Btl Scum Regrouping And On The Offensive. -- Merged

[Ah-so]

11 hours ago, JustAPleb said:

At the bottom of Neil Pattersons post he states - "The above equates to a 13.79% drop in rental income borrowing power."

Now i can see that if an rent scavenging entrepreneur needs to remortgage and is at maximum leverage it'd mean finding significant sums and will force them into selling.

But for the masses of Brits whose life ambition is to get into BTL the very people it seems i am competing against to buy from such forced sellers it'll only lead to them borrowing 13.79% less from the bank, which in my neck of the woods gets us back to about last years prices, which were utterly ridiculous and only suitable to a sick society.

Why am i wrong to be so pessimistic.

13.79% is the correct figure ((145%-125%)/145%), and while it sounds small, it makes a big difference to future BTL affordability, particularly when you take the additional 3% stamp duty into account. 

For higher rate tax payers it now means that the minimum BTL deposit is nearer 40% as opposed to 25% and this makes a big difference to the ability to acquire an initial property and also the ability to use future house price gains to remortgage and acquire additional properties. 

[JustAPleb]

1 minute ago, Ah-so said:

13.79% is the correct figure ((145%-125%)/145%), and while it sounds small, it makes a big difference to future BTL affordability, particularly when you take the additional 3% stamp duty into account. 

For higher rate tax payers it now means that the minimum BTL deposit is nearer 40% as opposed to 25% and this makes a big difference to the ability to acquire an initial property and also the ability to use future house price gains to remortgage and acquire additional properties. 

So we should see fairly early on in 2017 as to whether its made a significant impact or not.

 

[Ah-so]

12 minutes ago, JustAPleb said:

So we should see fairly early on in 2017 as to whether its made a significant impact or not.

 

I hear that Nationwide wrote far fewer mortgages after its 145% coverage ratio came in.

There will be a handful of racier lenders that will lend to the more highly leverage borrowers, but they alone will not have the capacity to absorb all the demand for higher LTV borrowing. We are now 3 business days away from implementation and I expect the impact to be fairly profound, hitting first new lending and then remortgaging.

[Venger]

 

57 minutes ago, JustAPleb said:

I've analysed the property market for best part of 2 decades and apart from a relatively small drop after 2008 i've been wrong all the time, economic fundamentals haven't applied in what is now the long term. Or the economic fundamentals of the English property market are now so bloody complex no one really knows what will happen.

 

Maybe so (all your points - and I agree with some of your points - it's been just foreverHPI in my parts) but I fail to see the point on why you have chosen to just sign up to HPC, and choose this particular fun thread to bring your HPC downers to, when you are so full of 'can't know anything.'

Of all the threads to choose.  It's like a magnet to the anti-HPCers or big doubters to try and cancel out the few very good things we can see set to weigh down hard on the ForverHPIers and BTLers, from my view.  Which came as a massive shock to their 'core-voter' HPI egos.  And a lot more to come.  S24, PRA.

I am a HPCer and won't pay these prices - and the same for many family and friends who rent, and wait for lower house prices.   Apart from a girl I met up with last night who umming on what to do in relationship problem with her £600,000 - £800,000 house all-paid-off (in her mid 30s / BOMAD help).... 'you could have more money and work less if you downsized / moved area'.   

Each of us has to make market decisions.   We know all the BTLers/HPI Forerver/Can Be No HPC 'balance' on multiple levels and in multiple dimensions.

We can know somethings.  Shock of S24 on the BTLers.  SDLT surcharge.  PRA.  If you believe they are of no consequence, buy a house at these prices if you want to.  (Or don't sell your house).

On 10/13/2016 at 8:48 PM, Just_Do_It said:

Okay, so I'm new to forums and bit at the loaded question.

I'm certain that I didn't say that anyone 'needs' BTL landlords, although I'm sure you agree that everybody needs somewhere to live.

To be honest I didn't expect any empathy from this website, but thought I'd try to add some balance.

 

On 10/17/2016 at 10:48 PM, JBourne said:

My reason for  charging below market rates may not because I am so kind but more because I am not greedy, practical and have a heart!

 I think I must be doing a good job and I think my tenants are generally happy with me.  So posters here can rant all they want but Btl does cater for people who want to rent and may not be currently in a position to buy.

 

On 10/17/2016 at 11:02 PM, Bland Unsight said:

I'm a bit confused as to why you think this is the right thread for your anecdote. There's a sub-forum for that kind of thing.

