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Buy-To-Let Housing Market Is A Bubble According To B O E Says Osborne.

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I am just pleased that there is only a bubble in the BTL market and that the BTL market in totally seperate and unconnected with the rest of the housing market. If they were connected than BoE may need to admit that there is a property bubble when there is only a bubble in a small part of the market ... so they will remain vigilent and keep looking for any more bubbles in case they need to take some action, or not depending on .... well they don't really know but they will be vigilent.

Yes it is a bit odd - almost like there are two sets of sale price index that they are look at, one for btl and another for everyone else.

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Yes it is a bit odd - almost like there are two sets of sale price index that they are look at, one for btl and another for everyone else.

Net lending in the last year 80% btl. They are the ones borrowing against these prices, hence they are the financial stability risk.

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"the knowledge the Bank of England has concerns about a bubble emerging in this market"

'emerging', not has emerged. They are just concerned that a bubble MIGHT happen. :(

Or a slightly more heartening interpretation... "a bubble has started to appear".

Could be read either way and from a Londoners point of view both are barking, just one less than the other.

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Yeah Chris Philp is great (so enthusiastic on the subject), I've been watching him for a while now. I think the fact he is a Tory also gives it a bit more clout . As to Tyrie's reaction I interpreted it in very positive way- to me it sounded like Tyrie was ticking off Osbourne suggesting housing is still a HUGE mess which he has yet to address and was going to take longer than five minutes to sort out "perhaps another day ". To me it was like the experienced elder putting the young schoolboy in his place, I thought Osbourne looked very sheepish at the end of that particular exchange.

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It was partially their fault. No reason they shouldn't rightly take the blame for that.

No landlord defence here, but there's a big difference between 'partially' and 'all'.

A small number of us know the multitude of sins leading to the current debacle. We will also know who got away with it eventually. They'll be the ones who decide what the masses get to hear.

I can't help but notice that landlords are gradually having the eyes of the public directed toward them but so many other factors are being conveniently kept in the shadows.

Edited by Noallegiance

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No landlord defence here, but there's a big difference between 'partially' and 'all'.

A small number of us know the multitude of sins leading to the current debacle. We will also know who got away with it eventually. They'll be the ones who decide what the masses get to hear.

I can't help but notice that landlords are gradually having the eyes of the public directed toward them but so many other factors are being conveniently kept in the shadows.

Life is all about compromise, (and communication). PovertyLater failing at both, hence poverty later. Same as it ever was.

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No landlord defence here, but there's a big difference between 'partially' and 'all'.

A small number of us know the multitude of sins leading to the current debacle. We will also know who got away with it eventually. They'll be the ones who decide what the masses get to hear.

I can't help but notice that landlords are gradually having the eyes of the public directed toward them but so many other factors are being conveniently kept in the shadows.

I think buy-to-let (meaning lenders and borrowers both) is coming into the limelight simply because it's one of the most significant remaining problems. BTLers are the largest segment of speculators still acting in the market. Much of the previous speculation by owner occupiers - in the form of liar loans, interest-only lending, and 100%+ LTVs - has already been knocked on the head.

Help to Buy is an issue but the volumes are so low that I don't think it can hold up prices without speculators taking up a significant portion of the market. It's mainly a sentiment driver and speculators are likely the strongest reactors to sentiment drivers, hence without the speculators it has substantially less teeth to drive prices. MMR has limited loans to income for owner occupiers and Carney has indicated he expects to see an increased spread between base rates and market rates due to lenders meeting the increased costs of higher regulatory and capital requirements, so low base rates should also be less of an issue. This is especially true if the amount of speculators in the market is reduced, as this would seriously curtail the other consequence of low base rates on the housing market: yield chasing. Supply of actual physical homes is arguably meeting direct demand but falling short of speculative demand, and thus reducing speculative demand would also help with this issue.

Equally there are BTL landlords who have and will get out with massive unearned gains, just as there are other speculators of all stripes who stand to lose it all and more in a BTL-induced correction. The world is not just. While it's good to try and work out the truth of what's happened what's most important is that the situation gets solved and people who are not to blame at all stop having to suffer the consequences of the actions of those who do share in the blame and are currently living the life of Riley.

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But the Bank have been calling it a bubble in central bankspeak for bloody ages, and were doing exactly that three months ago in the December 2015 FSR. (As stated times many, they arguably made the call in July 2014.)

