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Now Buy-To-Let Borrowing Will Get A Grilling, Too: Banks Extend Tough Tests To Would-Be Landlords

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It includes the words: ".... buy-to-let borrowers may be priced out of the market..."

I just don't know how to react to a quote like that.

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It includes the words: ".... buy-to-let borrowers may be priced out of the market..."

I just don't know how to react to a quote like that.

I believe that this is the appropriate reaction.

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OOF! It looks like landlords are being kicked off the gravy train, and then skinned alive! Well, it couldn't happen to a nicer bunch of people. I expect more of them will be likening themselves to the victims of genocide.

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The really big effect of this - as touched on in the big BTL budget changes thread - is going to be for those currently on cheap fixed or introductory deals who always assumed they would simply remortgage when the good deal ran out. If they can't, they are going on the SVR with no escape route - and current SVR's (even at todays 0.5% base rate) are in the 5% bracket. This could well coincide with the phasing in of the tax-break changes and make things extremely uncomfortable for highly leveraged BTL players.

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Posters who watched the reform of the lending into the owner-occupier sector from 2012 to 2014 will recognise the script

  • Regulator publishes some numbers (Trends in Lending BTL special edition and the July 2015 Financial Stability Report)
  • Regulator indicates they'll need to regulate
  • Banking sector miraculously comes to its senses
  • By the time the regulation is implemented the banks are already lending in line with the proposed reforms

It's on.

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good

could not happen to a nicer bunch of people.

wonder how many people who are 'accidental landlords' perhaps with consent to let on their residential mortgage who couldn't sell their house will realise it is not the path to riches and instead of valuable assets they are left with a big liability when they try to remortgage.

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'I'm not a snob but the property next door is now subject to short term lets. After 17 years of paying a mortgage I'm considering selling because of anti social neighbours who get their rent paid and play loud music, and wreck the place. Twice the landlord has moaned to me about the damage caused by tenants who live here for six months then move on.'

Ahh, the joys of rentrification.
Im suprised they are lasting the full 6 months.
A few places Iknow of, the LL gets 1 month + deposit and thats it, till the tenant can be evicted.
The less scamming tenants just run out of money and then leave.

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'It was the irresponsible lending of high street banks to BTL investors that caused the property crash. I know of one case where 1 borrower with a gross income of 22k per year had BTL loans from one high street bank of over £1.5m and his total borrowing in excess of £7m across a number of banks. Not one asked how he would service his loans if he couldn't rent any of the properties, especially as purchase prices rose from 2004 to 2007. Instead the banks just sued the surveyors for overvaluation while denying any responsibility for their own failings. Banks almost destroyed the surveying industry in this way and have recovered 100s of millions from insurers of surveyors. If only the public knew the full story of this scandal!'


Think of others this Christmas. Quentin used to be a chartered surveyor. With his minor public school education, Quentin thought he be set for life. Instead, after an unfortunate incident involving a few 100 BTL flats in Leeds, Quentin is eating his dinner from a bin.
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Posters who watched the reform of the lending into the owner-occupier sector from 2012 to 2014 will recognise the script

  • Regulator publishes some numbers (Trends in Lending BTL special edition and the July 2015 Financial Stability Report)
  • Regulator indicates they'll need to regulate
  • Banking sector miraculously comes to its senses
  • By the time the regulation is implemented the banks are already lending in line with the proposed reforms

It's on.

While banks are allowed to practise infinite forbearance nothing will change.

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BTL borrowers are dependant on both willing and able rental customers, low cost borrowing and low taxes.........they expect high capital growth........one by one being taken away........see how many can afford to stay. ;)

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While banks are allowed to practise infinite forbearance nothing will change.

I don't think the banks will forbear this time. I made the argument here. Hopefully other posters will forgive me for repeating it.

I'm going to hazard that in 2008 the banks went easy on the margin calls as they knew that the only thing that could save them was the government stepping in to fill the hole on the liability side of their balance sheet as the money markets closed to them. As Brown did not want to see house prices collapse and that collapse to be interpreted as further evidence of his incompetency the lenders quickly came under pressure to put a halt to the fire sale (and were given assurances that they'd not be going to the wall).

Again, this time it is different. The liability side of the banks' balance sheets are now to a much greater extent retail deposits which will not be flighty in a crash so the systemic threat to the solvency of the banking sector entire no longer exists. Further the systemic threat was so significant because there was no framework for handling the insolvency of a decent sized bank. Its books would essentially freeze - there is a reason that they bailed the banks, the alternative was worse. However, the Treasury immediately got the 2009 Banking Act on the statute books and there has been a practice run for the resolution regime with a minnow, the Dunfermline, which passed off without fuss.

Hence now the execs at the big lenders know two things. Firstly, they will be allowed to go bust, because they will just be unfussily swept into UKAR. Secondly, they will know that if the bank they run goes bust, they will lose their nice little troughing job, and they won't get another so good. They are going to throw the buy-to-let investors under the bus at the first sniff of trouble and each lender will know that they mustn't dawdle with the mercy killings as their competitors would seize on the error by getting hold of and disposing the assets on which their loan books were secured before the oppo did.

