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One In Three Tory Mps Own Buy-To-Lets - But They've Wrecked It For Everyone Else, Say Landlords

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Wasn't that Claire Freer the one who in another article said that BTL would have been her way of 'giving something back'?

You couldn't make it up.

But it's a justification I've seen more than once from BTLers - if they weren't so nobly and self-sacrifingly providing all these homes, where would all the poor tenants live? Because if they didn't own them, the flats and houses would magically disappear, pouf, just like that...

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I love the angle that people will rush to complete before 1st April as if it is a guarantee return and nothing could go wrong. If it was me, I'd be worried that I'd not be able to get my capital back. if they think 3% is bad, wait until interest rates finally start rising.

All the highly leveraged landlords will be bust within 3 years!!!

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These guys were buying a house every 2 weeks!.

Again, I know it's not the core message of this thread - but it highlights to me just how there is a reliance on HPI in order to make money. Being in 'the building trade' and snagging a bargain a few times over a lifetime is one thing.....but this is just using a low rate, low equity, high risk business model. GO has done them a favour.

Shame Claire Freer may miss out....and is having second thoughts. This really is an infringement of her human rights. Maybe 118 should start a petition.....oh, wait...I think that may ring a bell?

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The government know the middle class are doing BTL to try to retire early.Thats the main reason they want to clamp down, so only huge investors can be involved.

I dont support BTL in anyway,but do understand the reasons lots of people buy a BTL.Loss of trust in banks.Pensions destroyed etc.

I guess for basic rate taxpayers though who buy outright none of the changes affect them much.It does hit hard the leveraged,but not so much the cash buyers.Here in the north east the stamp duty will amount to around £1800 on most BTL properties.An extra cost, but unlikely to put anyone off.The direction of travel in government policy might though.

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The government know the middle class are doing BTL to try to retire early.Thats the main reason they want to clamp down, so only huge investors can be involved.

I dont support BTL in anyway,but do understand the reasons lots of people buy a BTL.Loss of trust in banks.Pensions destroyed etc.

I guess for basic rate taxpayers though who buy outright none of the changes affect them much.It does hit hard the leveraged,but not so much the cash buyers.Here in the north east the stamp duty will amount to around £1800 on most BTL properties.An extra cost, but unlikely to put anyone off.The direction of travel in government policy might though.

So are they wanting a BTL for the income to live on whilst retired or the capital growth to cash in and to live on using the invested capital that offers instant access?.....Yield has to be the main criteria of any income investment......you don't see many of that about says the wide mouth frog....not in property today anyway. ;)

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Wasn't that Claire Freer the one who in another article said that BTL would have been her way of 'giving something back'?

You couldn't make it up.

http://www.thisismoney.co.uk/money/bills/article-2035888/The-problem-cashback-websites-discount-vouchers.html

Despite this, some regular users of discount and cashback websites claim they are worth the effort. Claire Freer, 25, has been using quidco.co.uk for three years and estimates she has made £1,400 in cashbacks. A self-confessed online shopping addict, Claire, a personal assistant in a dental practice, says she doesn’t buy anything unless it is through Quidco.

She has bought clothes, a recent holiday to Egypt and white goods and furniture for her new flat through the website. Claire, from Cambridge, also received £20 cashback for opening a Santander savings account through the site.

Claire and her boyfriend, Jamie Harman, 24, both train about three times a week at a gym in Hardwick, Cambridgeshire, where they met. Claire competed last year in the Amateur Boxing Association championships but lost in her final bout. She weighs just 45kg (7st 1lb) so she struggles to find sparring partners at her weight.

‘I never bother with High Street shopping any more,’ says Claire, ‘I’m small so it is easier to find my size for clothes online and it’s more convenient shopping from home. But the main reason is the huge discounts you can get online and, of course, the cashback.’

She seems to be a token person brought in for money articles with random papers, I was wondering if she was using quidco for her buy to let.

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The government know the middle class are doing BTL to try to retire early.Thats the main reason they want to clamp down, so only huge investors can be involved.

I dont support BTL in anyway,but do understand the reasons lots of people buy a BTL.Loss of trust in banks.Pensions destroyed etc.

I guess for basic rate taxpayers though who buy outright none of the changes affect them much.It does hit hard the leveraged,but not so much the cash buyers.Here in the north east the stamp duty will amount to around £1800 on most BTL properties.An extra cost, but unlikely to put anyone off.The direction of travel in government policy might though.

There are unleveraged landlords but there are no unleveraged BTLers because BTL is a type of leverage. It's a financing arrangement developed in the mid-90s that allows investors to leverage rental income, often on an interest only basis. Lack of trust in banks seems to be a recurring theme from BTLers but that only serves to make their actions less understandable, not more so. People who engage in BTL are entering into high risk financial arrangements with banks by taking what would have been their savings and leveraging them against investment properties via buy-to-let financing from banks.

