Buy To Let Finance Watch

[hp72]

On 14/09/2017 at 11:38 AM, Patient London FTB said:

Further down the same article: 

These 20-somethings are the sacrificial lamb the property market needs to make the turn down. 

These transactions soak up the very small pool of FTB able to proceed at current prices, while removing demand from quality tenants in the rental market. 

Get ready for lower rents and lower prices. 

We salute your bravery, rich Clapham FTBs. 

https://youtu.be/uVvcD4Czx4Y

Paul and Harry - I Saw You Coming

[Bland Unsight]

H/T to @i_tenant on the Twitters:

Thoughts from Vanessa Warwick on the PovertyTribes thread:

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I have been talking to brokers and lenders recently and they are both saying the same thing.

Lenders are withdrawing from the "portfolio landlord" space - landlords with 4 or more properties by PRA definition.  They don't want the hassle of the massive fact find.

There are only a handful of lenders who will now consider lending to landlords with four or more properties.  The others are turning the business away.  I believe this will make it hard for landlords to grow a portfolio.

If only it was possible to have seen any of this coming. So sad that these courageous entrepreneurs were taken totally unaware by changes that have been foreshadowed for over three years.

Sell now, sell everything.

[Bland Unsight]

The follow up from the in-house mortgage brokers at Poverty Tribes is one for the scrapbook too:

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Vanessa, you are absolutely right that some lenders have indeed pulled back from the portfolio lending space.

And having spoken to a number of other Brokers too - and replying to Lockmark's question ("Do we need a new broker or Is this a common theme?" ) - I know of many Brokers who are now pulling out of the BTL mortgage advice market as well.

The PRA sledgehammer has cracked an industry.

Source

Edited October 18, 2017 by Beary McBearface

[mrtickle]

12 minutes ago, Beary McBearface said:

H/T to @i_tenant on the Twitters:

If only it was possible to have seen any of this coming. So sad that these courageous entrepreneurs were taken totally unaware by changes that have been foreshadowed for over three years.

If only, indeed

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JamesB to dislexic_landlord 6 hours ago

 

Yes, but most of us in the South are stuck with it because it was for most of the last 20 years the best way to do it and the stamp duty and CGT on transferring long held properties would be ridiculous.

You're not "stuck" JamesB dear, the stamp duty and CGT might be higher than you'd like, but might be your least-worst option. You got yourself in to that mess, and you're a businessman with a business plan, right?

 

[Venger]

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The mortgage on our B2L was up for renewal before it reverted to the SVR. A good opportunity to release some funds at the same time to reinvest into another property. I thought!  (Following well publicised strategies).

Two agents valuations came out at £390K  £400k

The existing mortgage on the property is £185k

 

Yet all the wider BTLers' claims that they are no part in keeping younger workers priced out.

That they don't buy homes younger people/families would be interested in, yet so many with homes rented out to younger people/families.

Quote

 

And having spoken to a number of other Brokers too - and replying to Lockmark's question ("Do we need a new broker or Is this a common theme?" ) - I know of many Brokers who are now pulling out of the BTL mortgage advice market as well.

The PRA sledgehammer has cracked an industry.

 

BTL/Finding BTL mortgages for BTL = an industry?

Quote

 

The tax overview and SA302 clearly show we are lower rate tax payers and therefore were taxed at 20%.

You may have noticed the thread I have written this morning about s24 and and lower rate Tax

With S24 you may be pushed into higher rate tax

Your Lenders may be looking at the implications of S24

 

 

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Yes, but most of us in the South are stuck with it because it was for most of the last 20 years the best way to do it and the stamp duty and CGT on transferring long held properties would be ridiculous. 

Get them gone already.   A system full of BTL easy lifers for 20 odd years, sat on all the mad-gainz and reaping the rent - vs priced out young, and so much other damage along the way for those who didn't believe the BTLers would be allowed to keep buying properties like this (HPI/MEW/buy another) for so many many years.

[zugzwang]

On 07/10/2017 at 8:33 AM, spyguy said:

This is much funnier (hopefully the link works)

https://ftalphaville.ft.com/2016/07/12/2169060/metro-banks-on-fire/?mhq5j=e7

It looks like Northern Rock with Jim Jones as CEO.

 

"Don't drink the kool aid. "

Ahh... too late.

[Bland Unsight]

Just keeping an eye out for stuff providing some kind of qualitative feel for how underwriting practices at the big lenders are evolving in the wake of PRA SS13/16

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Large lenders are too prescriptive, have no flexibility and are making it harder for mortgage brokers to secure the best deal for their buy-to-let clients.

High street lenders' approach to buy-to-let slated, FTAdviser, 17 November 2017

Other bits and pieces in the article which suggest that the big lenders are now only into the most vanilla end of the buy-to-let mortgage market.