This thread is for over-gloating at the misfortunes of the PovertyLater tw@ts. Welcome the forum and all that kind of thing etc. but if you don't want to be seen as a troll, you need to avoid disruptive posting. As there's no 'business' being done on this thread at the moment you're unlikely to get anybody's back up with lengthy posts about your BTLs, but it's really not the right place for them.

 

[JustAPleb]

3 minutes ago, Venger said:

 

 

Maybe so (all your points - and I agree with some of your points - it's been just foreverHPI in my parts) but I fail to see the point on why you have chosen to just sign up to HPC, and choose this particular fun thread to bring your HPC downers to, when you are so full of 'can't know anything.'

Of all the threads to choose.  It's like a magnet to the anti-HPCers or big doubters to try and cancel out the few very good things we can see set to weigh down hard on the ForverHPIers and BTLers, from my view.  Which came as a massive shock to their 'core-voter' HPI egos.  And a lot more to come.  S24, PRA.

I am a HPCer and won't pay these prices - and the same for many family and friends who rent, and wait for lower house prices.   Apart from a girl I met up with last night who umming on what to do in relationship problem with her £600,000 - £800,000 house all-paid-off (in her mid 30s / BOMAD help).... 'you could have more money and work less if you downsized / moved area'.   

Each of us has to make market decisions.   We know all the BTLers/HPI Forerver/Can Be No HPC 'balance' on multiple levels and in multiple dimensions.

We can know somethings.  Shock of S24 on the BTLers.  SDLT surcharge.  PRA.  If you believe they are of no consequence, buy a house at these prices if you want to.  (Or don't sell your house).

 

 

 

I asked a legitimate question based on that link showing its only a 14% drop in lending. Would you prefer people joined and said all prices are going to crash next year, wooohooo yeah everythings great and totally ignored whats gone on in the last decade?

And i implied a drop of 14% is neither here nor there for me personally, as it will only bring prices to last years levels which i made a decision not to buy at as they were ludicrous. But such a comment is acknowledging it should have a consequence.

[spyguy]

33 minutes ago, Ah-so said:

I hear that Nationwide wrote far fewer mortgages after its 145% coverage ratio came in. are fcked.

There will be a handful of racier dodgier/Big Dave lender lenders that will lend to the more highly leverage borrowers, but they alone will not have the capacity to absorb all the demand for higher LTV borrowing. We are now 3 business days away from implementation and I expect the impact to be fairly profound, hitting first new lending and then remortgaging.

Its not jus tdumb BTler who have been caught with their pants down. Some banks - whod you think would know better but after 2008 I dont think - are fcked.

And there's claw back in palce too. No retiring into the sunset.

[thewig]

51 minutes ago, Ah-so said:

13.79% is the correct figure ((145%-125%)/145%), and while it sounds small, it makes a big difference to future BTL affordability, particularly when you take the additional 3% stamp duty into account. 

For higher rate tax payers it now means that the minimum BTL deposit is nearer 40% as opposed to 25% and this makes a big difference to the ability to acquire an initial property and also the ability to use future house price gains to remortgage and acquire additional properties. 

 

This is the elephant in the DEBTjunkies living room and y why fronts dulley is having to just raise the rents by a SH*TLOAD more than 14% to keep him in the lifestyle to which he has become accustomed innit. And why his VOIDS will instantaneously rise to ~100%.

 

At the same time as his tennants leave the building for the last time, filthy keks left on every door handle, his prized bricks and mortar will of course vanish into physical nothingness in a bizarre quirk of quantum physics reserved solely for overleveraged chimps. (his DEBT won't be going anywhere though)

 

Leverage is the key to all of this, and DEBTjunkies by their very specific nature cannot exist without a SH*T TON OF leverage, and they're now on the receiving end of the funniest margin call in living memory.

[spyguy]

3 minutes ago, thewig said:

 

This is the elephant in the DEBTjunkies living room and y why fronts dulley is having to just raise the rents by a SH*TLOAD more than 14% to keep him in the lifestyle to which he has become accustomed innit. And why his VOIDS will instantaneously rise to ~100%.

 

At the same time as his tennants leave the building for the last time, filthy keks left on every door handle, his prized bricks and mortar will of course vanish into physical nothingness in a bizarre quirk of quantum physics reserved solely for overleveraged chimps. (his DEBT won't be going anywhere though)

 

Leverage is the key to all of this, and DEBTjunkies by their very specific nature cannot exist without a SH*T TON OF leverage, and they're now on the receiving end of the funniest margin call in living memory.