When individuals put cash in the bank it is protected under FSCS and, while they might not get the best return on it, they cannot lose the cash that they put in. The banks cannot take their savings if they are in cash and sensibly distributed according to FSCS rules. When they use their cash as a deposit for a BTL property then, if they are forced to sell at a time and in a manner not of their choosing, they risk losing all of that money and more. Gearing works the same way on the way down as it does on the way up, it magnifies price movements. If property prices decline then they can lose all of their deposit and then keep on losing money.

Because BTLers have chosen to enter into high risk financial arrangments with banks they have chosen to put not only their savings, but also any other assets or sources of income they might have, at the mercy of said banks. Lenders can force BTLers to sell at a time not of their choosing and thus crystallize whatever financial position the BTLers investments are in at that point, whether positive or negative. BTLers have effectively handed over control of their entire financial postion to banks. BTL is an investment activity. It has no consumer protection. BTLers have specifically chosen to spend their savings to bet in a market where they have given up that protection from banks and are instead entirely reliant on the banks doing the right thing by them.

What's more that is the only reason that the investment decisions that BTLers have made exists for them to make: the lack of consumer protection is what allows lenders to offer them financially risky interest only finance and thus to be able to leverage their tenant's wages (via the medium of rent) to a greater extent than their tenants are able to do so themselves (as house buyers via repayment mortgages). The profits BTLers make only exist to be made because the banks have gifted them the circumstances under which they can be made. Lenders have done this in exchange for profits of their own of course, not to mention a claim against all of the BTLer's other assets and other income as well, but as BTL is a type of financing provided by banks it is obvious that any profit anyone has ever derived from it has been because the banks have allowed them the opportunity to derive it.

The vast majority of BTL is interest only. They don't own any of their rental properties. They are simply renting them from the banks - whilst risking their savings and carrying the majority of the banks' risks on the banks behalf - and then attempting to charge a higher rent still to their tenants. In order to enter into this arrangement BTLers have signed unregulated business contracts with bankers, that they have freely entered into out of choice and not through circumstance, and in which the banks very obviously have the upper hand. If at any point the banks demand a higher rent from the BTLers this does not mean that their tenants will be able to pay them a higher rent in turn (rent obviously being tied to tenants' wages, not landlords' costs). BTLers have given the banks all of the power.

What's more even unleveraged landlords who aren't indulging in BTL are acting somewhat irrationally by tying up their wealth in property if they don't trust banks, as credit conditions largely dictate the direction of the UK housing market and they're therefore choosing to invest heavily in an asset class dominated by the actions of banks.

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Great post Neverwhere.

I've yet to really begin getting anywhere with boosting my pension, so the excuses for those who already have homes on their own, and double down into BTL just do my bloody head in.

Especially with this 'lost trust in the banks' - then borrowing their heads off with the same bankers.

All an excuse front for those who want to ride younger people for rent and hope of HPI glory imo.

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Great post Neverwhere.

I've yet to really begin getting anywhere with boosting my pension, so the excuses for those who already have homes on their own, and double down into BTL just do my bloody head in.

Especially with this 'lost trust in the banks' - then borrowing their heads off with the same bankers.

All an excuse front for those who want to ride younger people for rent and hope of HPI glory imo.

Here's hoping that those who double down will lose the lot and then they can choose to rent like they claim the priced out do now.

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Wasn't that Claire Freer the one who in another article said that BTL would have been her way of 'giving something back'?

You couldn't make it up.

But it's a justification I've seen more than once from BTLers - if they weren't so nobly and self-sacrifingly providing all these homes, where would all the poor tenants live? Because if they didn't own them, the flats and houses would magically disappear, pouf, just like that...

:P V good.

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Neverwhere it would be good if you posted your post above on LL sites. BTLs badly need educating and you have explained their position succinctly and accurately. :)

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http://www.thisismoney.co.uk/money/bills/article-2035888/The-problem-cashback-websites-discount-vouchers.html

Despite this, some regular users of discount and cashback websites claim they are worth the effort. Claire Freer, 25, has been using quidco.co.uk for three years and estimates she has made £1,400 in cashbacks. A self-confessed online shopping addict, Claire, a personal assistant in a dental practice, says she doesn’t buy anything unless it is through Quidco.

She has bought clothes, a recent holiday to Egypt and white goods and furniture for her new flat through the website. Claire, from Cambridge, also received £20 cashback for opening a Santander savings account through the site.

Claire and her boyfriend, Jamie Harman, 24, both train about three times a week at a gym in Hardwick, Cambridgeshire, where they met. Claire competed last year in the Amateur Boxing Association championships but lost in her final bout. She weighs just 45kg (7st 1lb) so she struggles to find sparring partners at her weight.

