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One of the fun stupid arguments that I've been entertained by as reconnaissance parties from the hpc hive mind have ventured into the intellectual netherworld of fora populated by interest-only mortgage financed buy-to-let investors is the idea that the coalition government, or indeed any government, encouraged them into taking the little money that they had and leveraging it so that they could buy shit houses with whatever amount of borrowed money their tenants' incomes could service, (on an interest only basis, of course).

I appear to have missed that memo. Could any of you provide me with a copy?

I have an alternative proposal. Just like so much else in this shit storm of idiocy, the Moron Prime looks like this:

brown97_1386256c.jpg

The reason that the BTL herberts have been allowed to continue to borrow themselves into bankruptcy and that the rest of us have had to tolerate house prices estranged from a sustainable link to earnings is, at least in part, due to the Moron Prime placing the Mortgage Market Review in the hands of the FSA who were concerned with lending that they regulated, and they did not regulate buy-to-let lending.

There will be no prizes for guessing who set up the FSA.

Regular readers of these boards will have noticed that the Bank of England are taking an interest in this societally poisonous idiotic lending and have found that it represents a threat to financial stability. They will also be aware that it was three years from the first MMR consultation papers in 2009 to the end of self-certified interest only lending by 2012. As the Bank started getting shitty about interest-only buy-to-let by late 2014, who will offer me odds on it still existing by late 2017?

(When by the way does Osborne's BTL W@nker Evisceration Tax start to taper in? I realise that the speculators are looking for a catchy name to help them convince their tenants to petition against it - you can have that one for free...)

Edited by bland unsight

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It's impossible to prove, but I think you're wrong on this. BTL is not some mishap on the part of the FSA.

In 2007, UK banks had a huge and risky exposure to property, and the government was forced to bail them out because doing otherwise would have pushed the pain onto the households who had bought with 95 LTV mortgages (and cost votes). Whether by chance or on purpose, much of that risk has now been shifted to a demographic who have 60 to 80 percent LTV mortgages and very little public sympathy (i.e. BTLers) and the banks are sitting in a much better position than they were 5 years ago.

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Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game.

As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

Warren Buffett

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It's impossible to prove, but I think you're wrong on this. BTL is not some mishap on the part of the FSA.

That's not what I'm suggesting. My point of departure is the assumption that interest-only lending into the market for residential property is monumentally dumb. As soon as anyone looked at it in the owner-occupier sector, it was immediate ended, in the face of lobbying from banks and whining from hoi polloi.

Yet post 2012, interest-only lending into the buy-to-let sector continued. Why?

(Because there is no plan, just people making it up as they go along, accident to accident, f**k up to f**k up, the survival of interest-only mortgage financed buy-to-let investment is just a f**k up waiting for a fix, nothing more, nothing less. They are not special flowers. They are morons picking up nickels in front of a steam roller. Is that a starter motor I hear?)

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Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game.

As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.”

Warren Buffett

This ^^^^^ someone was always going to have to feel the pain ,it`s all been engineered so the smallest demographic takes the hit ,in effect the BTL brigade have bailed out many over leveraged OO over the last 3-4 years by paying over the odds due to the easy credit they thought they had been gifted...this could well turn out to be a poisoned chalice....it will be interesting to see how the banks react in the near future

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This ^^^^^ someone was always going to have to feel the pain ,it`s all been engineered so the smallest demographic takes the hit ,in effect the BTL brigade have bailed out many over leveraged OO over the last 3-4 years by paying over the odds due to the easy credit they thought they had been gifted...this could well turn out to be a poisoned chalice....it will be interesting to see how the banks react in the near future

They (the BTL'ers) thought the renters were the patsy, but only because they (the renters) knew somebody had to be the patsy so they sat it out. Stood back. That's what happened. Ball$ 'n' all!

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Basically it is an increasingly stupid system. It relies on ever fewer people people paying ever higher prices to "get credit into the economy"...hence why they are making it compulsory for students.

Doesn't that make it an unsustainable system? Stupid may well be, in line with Forrest Gump's mother's suggestion, as stupid does, but "If something cannot go on forever, it will stop", (Herbert Stein).