[Ah-so]

2 hours ago, Beary McBearface said:

Just keeping an eye out for stuff providing some kind of qualitative feel for how underwriting practices at the big lenders are evolving in the wake of PRA SS13/16

High street lenders' approach to buy-to-let slated, FTAdviser, 17 November 2017

Other bits and pieces in the article which suggest that the big lenders are now only into the most vanilla end of the buy-to-let mortgage market.

"Traditional high-street banks have not been as helpful to brokers as they could be, especially considering all the new buy-to-let regulations and tax changes coming into force."

Not only is it not banks' job to be helpful to high street brokers, the banks are behaving like this because of new regulations, not despite them. 

[mrtickle]

2 hours ago, Ah-so said:

"Traditional high-street banks have not been as helpful to brokers as they could be, especially considering all the new buy-to-let regulations and tax changes coming into force."

Not only is it not banks' job to be helpful to high street brokers, the banks are behaving like this because of new regulations, not despite them. 

Don't care whether it's "because" or "despite". The fact that they are doing it is what counts.

 

[spyguy]

10 hours ago, Ah-so said:

"Traditional high-street banks have not been as helpful to brokers as they could be, especially considering all the new buy-to-let regulations and tax changes coming into force."

Not only is it not banks' job to be helpful to high street brokers, the banks are behaving like this because of new regulations, not despite them. 

Typical mortgage broker is a dumb, commission driven idiot, who's only been working 2-3 years.

[Bland Unsight]

Again, just qualitative stuff via the mortgage broker trade press, but still sounding as if it is playing out as expected - higher borrowing costs for the four or more portfolio landlords coming down the line:

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There is now less product choice for portfolio landlords and they are increasingly being driven to more specialist options, which drives up borrowing costs.

Having just one underperforming property in a larger portfolio now puts borrowers at risk of failing the approval process.

Some lenders – particularly challenger banks – have responded positively to the changes by upping staffing levels or developing new systems to help cope with the additional administrative requirements.

Others, however, have reacted by scaling back their buy-to-let offering.

Source: PRA rules are ‘sticks to beat landlords with’ – Marketwatch, Mortgage Solutions, 22 November 2017

More at the link.

[Byron]

But all they are doing is whinging on that they cannot get any more mortgages unless they are truly able to service them.

Of course, that means less business for brokers, but they were always parasites anyway.

Who cares?

[mrtickle]

4 hours ago, Beary McBearface said:

Again, just qualitative stuff via the mortgage broker trade press, but still sounding as if it is playing out as expected - higher borrowing costs for the four or more portfolio landlords coming down the line:

Source: PRA rules are ‘sticks to beat landlords with’ – Marketwatch, Mortgage Solutions, 22 November 2017

More at the link.

Thanks. Some choice quotes from it

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Chris Maggs, commercial manager at Accord buy-to-let

The introduction of Prudential Regulation Authority regulation for landlords with four or more properties has been a positive step for the buy-to-let market.

[...]

Since the changes on 30 September we have seen an uplift in portfolio landlord applications and believe the changes encourage good best practice across the industry, and protect the interests of all parties involved.

he's supportive, but

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Shaun Church, director at mortgage broker Private Finance

Since the PRA rules were introduced, we’ve found a lot more landlords are falling into the portfolio landlord category than is perhaps necessary.

The qualification of four or more buy-to-let properties is quite restrictive and many landlords who would not otherwise be deemed ‘professional’ are now having to cope with tougher mortgage affordability rules and more complex application processes.

I think 10 buy-to-let properties or more would be a better measure to help achieve the same objectives.

He's not. He can piss right off - there was a consultation, 4 is the number, lump it mate. Ten wouldn't affect enough of the market nor change bad behaviour. What an utterly irresponsible position to take.

 

Edited November 22, 2017 by mrtickle

[Ah-so]

20 minutes ago, mrtickle said:

Thanks. Some choice quotes from it

he's supportive, but

He's not. He can piss right off - there was a consultation, 4 is the number, lump it mate. Ten wouldn't affect enough of the market nor change bad behaviour. What an utterly irresponsible position to take.

 

The whole point about 4 is that is where s lot of amateurs would get to and then get in over their head - st that point you get a rise in defaults. 

When you get near 10 you probably do get more professional landlords with better run portfolios and fewer defaults over the dinner party landlords 

[mrtickle]

4 minutes ago, Ah-so said:

The whole point about 4 is that is where s lot of amateurs would get to and then get in over their head - st that point you get a rise in defaults. 

When you get near 10 you probably do get more professional landlords with better run portfolios and fewer defaults over the dinner party landlords 

Exactly! To reduce the risk of a rise in defaults, 4 is the cutoff. (I hope this is lowered to 2 in good time)

He wants all the chaos from loose lending all the way up to 10. With only the "professionals" actually having proper checks.