Years ago, when I used to hear the first BTLers talking about their exciting new investment, I only asked them if the knew what the LHA was.

Why they ask?

Most rents are within ~10% of the LHA.

 Labours disastrous plan of raising the LHA ahead of wages - to 'help' people get housing. Fcktards.

Now LHA are being reduced. They need to be aligned at 1/3 of the mean takehome wage.

 

 

 

[mathschoc]

Found this, please sign

https://petition.parliament.uk/petitions/175794

 

[Venger]

47 minutes ago, JustAPleb said:

I asked a legitimate question based on that link showing its only a 14% drop in lending. Would you prefer people joined and said all prices are going to crash next year, wooohooo yeah everythings great and totally ignored whats gone on in the last decade?

And i implied a drop of 14% is neither here nor there for me personally, as it will only bring prices to last years levels which i made a decision not to buy at as they were ludicrous. But such a comment is acknowledging it should have a consequence.

My point was this thread is about the BTLers.

This is one of the main big-fun threads about the BTLers.  There is thread after thread pointing out the challenges/prices all around us.

My point being is I don't see it as the thread for a new joiner to make  first, second and now third post, doubting all things HPC, on this thread.  Btl Scum Regrouping And On The Offensive.   Others may disagree, but I hold my view, and I am in a testy frame of mind at the moment, and feel a bit Regulator about this thread, to keep it on track.   

On this thread you've got to be handy with the steel... earn your keep, prove your worth (imo) - something about the BTLers, rather than some newbie turn the thread into personal view all about HPC doubt.   You make good points, but they are for another thread imo.   I am hoping the points you make leads to some cascade from this HPI/BTL grip situation - that things can go way past 14% drop in lending.  Prices are set at the margin.  What active sellers and buyers transact at.  It doesn't take many buyers and sellers to transact at much higher prices to power the market up, and it doesn't take too many active buyers and sellers transacting at much lower prices to bring values down.

On 10/17/2016 at 11:02 PM, Bland Unsight said:

I'm a bit confused as to why you think this is the right thread for your anecdote. There's a sub-forum for that kind of thing.

This thread is for over-gloating at the misfortunes of the PovertyLater tw@ts. Welcome the forum and all that kind of thing etc. but if you don't want to be seen as a troll, you need to avoid disruptive posting. As there's no 'business' being done on this thread at the moment you're unlikely to get anybody's back up with lengthy posts about your BTLs, but it's really not the right place for them.

The forum allows all view and free speech and 'balance' - so it's not about you needing to tow some imaginary line.  It's just this thread is about the BTLers shock and grasping and trying to come to terms with hard new realities.  Not your HPC doubting.

 

Quote

 

Neverwhere

(Freespeech discussion) this is already the case on HPC, not least because there is no one central HPC view on anything.

Given that posters do hold differing views this naturally results in disagreement, which is - for me at least - one of the aspects of the forum that I most appreciate. What better way to test an idea or opinion than to subject it to the rigours of debate and see if it survives the discussion?

 

 

 

 

[JustAPleb]

I did not know that this topic was about exactly what have just said not sure how I could. In most forums if someone puts a link in its ok to comment on the content. But you seem to be telling me its not. Anyway others gave their informed response.

[Venger]

 

26 minutes ago, JustAPleb said:

I did not know that this topic was about exactly what have just said not sure how I could. In most forums if someone puts a link in its ok to comment on the content. But you seem to be telling me its not. Anyway others gave their informed response.

The topic title gives a clue.  

Tipped into you slightly because you have just joined and chose this particular thread to convey a lot of negative doubt about house prices - and your personal situation in looking to buy at home at some future point, and your posts riddled with HPC doubts.

My only point is this particular thread is about the BTLers.  There's all the other threads for that.  Many of us up against the same challenges to understand the situation and weighing down.  The plight of the BTLers and their reactions to S24, PRA, is one of the few positives of this situation (current house prices).   

Continue to be so pessimistic if you like, although there is a lot of good reading to be found on HPC which pushes back against your new member posts on this thread that BTL life ambition masses going to be up against lot of changes, sentiment change, PRA, S24, SDLT surcharge.   This thread one of the few fun threads for optimism with the BTLers whining and lashing out - and many talking about their own bankruptcy.

 

14 hours ago, JustAPleb said:

At the bottom of Neil Pattersons post he states - "The above equates to a 13.79% drop in rental income borrowing power."