Source

Stack that against the wording of the Consultation on Financial Policy Committee powers of direction in the buy-to-let market

Surely, this is what it looks like when the Bank of England call a bubble a bubble? Go back to Cunliffe at the Lords at the beginning of this month, the Chair fishing around for confirmation that the Bank were keen that house prices not fall and Cunliffe pointing out that they don't have an opinion on the fair value house of house prices (much less how those supposed fair value prices would compare to current prices). Cunliffe's remarks can obviously be read as consistent with the idea that house prices might well be way too high. The Bank has no remit to stop people paying too much for things. It has a remit to stop the banks creating financial instability by lending way too much forcing PREDATORY LIAR LOANS to the ON people who want to pay too much.

HA!!!!!!!!!!

Talk about shutting the barn door after the horse has bolted!!!!! I mean - the bloody barn door is flapping in the wind -- and the horse DIED OF NATURAL CAUSES in the next county YEARS AGO!!!!!!!!!!!!!!!!

WHAT A FARCE!!!!

PREDATORY LIAR LOANS HAVE BEEN AROUND FOR 15-20 YEARS NOW ---- AND THEY ARE THE ABSOLUTE KEY TO ALL THIS HPI MESS --- THEY ARE THE WEAPON OF MASS DESTRUCTION THAT HAVE TOTALLY SKEWED THE "HOUSING MARKET" - IT IS OUTRIGHT FRAUD - IT HAS BEEN GOING ON RIGHT UNDER OUR NOSES FOR YEARS AND YEARS!!!! [see below].

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Scapegoat BTLers.

It was all their fault.

Its BLT as a concept thats at fault, that doent mean I dont think BTLers are scum because they are, but theres always a certain portion of the population who will exploit others if given the chance. The trick is not to give them that chance.

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It is interesting that a Tory government with a majority in its first year of office is so terrified of cutting welfare in any form. Perhaps they believe a lot more than many suspect that within the next 5 years there is the possibility for a Bernie Sanders type popular movement to change the status quo, especially with demographic change favouring the younger vote. Also, if the Tories will not cut welfare then yes, BTL and housing is an easy target because landlords are hated and are currently given billions in tax breaks and subsidies and the government needs money. Hopefully we will start hearing more and more how housing benefit is actually landlord benefit and then the Tories will cut it.

Pondered on this. Gidiots being too clever and failing.

Flips benefit reform to IDS who fcks up and quits after 5 years, achieving nothing. Gidiots now carries can and the very large cost, escalating out of control.

Tries to be clever with TC changes. Gets beaten by dumb civil servant secretary.

Soon, UK borrowing us going to start costing a lot. Gilts auctions are sturreing at Mo.

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Does anyone have figures which show what percentage of the market BTL currently is in terms of new sales?

I seem to remember BTL is 20-30% of the rental market.

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Good to see that Osborne doesn't intend to backtrack on the buy-to-let measures in the event of the bubble bursting!

Also, as others have said, thanks for posting.

Agreed. For those who have not watched the video, Andrew Tyrie, the chair of the meeting specifically asked Osborne "if the bubble blows, you will presumably reverse these measures".

Osborne replied that he would not.

:lol::lol::lol:

If I were balls deep into BTL, I really would be rather concerned.

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'May bring in' 'later in the year' they need to do something now.

These BTL clowns don't seem to know when to stop. They hike the stamp duty and they all start piling in before it increases, pushing up prices even more.

They change the tax implications and they ignore it, start threatening to evict people or look for ways around it.

Time to get the hammer out I think and beat them into submission.

I want a glut of rental properties on the market this time next year. I want my crash!

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Does anyone have figures which show what percentage of the market BTL currently is in terms of new sales?

It's approximately 16% of the outstanding mortgage stock, 20% of gross new lending, and 80% of net new lending:

In the buy-to-let mortgage market, lending has continued to grow, with buy-to-let mortgage lending now accounting for 15% of the stock of outstanding mortgages and nearly 20% of the flow in 2015 Q1 (Chart G).

Financial Stability Report, July 2015

The stock of mortgage lending for buy to let has increased from £65bn to £200bn over the last decade. And it is growing quickly now, by around 9% a year. Buy to let now represents 16% of the overall mortgage stock and accounted for 80% of net lending over the past year.

The Outlook for Countercyclical Macroprudential Policy - speech by Sir Jon Cunliffe, November 2015

(h/t Idlewild on both counts)

Edited by Neverwhere

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Does anyone have figures which show what percentage of the market BTL currently is in terms of new sales?

