MMR the interpretation is problematic.

Trying to wring something out of this PR, and setting aside the small disclosed sample size (1,500) and the complete lack of anything on the methodology, what caught my eye was that when Experian conducted research in April 2014, of the 28% of respondents who claimed that they knew what MMR was "[o]nly 44% correctly understand that it means lenders will be more careful about ensuring that mortgage applicants can afford their repayments, both now and into the future". That meant that even though we'd been through the financial crisis and five years of the MMR process, at that time barely 1 in 10 people had absorbed the message that mortgage lending had got a bit out of hand and that regulatory authorities were trying to get a handle on things.

The lack of detail on both the April 2014 survey and the May 2015 survey that underpins the latest Experian report, wedded to the fact that it looks to have been written by a f**kwit, make it impossible IMO to make confident inferences, but the May 2015 Experian report does have this:

A separate report commissioned by Experian in April 2014, The MMR Muddle, highlighted that a concerning 43% of aspiring home buyers believed that MMR would mean that they could apply for mortgages with smaller deposits than before. One year on, 23% of people still mistakenly believe this to be the case.

Hence, in April 2014, nearly six years after 2008 we get the implementation of practices to drive irresponsible lending to ground, but at that time of the 3 in 10 people who even profess to know what MMR is, 4 out of 10 of them think it is going to make mortgage credit more freely available

The supposition that the April 2015 23% is directly comparable to the 43% looks unwarranted - we appear to be picking from different pots. But a vaguer supposition, that there are more people who correctly understand the impact of MMR, looks to be justified, on the balance of probabilities. At this rate at some point in 2042 people might work out that its not good for them if BTLers have access to dirt cheap unregulated mortgages but they have their affordability assessed subject to an array of constraints.

What is interesting is what happens next. I presently see no softening of the Bank of England's position keeping a lid on mortgage credit to aspiring owner-occupiers so either we accept the right of these bozo BTLers to leverage up and lay down in traffic, and damn the inconvenience they cause the rest of us, or we shut them down. As I've argued, presumably beyond the limit of other posters patience, there is plenty of evidence of a willingness on the part of the Bank to weaken the ability of BTLers to keep bidding up floor prices. As other posters have argued convincingly, the floor price for crap housing looks to be linked also to government transfer spending allocated to housing, i.e. the housing element of Universal Credit, and that may be about to take its share of the proposed cuts. Game on.

[Bland Unsight]

Point of information - the Brunswick Centre flats aren't in a tower block. If I lived in London I'd rather fancy living there.

This is the internet. There will be no facts and I will never be shown to be wrong. The Brunswick flats are a tower, they are a tower lying on its side.

Or to put it another way, of course you are right.

I was taking a more general swipe at the idea that council housing was just tower blocks that nobody would want to live in, because it's much more complicated than that. A flat in a tower block, if well built and with communal areas that were clean and safe would presently suit me to a tee. We need to attend to need to unravel the problems associated with the configuration of the concrete and steel fabric from factors arising from separate mechanisms that result in the concentration of both deprivation and individuals living, for whatever reasons, somewhat

.