The mechanics of all the leverage and the incentives for the lenders to murder their customers are extraordinary.

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Well ding-a-ling-a-ling, never thoruht i'd see BTL'ers being turned on by the tories, but that's what is happening.

Why? Who is really driving this? Goldman? The Americans? The Royals.

There IS more to this than Mr Cameron waking up and discovering a conscious. ??__WHAT_IS_REALLY_DRIVING_THIS__??

My finger in the air bet would be Goldman planning to massacre the BTL segment in the UK and USA, before snapping them all back up cheaply.

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Well ding-a-ling-a-ling, never thoruht i'd see BTL'ers being turned on by the tories, but that's what is happening.

Why? Who is really driving this? Goldman? The Americans? The Royals.

There IS more to this than Mr Cameron waking up and discovering a conscious. ??__WHAT_IS_REALLY_DRIVING_THIS__??

My finger in the air bet would be Goldman planning to massacre the BTL segment in the UK and USA, before snapping them all back up cheaply.

It's enabled a transfer of wealth from some BTL landlords to the banks, propped up the financial sector in the UK as a result, and now they can be raped silly with the CGT lock holding the exit gate firmly shut. For all those with 7+ properties, think about those with 1-2 who have put down 20% of their own money for the deposits and legal bills, stamp duties etc. Many of them will never get that back......

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Well ding-a-ling-a-ling, never thoruht i'd see BTL'ers being turned on by the tories, but that's what is happening.

Why? Who is really driving this? Goldman? The Americans? The Royals.

There IS more to this than Mr Cameron waking up and discovering a conscious. ??__WHAT_IS_REALLY_DRIVING_THIS__??

My finger in the air bet would be Goldman planning to massacre the BTL segment in the UK and USA, before snapping them all back up cheaply.

The decline in home ownership, the Tories consider home owners to be natural Tory voters.

Build To Rent, companies and institutional investors want in on the PRS.

Getting rid of BTLers frees-up housing for owner occupiers whilst reducing the competition for BTR, and keeps the Tory party and its big business supporters happy.

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I wonder how well this is going to play out. Politically a slow crash won't work. What's needed is for things to be settled by 2020 so my money is on for more measures till ramming speed is reached. Then the politics works.

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Are other countries clamping down on BTL? these regulation and taxation policies rarely happen in isolation. I should think that Ireland and the USA would also be making similar noises.

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Are other countries clamping down on BTL? these regulation and taxation policies rarely happen in isolation. I should think that Ireland and the USA would also be making similar noises.

Do other countries (other than say Ireland) even have BTL as we know it? I really don't know.

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I wonder how well this is going to play out. Politically a slow crash won't work. What's needed is for things to be settled by 2020 so my money is on for more measures till ramming speed is reached. Then the politics works.

I think they just need to get the peak out of the way sometime in the first half of the parliament. Posted elsewhere so sorry being repetitive but historic data from the Bank for International Settlements strongly indicates that whilst real GDP per capita consistently drops off immediately post property price peak it also consistently takes off again and normally exceeds its previous level within a few short years and whilst property prices are still deflating:

ch3-gra4.jpg

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I wonder how well this is going to play out. Politically a slow crash won't work. What's needed is for things to be settled by 2020 so my money is on for more measures till ramming speed is reached. Then the politics works.

The Tories don't need Generation Y to be feeling better about things by 2020. The older homeowners who won it for them in 2015 will still be alive and voting in 2020. With Labour and the Lib Dems in such a state it's hard to see either of them ready to enter government in 4.75 years so 2020 should be a pretty easy election for the Tories.

2025 is the next interesting one. By that time the median voter by age will have been born in about 1983 so clearly on the losing side of high house prices.

Osborne will be 54 years old in 2025. He may be thinking that he can take over from Dave towards the end of this Parliament, get an easy GE win against weak opposition in 2020, serve a full Parliament as PM, win 2025 off the Generation Y vote courtesy of planting some clever policy seeds now, and then retire at his leisure after 8 or 9 years as PM, still in his mid-50s and with plenty of time to rake it in during his post-PM career.

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Do other countries (other than say Ireland) even have BTL as we know it? I really don't know.

Yep, Australia x10, far worse than Uk, put all costs against your earned income, 1/2 cap gains tax after 12months ownersip, banks lending more than 50% of all mortgages Btl, youur own personal pension fund can buy in, so no tax at all and to top it off, a full blown mania, far worse than uk ever.....+++ our very own Chinese buyers buying up everything they can to add fuel to the fire. And every single MP is up to their neck in it. You think it can't get worse but it does, over and over, year after year,they invent some other scam to keep it foaming at the mouth.

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Maybe Osbourne is a super genius? To save on building social housing he just gets everyone else to do BTL then when they cant may the tax he just takes the houses and puts folk in them on housing benefit. Sacrifice BTL landlords to reduce the benefits bill?

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