AFAIK the only source which breaks down BTL in the loans for purchase data is the CML and they are a bit capricious about what they release. The latest press release has the December data.

20160216-mlt-dec-2015-chart-one.png

Source

Not the best basis of calculation though, "Totals shown are estimates grossed up from the sample of lenders reporting to reflect total market size, based on total market volumes published by the FCA. Our historical figures are subject to revision as and when the FCA makes revisions to the market totals".

That makes BTL about 11% of the flow of purchases (on a value basis) in December. We won't see this data for Q1 2016 for a while yet.

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If you want to reconcile the 11% from the CML press release with the 17% in the June 2015 FSR simply include remortgaging in your numerator and denominator. In December 2015 remortgaging was only 28% of lending to owner-occupiers whereas BTL remortgaging was 58% of BTL mortgages. As as share of the remortgaging activity by BTLers will be cash out refinancing (MEW) used to provide deposits for further borrowing both figures are worthy of attention.

Edited by Idlewild

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If you want to reconcile the 11% from the CML press release with the 17% in the June 2015 FSR simply include remortgaging in your numerator and denominator. In December 2015 remortgaging was only 28% of lending to owner-occupiers whereas BTL remortgaging was 58% of BTL mortgages. As as share of the remortgaging activity by BTLers will be cash out refinancing (MEW) used to provide deposits for further borrowing both figures are worthy of attention.

Implying that mortgage equity withdrawal accounts for more than a third of new BTL lending? I would hate to see their CGT bills if they were ever forced to sell for some reason. ;)

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Does anyone have figures which show what percentage of the market BTL currently is in terms of new sales?

To build on earlier responses, I have heard anecdotally, but within a professional context, that for the past couple of months BTL had formed about half of the work of mortgage brokers, as landlords attempt to get in before stamp duty changes.

Based on the fact that nearly all BTL transactions go through brokers and about 70% of O/O mortgages go through them too that about 30% to 40% of all property transactions this year have been BTL or other second properties.

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To build on earlier responses, I have heard anecdotally, but within a professional context, that for the past couple of months BTL had formed about half of the work of mortgage brokers, as landlords attempt to get in before stamp duty changes.

Based on the fact that nearly all BTL transactions go through brokers and about 70% of O/O mortgages go through them too that about 30% to 40% of all property transactions this year have been BTL or other second properties.

I have been told the same by a solicitor friend who is rushed off his feet with BTL conveyancing that must complete this month.

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I have been told the same by a solicitor friend who is rushed off his feet with BTL conveyancing that must complete this month.

I know two couples who are rushing to complete on the purchase of main residences because the don't want to sell the old place but rent it out instead. One of those couples just completed on a £700K purchase. The only way I can imagine buying a 700K house without selling the old place is possible is by conversion to a BTL mortgage on the old place and then withdrawing the equity on the bubble valuation.

Mad really.

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I know two couples who are rushing to complete on the purchase of main residences because the don't want to sell the old place but rent it out instead. One of those couples just completed on a £700K purchase. The only way I can imagine buying a 700K house without selling the old place is possible is by conversion to a BTL mortgage on the old place and then withdrawing the equity on the bubble valuation.

Mad really.

sounds familiar to the couple I know who spent 950k on a new semi in Pinner (+100k overhaul). Apart from their own savings, mortgage and BOMADs they borrowed against the value of their old house that they couldn't sell for 650k asking (had an offer of ~570k they accepted that fell through then decided to let it out). So they're borrowing against equity that no one will meet!!!

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Thanks for that. Andrew Tyrie's view of the housing market was interesting.

I've just turned on BBC Parliament and Tyrie is tearing Lord Rose to pieces..... pure comedy.

It seems that the "Britain Stronger in Europe" campaign are presenting false figures.

Here you go....... http://www.parliamentlive.tv/Event/Index/b2e04db8-1dd2-4846-a765-010993724210

Edited by Bruce Banner

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I should confess, I only knew that cos of your shoblerant. You're right, his book you recommended is proper class and I'd recommend it to everyone but esp. my gen.

As a fellow Manc, he went to school with a family friend who says he's a top bloke too. Will try to get in touch to see if he could do an AmA style interview here on HPC.

Matter of fact, why doesn't HPC try to get more interviews with prominent people? Even those we would necessarily disagree with. Maybe a monthly podcast to discuss developments in finance?

That would be a great idea imho

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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