Now i can see that if an rent scavenging entrepreneur needs to remortgage and is at maximum leverage it'd mean finding significant sums and will force them into selling.

But for the masses of Brits whose life ambition is to get into BTL the very people it seems i am competing against to buy from such forced sellers it'll only lead to them borrowing 13.79% less from the bank, which in my neck of the woods gets us back to about last years prices, which were utterly ridiculous and only suitable to a sick society.

Why am i wrong to be so pessimistic.

 

[Bland Unsight]

3 hours ago, JustAPleb said:

And their financing has had a haircut of about 14% hence if the theory that BTL lending is setting the floor then this will be somewhere close to the drop. (for now)

That's not how markets work.

Let's say that you can finance a BTL purchase given the rent you expect and the money you can borrow, but house prices have fallen 5% in the previous six months. Why not wait and get the same house with a better yield in another six months? Actually, if you buy in a falling market at the thick end of the LTV range the bank allows, you might get hit with a margin call 12 months later, so probably wiser to wait until prices have stopped falling.

Here's what happened to BTL lending last time the market struggled.

Source: Bank of England, Trends in Lending, April 2015

I make that an 80% fall in approvals for purchase between 2007 and 2009.

House prices are set by supply and demand (and credit has an important role in demand in some markets).

You're basically missing the entire point, which is what happens to prices when the BTL sector as a whole becomes an aggressive net seller. There are somewhere in the region of 3 million properties in the leveraged PRS. If the buy-to-let clowns stop buying and start selling then you can forget about 13.79%, because in a fire sale nobody will be looking at the yield they are giving up. They'll be focusing on avoiding a situation where a capital loss on a dodgy BTL bet forces them to sell their family home and become (horror of horrors) a tenant.

If you've managed to analyse property for twenty years and not work out that it's supply and demand (innit) then I'd be curious to know what you have learned. I think you might welcome a little help getting up to speed so have these two property factoids for free, think of them as an early Christmas present: houses have doors and windows and the banks will lend you money to buy them.

[Bland Unsight]

2 hours ago, JustAPleb said:

And i implied a drop of 14% is neither here nor there for me personally, as it will only bring prices to last years levels which i made a decision not to buy at as they were ludicrous. But such a comment is acknowledging it should have a consequence.

And that is the exact problem with your 'reasoning'.

It's like when the half-wit w@nkers from PovertyLater turn up in then Guardian comments and go on about how they individually aren't bankrupted by Section 24. Fascinating for them, I'm sure, but it will be a pretty meagre crumb of comfort if a price move of 30% down leaves them with negative equity in their portfolio and waiting on the margin call letters from their lenders enquiring about their plans to restore the LTV in the loans.

[spyguy]

10 minutes ago, Bland Unsight said:

That's not how markets work.

Let's say that you can finance a BTL purchase given the rent you expect and the money you can borrow, but house prices have fallen 5% in the previous six months. Why not wait and get the same house with a better yield in another six months? Actually, if you buy in a falling market at the thick end of the LTV range the bank allows, you might get hit with a margin call 12 months later, so probably wiser to wait until prices have stopped falling.

Here's what happened to BTL lending last time the market struggled.

Source: Bank of England, Trends in Lending, April 2015

I make that an 80% fall in approvals for purchase between 2007 and 2009.

House prices are set by supply and demand (and credit has an important role in demand in some markets).

You're basically missing the entire point, which is what happens to prices when the BTL sector as a whole becomes an aggressive net seller. There are somewhere in the region of 3 million properties in the leveraged PRS. If the buy-to-let clowns stop buying and start selling then you can forget about 13.79%, because in a fire sale nobody will be looking at the yield they are giving up. They'll be focusing on avoiding a situation where a capital loss on a dodgy BTL bet forces them to sell their family home and become (horror of horrors) a tenant.

If you've managed to analyse property for twenty years and not work out that it's supply and demand (innit) then I'd be curious to know what you have learned. I think you might welcome a little help getting up to speed so have these two property factoids for free, think of them as an early Christmas present: houses have doors and windows and the banks will lend you money to buy them.

Hard to come up with exact figures but BTL has accounted for the majority of housing transaction since 2004ish.

FTBs and buyers wilted away in a lot of places in 2003.

BTL took up the slack.

 

 

[Bland Unsight]

1 hour ago, JustAPleb said:

I did not know that this topic was about exactly what have just said not sure how I could. In most forums if someone puts a link in its ok to comment on the content. But you seem to be telling me its not. Anyway others gave their informed response.