‘I never bother with High Street shopping any more,’ says Claire, ‘I’m small so it is easier to find my size for clothes online and it’s more convenient shopping from home. But the main reason is the huge discounts you can get online and, of course, the cashback.’

She seems to be a token person brought in for money articles with random papers, I was wondering if she was using quidco for her buy to let.

So, a shopping-addicted dental assistant who believes she made money by spending more money. No chance she's highly leveraged, then. :rolleyes:

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Wasn't that Claire Freer the one who in another article said that BTL would have been her way of 'giving something back'?

You couldn't make it up.

But it's a justification I've seen more than once from BTLers - if they weren't so nobly and self-sacrifingly providing all these homes, where would all the poor tenants live? Because if they didn't own them, the flats and houses would magically disappear, pouf, just like that...

The mentality is little different to that of slave owners, they'd claim they were selflessly providing them with work (and probably say something about how the slave traders actually rescued the slaves from a life of freedom in Africa).

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Neverwhere it would be good if you posted your post above on LL sites. BTLs badly need educating and you have explained their position succinctly and accurately. :)

Somehow I think that if I joined an LL site all I would get is abuse!

Thanks though, feel free to re-post anywhere you like. :)

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I really, really hate the 'don't trust pensions' lines from btl'rs and the public as a whole.

Just because a previous generation chose to put blind faith in policies that they perhaps should have read first, it doesnt mean our current system is horrid. Do some bloody research. Indeed, if george doesnt tinker, a SIPP is an *awesome* way to save for retirement. It is a gift.

However, these fools have seemingly directed the gov into re-evaluating pensions to make them more understandable to their single digit iq's. This will almost inevitably make them worse vehicles rather than better, as George will take the op to close some of the fantastic 'loopholes' for tax avoidance they currently offer.

I despair of most people.

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I really, really hate the 'don't trust pensions' lines from btl'rs and the public as a whole.

Just because a previous generation chose to put blind faith in policies that they perhaps should have read first, it doesnt mean our current system is horrid. Do some bloody research. Indeed, if george doesnt tinker, a SIPP is an *awesome* way to save for retirement. It is a gift.

However, these fools have seemingly directed the gov into re-evaluating pensions to make them more understandable to their single digit iq's. This will almost inevitably make them worse vehicles rather than better, as George will take the op to close some of the fantastic 'loopholes' for tax avoidance they currently offer

.

I despair of most people.

I agree - what other investment g'tees a magic 25% growth of the after tax amount invested? It's a steal even if you keep it all in cash.

Edited by Exiled Canadian

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I really, really hate the 'don't trust pensions' lines from btl'rs and the public as a whole.

Just because a previous generation chose to put blind faith in policies that they perhaps should have read first, it doesnt mean our current system is horrid. Do some bloody research. Indeed, if george doesnt tinker, a SIPP is an *awesome* way to save for retirement. It is a gift.

However, these fools have seemingly directed the gov into re-evaluating pensions to make them more understandable to their single digit iq's. This will almost inevitably make them worse vehicles rather than better, as George will take the op to close some of the fantastic 'loopholes' for tax avoidance they currently offer.

I despair of most people.

What age would the endowment mortgage generation be now?

From memory they were really popular in the mid-eighties to mid-nineties roughly. So assuming they were 27 when they took the endowment mortgage out (the typical FTB age back then) they'd be in their 50s or 60s now.

They saw stock prices collapse, so don't trust pensions or other investments. They saw house prices crash, probably fell into negative equity, yet pump their savings into property...

That generation is the gift that keeps giving for the snake oil salesmen. Once the BTL bubble bursts they'll be selling them investments into China or something.

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Just because a previous generation chose to put blind faith in policies that they perhaps should have read first, it doesnt mean our current system is horrid. Do some bloody research. Indeed, if george doesnt tinker, a SIPP is an *awesome* way to save for retirement. It is a gift.

I think it's fair comment to say that the BTLer as a species is self-selected for its laziness. Saving is hard, doing your own research is hard. F**k it. Borrowing loads of money and believing in magic beans is easy. Let's do that. Then you back fill the logic with a lot of utter tripe about pensions being a rip-off and how you're doing something to make yourself "financially independent". We'll see how that works out.

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I agree - what other investment g'tees a magic 25% growth of the after tax amount invested? It's a steal even if you keep it all in cash.

For every £35 in PAYE income I give up now, I get £100 in pension.

At age 55, I withdraw £25 tax-free and take the rest at 20% (no NI). So I get to keep £25 + (£75 * 0.8) = £85.

Much better to have £85 when I'm 55+ than £35 now. Its less than 10 years away for me. Less risk than BTL and lower costs. I happen to have it all in cash funds at the moment, spread between many institutions to keep the government guarantees. I'll invest in something when I see a good deal.

I'm shoving in as much as I possibly can. I don't think this deal will last long.

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