Edited by bland unsight

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This ^^^^^ someone was always going to have to feel the pain ,it`s all been engineered so the smallest demographic takes the hit ,in effect the BTL brigade have bailed out many over leveraged OO over the last 3-4 years by paying over the odds due to the easy credit they thought they had been gifted...this could well turn out to be a poisoned chalice....it will be interesting to see how the banks react in the near future

Not sure. A BTLer ofthe 2002-2007 would make a very poor patsy as their assets are fraction of their debts.

I think there's been a minor patsy in letting equity rich OOOs 'invest' in BTL post -2008.

I doubt you could formulate policy to that extent as you'd have to line up investors, mortgage providers and get the regulator to give you a free pass.

I don't think there's been much of a reduction in risk. Outside of London, house transactions have been on the floor for almost 10 years.

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A couple have just sold in my close for £108k ,3 bed semis,back in 2004/5 they were going for £129k.Infation adjusted thats a big fall.

A lot of southern BTLers bought up terrace houses in the worst streets in the local towns for £70k each back then.At the time they were probably worth £15k max.The locals took their hands off (rightly).They are mostly down below £45k now and falling.The tenants they get tend to simply move in,dont pay the rent and sell the boiler and all the copper piping.

One set of BTLers used their inheritance were on Homes under the Hammer.Told the estate agent (i know her) she was wrong and they already had a tenant for £480 a month (£70k terrace).She told them £350 for decent tenants.The tenant they had simply agreed to the rent to get in.Never paid but did strip the house.It ended up empty for 8 months if you include the 6 months the tenant was there.

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Guest eight

A couple have just sold in my close for £108k ,3 bed semis,back in 2004/5 they were going for £129k.Infation adjusted thats a big fall.

A lot of southern BTLers bought up terrace houses in the worst streets in the local towns for £70k each back then.At the time they were probably worth £15k max.The locals took their hands off (rightly).They are mostly down below £45k now and falling.The tenants they get tend to simply move in,dont pay the rent and sell the boiler and all the copper piping.

One set of BTLers used their inheritance were on Homes under the Hammer.Told the estate agent (i know her) she was wrong and they already had a tenant for £480 a month (£70k terrace).She told them £350 for decent tenants.The tenant they had simply agreed to the rent to get in.Never paid but did strip the house.It ended up empty for 8 months if you include the 6 months the tenant was there.

:lol::lol:

Still, you can't go wrong with brickzanmortar.

It was seeing exactly this kind of thing that brought me to this site in the first place. There can barely be a place in the World where house prices have been more out of kilter with local wages these past fifteen years than the north-east of England.

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:lol::lol:

Still, you can't go wrong with brickzanmortar.

It was seeing exactly this kind of thing that brought me to this site in the first place. There can barely be a place in the World where house prices have been more out of kilter with local wages these past fifteen years than the north-east of England.

I would argue parts of Wales are worse

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Guest eight

I would argue parts of Wales are worse

Really? So who is paying - overstretched locals, or canny southern based "investors"?

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:lol::lol:

Still, you can't go wrong with brickzanmortar.

It was seeing exactly this kind of thing that brought me to this site in the first place. There can barely be a place in the World where house prices have been more out of kilter with local wages these past fifteen years than the north-east of England.

NorthEast England?

Looks very, very reasonable by world standards. Very low house prices compared to most of the developed world, very high incomes compared to anywhere outside a few hothouses like southeast England.

http://www.zoopla.co.uk/for-sale/details/37567679

http://www.zoopla.co.uk/for-sale/details/36590692

If you want much higher prices with slightly lower local incomes, try Kernow. Or, how do you compare with Cumbria, just next door to you?

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Really? So who is paying - overstretched locals, or canny southern based "investors"?

I would guess the equity rich swapping equity and BTL holding up the bottom end there also must be an element of those who have a decent wage accepting paying more for less ,its no coincidence that the bottom end prices are aligned to the yield LHA rates will achieve the problem here is that when IR`s fell the price of the bottom end rose from the 09/10 lows back close to the 05/06 high some parts a be falling as the early entrants have seen the writing on the wall

This place would not be the dream of a professional couple 15 years ago http://www.rightmove.co.uk/property-for-sale/property-53153213.html

Average pay in Wales is just £19,216 a year, figures show ...
www.walesonline.co.uk/news/wales.../average-pay-wales-just-19216-2018
  1. The median wage in Wales remained at £19,126, which is also the lowest median wage in Britain, suggesting the gap between wages in Wales and the rest of the country may be growing. Average pay in Wales has remained the same this year, compared to growth in all other parts of the UK, according to new figures.22 Nov 2012
Edited by long time lurking

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Guest eight

This place would not be the dream of a professional couple 15 years ago http://www.rightmove.co.uk/property-for-sale/property-53153213.html

Expectation deflation?