This is not just any old forum, dude. And this certainly isn't just any old thread on any old forum.

We've kind of run out of established BTL trolls on the forum so if you're on the level (and I'm sure you are) then you ought to be aware that some of us are a bit like a chap who's been out lamping for four hours and has come across exactly bugger all to shoot at and might now be expected to take a pot-shot at anything with the temerity to reflect any light, and damn the consequences.

 

Edited December 24, 2016 by Bland Unsight

[Venger]

48 minutes ago, Bland Unsight said:

That's not how markets work.

Let's say that you can finance a BTL purchase given the rent you expect and the money you can borrow, but house prices have fallen 5% in the previous six months. Why not wait and get the same house with a better yield in another six months? Actually, if you buy in a falling market at the thick end of the LTV range the bank allows, you might get hit with a margin call 12 months later, so probably wiser to wait until prices have stopped falling.

Here's what happened to BTL lending last time the market struggled.

[Chart]

Source: Bank of England, Trends in Lending, April 2015

I make that an 80% fall in approvals for purchase between 2007 and 2009.

House prices are set by supply and demand (and credit has an important role in demand in some markets).

You're basically missing the entire point, which is what happens to prices when the BTL sector as a whole becomes an aggressive net seller. There are somewhere in the region of 3 million properties in the leveraged PRS. If the buy-to-let clowns stop buying and start selling then you can forget about 13.79%, because in a fire sale nobody will be looking at the yield they are giving up. They'll be focusing on avoiding a situation where a capital loss on a dodgy BTL bet forces them to sell their family home and become (horror of horrors) a tenant.

If you've managed to analyse property for twenty years and not work out that it's supply and demand (innit) then I'd be curious to know what you have learned. I think you might welcome a little help getting up to speed so have these two property factoids for free, tthink of them as an early Christmas present: houses have doors and windows and the banks will lend you money to buy them.

Exactly.  That is not how housing market works JustAPleb.... just that drop in possible lending.  From these levels... a tiny spark...... 

I don't want the lending at these prices to buy a home - actively refuse it.

And soon after S24 announced (2015) even some hard-headed BTLers quickly realised the dangers of position they were in, and what can happen, both on lending and sentiment side.  Not all about the lending side, against inflated values that risk crashing back.  

People willing to stand back and wait for real value.  Although remains to be seen whether many existing BTLers can survive it (CGT) on their 20 years of portfolio building, and loadsa houses.  There is more weighing down on the market with the BTLers now freaking out on their view they are under sustained attack.  Not yet at any sentiment point change (really), but a lot of encouraging signals we're approaching that point.

Some BTLers had their shocking moment of realisation just a few days after Section 24 announced by Chancellor of the Exchequer.   Since then, SDLT surcharge, PRA.... improved legislation on tenant side re S21s and BTLers to maintain properties / landlord licensing in some areas.  Real estate runs on money.   Of course it will take time for more BTLers to understand there has been a big policy shift.  Political risk.
 

Quote

 

08/07/2015 at 21:10

OK, so now we are all pretty clear on what the implications are, what next?

I am in the process of remortgaging several of my properties to 85% fixed for 5 years but now I must re-think this.

Should I sell up? Maybe, but the CGT is horrendous!

Maybe I should remortgage to the max and wait for distressed sellers? I’m sure there will be plenty of these and the LPA receivers may well get very busy come 2017 and they won’t be wanting to hold highly leveraged assets that are losing money but still incurring tax liabilities for too long! Will we see early 90’s style fire sale opportunities? If so, cash will be king!

Will lenders change their notional rates to reflect the new cashflow issues? If they do borrowing will get tougher, and as we know, this drives property values down too.

Will mortgage brokers see another crash in applications?

Will BTL purchases in progress be aborted? If so this will hit estate agents and developers.

Will developers be able to continue to build if they lose the BTL off plan speculators which they are so reliant upon to get funding these days?

On balance, I think all those who have huge amounts of cash or the ability to raise it quickly are in for some rich pickings, leaving the rest with major difficulties to endure.

Maybe I will refinance at high gearing and a long term fixed after all?

What are your thoughts?

https://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-7/#comment-57774

 

 

I enjoy reading the first run of pages (after S24 announced on Property118) - and the shock reactions.  Although Bosher took so long to understand it, and is now one of their 'industry experts' with the 78 page Bosher Report.

