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5 minutes ago, spyguy said:

LBS are also very active in my current bug bear - holiday lets.

I hope they catch on fire and burn to the ground.

Or, better, be sandwiched between a stag and hen party using two holiday lets for a bank holiday weekend.

Or as they describe their "business model"

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Lending across a number of segments allows the Society to manage credit risk across the whole mortgage portfolio whilst achieving appropriate margins.

I think that means that their need to maintain margins has pushed them into what Andrew Bailey described as the "racier end" of the lending market.

There are parallels between how some of the mutuals are 'coping' with the post-crisis interest rate environment and how some of the mutual attempted to cope with the pressure on them from pre-crisis competitors securing their funding cheaply in the wholesale money markets and immediately securitising the bulk of their lending, as per Bailey's comments to the TSC on Britannia back in 2014.

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Going back to 2008-09, Britannia was one of a small group of building societies that stood out when the work was done by the tripartite authorities looking across the board. The others that stood out have also had to have some form of either resolution or remedial measures taken on them. Why did that come about? I think this is very important in the context of thinking about mutuals. The common feature of those societies was that they had expanded their lending activities into outside the traditional prime mortgage market that building societies occupied. Why had they done that? I think the reason they had done that-and this is a theme that runs through a number of the failures-is that, during the period of five to seven years prior to 2007, lending margins in the mortgage market had been squeezed very heavily. One of the reasons for that was the activities of institutions like Northern Rock.

This was a model in which there was a severe squeeze on lending margins, particularly in the prime mortgage market because it tends to happen more there. What that had led to was institutions that were not the strongest and largest players in the market-I will come back to one of the largest players-therefore looking to diversify their lending activities to earn larger returns. To simplify it, they were doing one of two things. They were either going into what you might call the fringes of mortgage lending, so into the self-certify non-conforming market, or they were going into commercial property lending. Dunfermline, which I had to resolve, had gone into both of those and Britannia had. The problem was that they did not have the risk management skills to manage those sorts of loan books and, as mutuals, they do not have the same flexibility to raise capital to manage those sorts of lumpier risks.

By the way, the same is also somewhat true of the HBOS story. HBOS moved out of their traditional prime mortgage lending market because the returns on it were being squeezed and, disastrously, moved into other lending markets that they did not have the skills to manage. The long answer to your question is there is a common theme there.

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On 02/08/2018 at 11:31, oatbake said:

How have we got to the point where 3% is considered expensive for a mortgage?!?

Just thinking about this post of your in light of the Bailey remarks I posted above - another way to look at this is how are you supposed to run a mutual if even somebody with more than 10 buy-to-let mortgages has been paying less than 3% on their interest-only buy-to-let mortgages?

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46 minutes ago, Neverwhere said:

Nice!

Added in to the additional property SDLT thread:

Personally I think it's important to 'take care' of over-leveraged portfolio landlords.

Hammond ought to give them plenty of warning before tweaking the mortgage interest rules again, so maybe something in the budget about withdrawing the mortgage interest relief entirely above de minimis level of, say, £12k/year of rental income. Tinkering with SDLT is all good clean fun in terms of discouraging new entrants and thus returning housing stock from the PRS to owner-occupation gradually but if you want to light a fire under things then taking a metaphorical tyre iron to the PovertyLaters is the only way to go.

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47 minutes ago, Bland Unsight said:

Personally I think it's important to 'take care' of over-leveraged portfolio landlords.

Hammond ought to give them plenty of warning before tweaking the mortgage interest rules again, so maybe something in the budget about withdrawing the mortgage interest relief entirely above de minimis level of, say, £12k/year of rental income. Tinkering with SDLT is all good clean fun in terms of discouraging new entrants and thus returning housing stock from the PRS to owner-occupation gradually but if you want to light a fire under things then taking a metaphorical tyre iron to the PovertyLaters is the only way to go.

Fantastic idea. It wouldn't be the entire removal of interest rate relief but dropping it down to the £12k level would really hurt those who earn up to about  £45k from BT and do nothing else.

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2 hours ago, Bland Unsight said:

Personally I think it's important to 'take care' of over-leveraged portfolio landlords.

Hammond ought to give them plenty of warning before tweaking the mortgage interest rules again, so maybe something in the budget about withdrawing the mortgage interest relief entirely above de minimis level of, say, £12k/year of rental income. Tinkering with SDLT is all good clean fun in terms of discouraging new entrants and thus returning housing stock from the PRS to owner-occupation gradually but if you want to light a fire under things then taking a metaphorical tyre iron to the PovertyLaters is the only way to go.

Theres the rentaroom tax break - 7k/y

Just withdraw everything but that for the non inc. loons.

 

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Just updating the BM Solutions rate graph for to reflect the change in the Bank of England base rate. They've raised the SVR from 4.84% to 5.09% but the pay rate on the mortgage remains unchanged at 2.44% as of 08/08/2018

image.thumb.png.b7b135effa5bb1ab4fc49b2fe23ff34d.png

The BTL mortgage broker trade press suggest that landlords are increasingly moving to 5-year fixed term mortgages. Back in December 2015 BM Solutions did not offer a zero-fee 5-year fixed rate mortgage. For a 75% LTV you had to pay a £1,995 fee and the rate was 3.79%. As of today the same product has a pay rate of 2.46% (the zero-fee product has a pay rate of 2.74%).

On a mortgage of £150k the change in pay rate from 2015 to today would leave a buy-to-let landlord with an extra £1,950 of income before tax (£162.50/month). You don't hear so much about that when they're telling you about the government and the Bank of England waging war on the private rented sector. For landlords with just one or two properties who have not been extracting equity when remortgaging the effects of persistent low interest rates will largely (possibly entirely) offset section 24. If somebody is bleating about the so-called 'Tenant Tax' then it's a good bet that they are an over-leveraged landlord with millions of pounds of mortgage debt and 20-something crap buy-to-let flats.