 

[Houdini]

Shaun Church, director at mortgage broker Private Finance whose main customer base is amateur landlords with between 4 and 9 properties stated

the interesting thing is that I bet the new paperwork isn’t that much of a problem for organised professional landlords. For the muppets at 118 and povertylater however

[Ah-so]

5 hours ago, Houdini said:

Shaun Church, director at mortgage broker Private Finance whose main customer base is amateur landlords with between 4 and 9 properties stated

the interesting thing is that I bet the new paperwork isn’t that much of a problem for organised professional landlords. For the muppets at 118 and povertylater however

Well when the PRA consultation came out, 118 said that it was fine and quite sensible, and that they were all running their own portfolios to those standards already.

So if they have any complaints, they've left it a bit late.

[Will!]

On 10/10/2017 at 8:45 PM, spyguy said:

Ahh Paragon.

Hats off to them . I thought theyd have been fuxed in 97.

I guess by being an intermediery and shifting stuff via self employed FAs saved them - they just crawled under a rock amd hud for a few years.

Oh dear. They have a banking license now. ....

That means theyll be eating their own dog food now.

Telegraph:  Challenger Paragon says Government must do more to break dominance of Britain's big banks

Paragon's lending up 28.8%.  Net interest margin down to 2.13% from 2.15%.  Pre-tax profit up 1.1%.  Dividend up 16% and a £50m share buyback.  Looks like a time bomb.

[Ah-so]

4 hours ago, Will! said:

Telegraph:  Challenger Paragon says Government must do more to break dominance of Britain's big banks

Paragon's lending up 28.8%.  Net interest margin down to 2.13% from 2.15%.  Pre-tax profit up 1.1%.  Dividend up 16% and a £50m share buyback.  Looks like a time bomb.

I hope they do go down but I  understand that they are actually quite a well-run firm. 

[assetrichcashpoor]

Just a quick one. Does anyone have any figures on buy to let landlords? Such as the age range and the average number of properties owned etc. My suspicion is most are over 50 and the majority own one or two but I wondered if there was a way to find out definitively. 

[Funn3r]

29 minutes ago, assetrichcashpoor said:

Just a quick one. Does anyone have any figures on buy to let landlords? Such as the age range and the average number of properties owned etc. My suspicion is most are over 50 and the majority own one or two but I wondered if there was a way to find out definitively. 

I don't know if there is an average. The ones I have met tend to be either young Asian and rich (looking), or white 40-somethings on benefits and just getting by (unsurprisingly as they don't have an actual job.) I heard somewhere that nearly all BTLers have 3 or less properties, in contrast with the occasional Fergus who has lots more.

[guest_northshore]

2 hours ago, assetrichcashpoor said:

Just a quick one. Does anyone have any figures on buy to let landlords? Such as the age range and the average number of properties owned etc. My suspicion is most are over 50 and the majority own one or two but I wondered if there was a way to find out definitively. 

Some info here:

https://www.gov.uk/government/consultations/consultation-on-financial-policy-committee-powers-of-direction-in-the-buy-to-let-market/financial-policy-committee-powers-of-direction-in-the-buy-to-let-market#the-buy-to-let-market

https://www.cml.org.uk/news/press-releases/cml-research-survey-of-uk-landlords/

[Ah-so]

2 hours ago, assetrichcashpoor said:

Just a quick one. Does anyone have any figures on buy to let landlords? Such as the age range and the average number of properties owned etc. My suspicion is most are over 50 and the majority own one or two but I wondered if there was a way to find out definitively. 

I think that the median number of properties is 1, but the mean average is obviously higher. 

Edit: Found the data

How many properties do landlords own?

Some 62% of landlords own only a single rented property, with buy-to-let landlords more likely to have a multi-property portfolio than other landlords. Just over half of buy-to-let landlords own more than one property, with the mean size of a buy-to-let portfolio being 2.7 properties.

Edited November 24, 2017 by Ah-so

[mrtickle]

This was covered extensively earlier in this thread, or in the BTL Scum thread. I'm sorry that I can't remember exactly where, but if you do a search you should be able to find these images and the accompanying discussion. The date I've got is 6th Sep if that helps.

 

 

[Bland Unsight]

1 hour ago, mrtickle said:

This was covered extensively earlier in this thread, or in the BTL Scum thread. I'm sorry that I can't remember exactly where, but if you do a search you should be able to find these images and the accompanying discussion. The date I've got is 6th Sep if that helps.

It's on the A Goodbye To All That Buy-to-let thread:

The CML December 2016 report included a mean figure portfolio size in the appendices which allowed you to work out how many houses were owned by the landlords in the sample and therefore work out a bit of extra detail about the distribution which hadn't been made explicit in the report itself.