As I read on a BTL forum recently (PT), effectively the Chancellor has given them a big pay rise.  Stop your complaining BTLers.  

https://www.property118.com/budget-2015-landlords-reactions/76164/comment-page-5/#comment-57744

[Lambie]

Really interesting chart. 

That seems to show the banks playing the aggressive drug dealer role - give their marks a cheap taste of the action, get them hooked, then turn the screw as they have to go to more extreme lengths to keep the hit coming.

It's almost enough to generate a bit of sympathy for the BTLers plight. Almost.

If they recognised they were screwed, saw the light and sought help for their addiction, then maybe they could have got out with a few scars and served as a warning to others.

As it is, they angrily tripled down on the addiction and demanded it all as their entitlement, acting as the addict who refuses to take responsibility and brings everyone around them down with them.  The only outcome now is for cold turkey - either they make it through with vastly unnecessary self-harm or they take themselves out causing the maximum amount of untold harm to everyone else.

Suicide by debt.

 

Edited December 24, 2016 by Lambie
typo

[Venger]

Lambie, from my perspective the BTLers have spent the last 6-7 years (into system reflation QE etc), after little crunch, telling everyone that they 'understand property'.  (And all the years before that)

Big egos in so many cases and seemingly not reflecting on gap between them and those who don't own.  Multiple houses.  Generation Rent thinking, with themselves in splendid isolation to problems others carrying, and which they are an active part of causing.   All the 'human-shield' letters of BTLers since S24, about 'making tenants homeless' and then making it clear it's actually all about protecting their £ positions.

Turning would-be buyers into renters.  Time and time again in regional forums have I seen HPCers outbid by BTLers (with houses coming back to rental market soon after purchase).

So no sympathy from me.  Not even your 'little bit'.      Although I suspect you don't really have that much sympathy for the BTLers.    And market events have not, as a whole, impacted on the BTLers yet.  (See prices in many areas).   Rout them out.  Let's see it turned first.

Warning after warning on HPC they the BTLers were doubling down into trouble, in recent years, ignored as iphone spending numbskull anarchists who "don't understand what it takes to get rich".   (When most of us just want more affordable homeownership at some measure to incomes,).

Even many EA interests (and BTL VI) still projecting big future HPI++++, and blogging lots about BTL, property investment  (with very little about homeownership), and often getting a good pop in at younger people.

Quote

November 10, 2016 .    It is harder for young people to save for a deposit in an age where Apple launch a brand new product every six months, or the latest HDTV is readily available. Renting is a choice, and we are developing a mindset more akin to the Europeans with regards to it. 

 

A 'choice' forced on many renter-savers by BTLers.  Being a BTLer/multi-property BTL overleveraged 'all-about-me' outlook is also a choice.

Quote

Venger (re other recent blog entry about letting fees): Is there any situation/change for BTLers/ property investors which can't be answered by 'Rents go up'.

 

 

On 4/3/2015 at 7:14 PM, Bland Unsight said:

Quite amusing how the Dyson piece gradually works its way into CML lobbying against tightening of credit underwriting on regulated mortgages.

IMO from a pro-hpc perspective we want as much new BTL lending as possible as soon as possible. All this buy-to-let is going belly-up shortly, after even a mild move in interest rates or a mild recession. In the meantime these good people are shoring up the banks' balance sheets one BTL deposit at a time. By increasing the depth of supply they are weakening the ability of landlords to effectively coordinate and drive up rents.  And when the gap between income and expenses forces them to sell up the fact that there are so many of them will increase the extent to which they move prices downwards, turning a correction into a crash.  The first act was BTLers making out like bandits, this is the second act. The final act is them crying into their beer once they finally understand that the leverage enabled a small correction in prices to wipe out all their capital and and leave them owing money to the bank - probably not the best kind of pension planning. Ever thus to deadbeats.

------------

Quote

Chris Novice Shark Bait says:

30/10/2016 at 09:51

3 points:

Huge thanks the Ros et. al. for recent splendid report. I know how much effort has gone into its production.

I am sending it to 2 MPs with whom we are yet to meet but am concerned it will fall on deaf ears. Unfathomable!

One is Kenneth Clarke who in his written reply to us has stated ” I must warn you that I am not instinctively in favour providing tax relief on interest on any debt, although we are hopelessly stuck with these arrangements for a large amount of business investment …………I will of course follow the continuing debate and await the outcome of the legal challenge that has been mounted”.