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Latest from UK Finance (re-plotted because their graph is of the chocolate-teapot school):

image.thumb.png.faef1aef1ee9609c7ef53c1429fb9c59.png

From the commentary:

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There were 5,400 new buy-to-let (BTL) home purchase mortgages completed in the month, some 19.4 per cent fewer than in the same month a year earlier. By value this was £0.8bn of lending in the month, 11.1 per cent down year-on-year.

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On a value basis, the current rate of the rate of new loan buy-to-let lending (about £740m/month) is little less than it was in 2013 (about £770m/month). The pre-crisis peak in 2007 was £1,925m/month. Before that you'd have to go back to 2002 to see lending below the current level (2002: £670m/month), link. My best guess on the hiccough in the trend would be the full implementation of PRA SS13/16 effective 30 September 2017 and the delay being due to mortgages that were in the pipeline before lenders tightened their rules.

Buy-to-let isn't dead yet by any means, but in 2014 there were 100,000 loans for purchase - about 8,300/month so we're down by about 30% on those volumes and given the trend before then, at least the ship has turned around.

Components of buy-to-let lending, £ billion

Image result for council of mortgage lenders buy to let

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On ‎05‎/‎08‎/‎2018 at 12:57, Bland Unsight said:

Personally I think it's important to 'take care' of over-leveraged portfolio landlords.

Hammond ought to give them plenty of warning before tweaking the mortgage interest rules again, so maybe something in the budget about withdrawing the mortgage interest relief entirely above de minimis level of, say, £12k/year of rental income. Tinkering with SDLT is all good clean fun in terms of discouraging new entrants and thus returning housing stock from the PRS to owner-occupation gradually but if you want to light a fire under things then taking a metaphorical tyre iron to the PovertyLaters is the only way to go.

But isn't that exactly what they want to do, let the air out of the bubble slowly. 

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8 minutes ago, Queasing said:

Front page / 3rd story down on the FT website: 

Buy-to-let lending slumps as landlords take fright at tax changes
Regulatory clampdown sees mortgage activity fall 19% compared with last year

https://www.ft.com/content/e7bccd64-9fd6-11e8-85da-eeb7a9ce36e4

Story also based on the UK Finance figures

Yeah some interesting comments - UK sneering at people wanting to get ahead/be successful.

There's nothing to stop a LL from buying a property with cash.

 

 

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  • 1 month later...
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Brokers warned of buy-to-let mis-selling scandal

A specialist lending panel at FSE London has urged intermediaries to stay clear of buy-to-let tax advice to avoid being involved in the next potential mis-selling scandal.

Louisa Sedgwick, director of sales for mortgages at Vida Homeloans outlined the importance attached to brokers having documentation in place to say they had offered no tax advice, as she cited this as the next potential mis-selling scandal.

Rob Jupp, chief executive at Brightstar Financial, said: “The important thing is that brokers spend the appropriate time making sure that they never cut corners on buy-to-let transactions.

“And that appropriate documentation is in place from specialist tax advisers to accept responsibility for the advice they give.”

Adrian Maloney, sales director of OneSavings Bank, added: “Make sure that your clients are getting the right tax advice and that you, as an adviser, are almost isolating yourself to the mortgage advice.

 

Edited by Neverwhere
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2 hours ago, spyguy said:

Cotswold Barristers!

Theyre not some dodgy operation that would give a job to anyone turning up wearing a tweed jacket.

https://www.lawgazette.co.uk/law/fake-lawyer-jailed-for-eight-years-after-92000-fraud/5062522.article

If they can employ someone as a lawyer and not check their credentials, which is public information anyway, why would you trust anything that they say?

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1 hour ago, Ah-so said:

If they can employ someone as a lawyer and not check their credentials, which is public information anyway, why would you trust anything that they say?

I dont know.

Maybe he threw a bottle of port at someone, who caught it with his left hand, demonstrating he could not have killed the Colonel....

The world of jobbing solicitors and barrister is just as nuts and  mental as io btls.

It crosses over sometimes.

I had some dealing with a pushy lawyer who send an email circular that went along lines of 'Property investor? I also am into property developing...'

Dropped him like a hot coal.

I want a solictor to concentrate on lawyering not p1ssing around with builders. And i also didnt want the extra risk of him going bankrupt, as propdevers are prone to,which woukd stop the company dead, locking up my business details.

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1 hour ago, spyguy said:

I dont know.

Maybe he threw a bottle of port at someone, who caught it with his left hand, demonstrating he could not have killed the Colonel....

The world of jobbing solicitors and barrister is just as nuts and  mental as io btls.

I seem to remember at the time that they issued a statement saying that they had never claimed that he was a qualified lawyer, while at the same time he was listed as such on their website.

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On 15/09/2018 at 18:36, spyguy said:

I had some dealing with a pushy lawyer who send an email circular that went along lines of 'Property investor? I also am into property developing...'

Dropped him like a hot coal.

I want a solictor to concentrate on lawyering not p1ssing around with builders. And i also didnt want the extra risk of him going bankrupt, as propdevers are prone to,which woukd stop the company dead, locking up my business details.

That's great to read. But what I'd like to know most is, did you have the satisfaction of telling him bluntly this was why you were dropping him, and if so what was his reaction? Hope he was very annoyed and in denial?

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Interesting post on P118:

recommended mortgage providers found suitable for landlords who have used MA’s BICT path to avoid S24.

does this imply that out of the many mortgage providers out there, they have only found two that are compatible/accommodating of the BICT structure?

thats a rather limited range of options!

https://www.property118.com/best-btl-lenders-post-bict-incorporation/

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