I grew up in a council house and used to get a bit of stick about it. I never thought about it till now but it's possible that some of those dishing it out are now paying way over the odds to live somewhere identical.

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NorthEast England?

Looks very, very reasonable by world standards. Very low house prices compared to most of the developed world, very high incomes compared to anywhere outside a few hothouses like southeast England.

http://www.zoopla.co.uk/for-sale/details/37567679

http://www.zoopla.co.uk/for-sale/details/36590692

If you want much higher prices with slightly lower local incomes, try Kernow. Or, how do you compare with Cumbria, just next door to you?

Ferryhill is where my partner is from.That first one is probably worth about £2k not £30k.Needs gutting and nobody would want to live where it is for any reason.They used to go for about £6k-£12k needing less work.Most of those were slum cleared by the council and only a few streets left.The best valuein the area are the circa 70s ex council houses.Three bed ones going for around £60k,well built.Most of the bad tenants have all left council now and are in private lets.

Cumbria is beautiful but very expensive as is the Yorkshire coast from Whitby downwards.

Edited by durhamborn

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Expectation deflation?

I grew up in a council house and used to get a bit of stick about it. I never thought about it till now but it's possible that some of those dishing it out are now paying way over the odds to live somewhere identical.

Strange you should mention that sort of thing there's a council estate in the town i grew up in that was considered the low of the low

Now it`s almost all OO and the houses are some of the most sought after in tha price range (which are ridiculous) but i`st the plot size that's the selling point how things change

Edited by long time lurking

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you forgot additionally Sir Hector Slimeball Sants

lovely lowball job he has at Barclays now, I believe

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Ferryhill is where my partner is from.That first one is probably worth about £2k not £30k.Needs gutting and nobody would want to live where it is for any reason.They used to go for about £6k-£12k needing less work.Most of those were slum cleared by the council and only a few streets left.The best valuein the area are the circa 70s ex council houses.Three bed ones going for around £60k,well built.Most of the bad tenants have all left council now and are in private lets.

Cumbria is beautiful but very expensive as is the Yorkshire coast from Whitby downwards.

Cumbria is long way. away. From anywhere.

The coast is fine from Saltburn down, skipping Skinningrove.

IMHO (Im from near Whitby) Scarborough offers the best bang for your buck in the UK.

Some fantastic houses in good bits of town can be had for reasonable prices.

1h to York on train.

I'd probably stop looking at Filey, beyond there and you are in Cravanland and Brid, which is a shithole.

Worse value in the UK is probably Middlesbrough.

You have (realtive) nice places, such as Linthorpe Village, where people are asking stupid prices.

I guess the thinking goes 'Well, its lot nice than Gresham (the centre)' It is but if I had money I would not live within 10 miles of 'boro centre.

I also would not go anywhere near any of the old, mining/industrial towns between Billingham and Blythe.

There's a lot of really feral families.

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Guest eight

If you want much higher prices with slightly lower local incomes, try Kernow. Or, how do you compare with Cumbria, just next door to you?

Good point, but over there you can at least throw the natural beauty of the area into the equation - in the former Durham coalfield, er, less so :blink:

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Strange you should mention that sort of thing there's a council estate in the town i grew up in that was considered the low of the low

Now it`s almost all OO and the houses are some of the most sought after in tha price range (which are ridiculous) but i`st the plot size that's the selling point how things change

Very much so.There are still very bad council estates,but there are also very decent ones where most are OO.I was a councillor until a few years ago and a friends wife was telling me how it was worth the fact she had paid £140k for a new build 3 bed semi because it meant she didnt have "riff raff" near her.She wasnt amused when i told her there was a bigger percentage of social housing on her shiny new estate as there was on the council estate half a mile away.They were 90% OO her estate was 82% .The HA bought a job lot at the end of the project :lol:

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