I have just received a letter from Birmingham Midshires advising of the forthcoming section 24 situation. It spells out the possible consequences and recommends seeking accountancy advice etc. They are not offering any sympathy or assistance. Has anyone else received such notice from lenders, and if so what are they saying?

Chris.

 

On 10/31/2016 at 8:54 PM, Bland Unsight said:

(Emphasis added.)

These chaps over the way at PovertyLater are full on proper bonkers aren't they? Your lender writes to you and doesn't offer "sympathy"? Astonishing.

Dear Mr Shark Bait,

Everyone at the office is proper gutted about your situation with Section 24. Barry in accounts has been inconsolable, wandering the car park moaning "But what about Chris? What about his portfolio? Are we supposed to just go on as if nothing has changed?". I personally have been so sick with worry for you that I haven't slept at all since last July when that monster Osborne showed his true colours.

In order to help you cope we've decided to waive all mortgage interest from now on; expressions of sympathy are all well and good, but in these difficult times what you really need is assistance.

Anyway, I better go, Barry is having a proper meltdown again and the police have been called.

Your sincerely,

B. Midshires.

[Neverwhere]

4 hours ago, Ah-so said:

13.79% is the correct figure ((145%-125%)/145%), and while it sounds small, it makes a big difference to future BTL affordability, particularly when you take the additional 3% stamp duty into account. 

For higher rate tax payers it now means that the minimum BTL deposit is nearer 40% as opposed to 25% and this makes a big difference to the ability to acquire an initial property and also the ability to use future house price gains to remortgage and acquire additional properties. 

The other thing to bear in mind - and of which I'm sure you are aware - is that the belief on the Poverty Later thread that the move upwards in ICRs has been mandated to stop at 145% is wrong.

As discussed on the BTL Finance thread, the PRA supervisory statement on underwriting standards for BTL does not specify a specific ICR but instead sets out an expectation that lenders must take into account the borrower's tax liability, including mortgage interest tax relief (i.e. the tax changes hat are being phased in over from 2017).

FreeTrader's calculations below indicate that this is likely to be considerably north of 145% for higher and additional rate taxpayers (whereas there may be no real need for ICRs to change for basic rate taxpayers, if lenders can feel assured that they will remain basic rate taxpayers, but they may not want to take that risk) so it seems likely that, while ICRs might be advertised as from 145%, they will actually be higher than that in practice for specific borrowers.

So higher rate taxpayers may actually need to meet ICRs of 167%, and thus see a drop in the amount that they can borrow of 25%, and additional rate tax payers may need to meet ICRs of 182%, and thus see a drop in the amount that they can borrow of 31% (all rounded).

Any resultant difficulty in remortgaging may be exacerbated by the impact on market rates, and especially on SVRs, of increases in RWs for BTL lending that are currently set to come in over approximately the same period, under Basel III.

And any resulting price falls may result in existing BTLers, even those not directly impacted by the tax changes themselves, needing to meet margin calls and maintain the LTVs agreed in their mortgage contracts; or sell and repay their loan, bringing additional supply to market just as all of the above is reducing the number of willing buyers.

And that's before even considering the long-term impact of the 3% SDLT surcharge for additional properties - which, if it's paid out of money that would have otherwise gone towards the deposit, obviously equates to a larger than 3% reduction in purchasing power in line with the intended LTV (e.g. a 3% reduction in the deposit for a property being bought with a 75% LTV equates to a 12% drop in purchasing power).

Merry Christmas guys, it looks like it could be an interesting new year.

[Lavalas]

25 minutes ago, Neverwhere said:

The other thing to bear in mind - and of which I'm sure you are aware - is that the belief on the Poverty Later thread that the move upwards in ICRs has been mandated to stop at 145% is wrong.

As discussed on the BTL Finance thread, the PRA supervisory statement on underwriting standards for BTL does not specify a specific ICR but instead sets out an expectation that lenders must take into account the borrower's tax liability, including mortgage interest tax relief (i.e. the tax changes hat are being phased in over from 2017).

FreeTrader's calculations below indicate that this is likely to be considerably north of 145% for higher and additional rate taxpayers (whereas there may be no real need for ICRs to change for basic rate taxpayers, if lenders can feel assured that they will remain basic rate taxpayers, but they may not want to take that risk) so it seems likely that, while ICRs might be advertised as from 145%, they will actually be higher than that in practice for specific borrowers.

So higher rate taxpayers may actually need to meet ICRs of 167%, and thus see a drop in the amount that they can borrow of 25%, and additional rate tax payers may need to meet ICRs of 182%, and thus see a drop in the amount that they can borrow of 31% (all rounded).

Any resultant difficulty in remortgaging may be exacerbated by the impact on market rates, and especially on SVRs, of increases in RWs for BTL lending that are currently set to come in over approximately the same period, under Basel III.

And any resulting price falls may result in existing BTLers, even those not directly impacted by the tax changes themselves, needing to meet margin calls and maintain the LTVs agreed in their mortgage contracts; or sell and repay their loan, bringing additional supply to market just as all of the above is reducing the number of willing buyers.

And that's before even considering the long-term impact of the 3% SDLT surcharge for additional properties - which, if it's paid out of money that would have otherwise gone towards the deposit, obviously equates to a larger than 3% reduction in purchasing power in line with the intended LTV (e.g. a 3% reduction in the deposit for a property being bought with a 75% LTV equates to a 12% drop in purchasing power).

Merry Christmas guys, it looks like it could be an interesting new year.

Oh yeah!!! Your post is the HPC equivalent of getting an Optimus Prime transformer AND a new BMX from Santa.

These f*cking goons are still busy campaigning against S24 with hardly a peep about PRA. They think they've still got time to plan and mitigate (i.e. write more letters and hope for the best) but when it comes to remortgage time PRA will smack them right in the face, then keep smacking them in the face until they take the only action we've been telling them they need to take for the last 18 months.

Merry f*cking Christmas!

 

[mathschoc]

S24 pop pop pop interest rate hike pop pop pop ????, merry Christmas everyone and a crash-ing new year.

[Ah-so]

31 minutes ago, Neverwhere said:

The other thing to bear in mind - and of which I'm sure you are aware - is that the belief on the Poverty Later thread that the move upwards in ICRs has been mandated to stop at 145% is wrong.

As discussed on the BTL Finance thread, the PRA supervisory statement on underwriting standards for BTL does not specify a specific ICR but instead sets out an expectation that lenders must take into account the borrower's tax liability, including mortgage interest tax relief (i.e. the tax changes hat are being phased in over from 2017).

FreeTrader's calculations below indicate that this is likely to be considerably north of 145% for higher and additional rate taxpayers (whereas there may be no real need for ICRs to change for basic rate taxpayers, if lenders can feel assured that they will remain basic rate taxpayers, but they may not want to take that risk) so it seems likely that, while ICRs might be advertised as from 145%, they will actually be higher than that in practice for specific borrowers.

So higher rate taxpayers may actually need to meet ICRs of 167%, and thus see a drop in the amount that they can borrow of 25%, and additional rate tax payers may need to meet ICRs of 182%, and thus see a drop in the amount that they can borrow of 31% (all rounded).

Any resultant difficulty in remortgaging may be exacerbated by the impact on market rates, and especially on SVRs, of increases in RWs for BTL lending that are currently set to come in over approximately the same period, under Basel III.

And any resulting price falls may result in existing BTLers, even those not directly impacted by the tax changes themselves, needing to meet margin calls and maintain the LTVs agreed in their mortgage contracts; or sell and repay their loan, bringing additional supply to market just as all of the above is reducing the number of willing buyers.

And that's before even considering the long-term impact of the 3% SDLT surcharge for additional properties - which, if it's paid out of money that would have otherwise gone towards the deposit, obviously equates to a larger than 3% reduction in purchasing power in line with the intended LTV (e.g. a 3% reduction in the deposit for a property being bought with a 75% LTV equates to a 12% drop in purchasing power).

Merry Christmas guys, it looks like it could be an interesting new year.

I know that we covered this in some detail last year but I calculated a move to 145% to maintain the equivalent of 125% ICR for higher rate tax payers back in July 16, and did not understand the 167% calculation.

Not saying it is necessarily wrong, but given that we know that the tax change essentially adds 20% of tax onto interest repayments, it sounds intuitively correct if we add this amount to the current ICR requirements ie 125% + 20%.

[Blod]

14 hours ago, Bland Unsight said:

Here are the things that really set house prices:

• How many houses there are close to the jobs
• The wages the jobs pay
• The terms by which house prices are financed

There you have it.

Does the cost of credit have any impact?

[Bland Unsight]

2 minutes ago, Blod said:

Does the cost of credit have any impact?

I'd include that in the "terms by which house prices are financed".

(Is "terms under which" better/right? [Shrugs])