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Buy-To-Let Is Possibly Dead - Stuart Law, Assetz

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Been looking out for the 2016 Paragon Great Buy-to-let debate.

Oddly this year it's the subs bench for Richard Dyson and the journalist selected to balance the lenders and their landlord customers is Patrick Collinson of The Guardian.

Sadly, they did not go with my proposal for a flyer, as proposed back in November - apologies for re-posting.

Flyer.png

There's some discussion on the Mortgage Finance Gazette website. The MFG website is a trip down memory lane apparently having been put together shortly after Tim Berners-Lee's invention of the World Wide Web in 1989.

Stuart Law, owner and founder of Assetz for Investors, took a decidedly more negative viewpoint.

“Buy-to-let is possibly dead. It is very clear that the new stamp duty and mortgage tax relief changes are not very helpful. Estate agents are probably going to be the biggest losers as people are going to have problems with the taxes and structure that specialists could provide answers to. I would not be surprised in the two or three years to see a reduction in their sales to individuals of around 20% to 30%.”

Source

Somebody at MFG has a sense of humour. Compare and contrast.

March 2015 debate.

Great-Buy-to-Let-Debate-panellists-LR-10

March 2016 debate:

btlpanelparagon-1024x683.jpg

Even I had to look up who David Whittaker is. He's the MD of BTL and commercial mortgage broker called Mortgages for Business. Wriglesworth runs The Wriglesworth Consultancy which is a PR and 'research' business with a finance focus. Lambert is the chair of the National Landlords Association and Heron is the MD at Paragon.

Edited by Idlewild

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http://www.mortgagefinancegazette.com/general-news/landlords-are-being-used-as-a-scapegoat-paragon-btl-debate/

I have previously posted some of David Whittaker's thoughts on BTL. He can be quite amusing at times.

“Are landlords going to bail out? They didn't in July 2007 when rates were 5.75% and I see nothing to suggest that they will do so now. Landlords are intelligent people and if some of them are going to bail out, they will do it progressively over time before the tax disincentives bite in 2016 and 2017.”

Patrick Collinson seems to have spoken some sense saying that the tilting of the playing field back towards first-time buyers was good.

“There has been no level playing field between landlords and first-time buyers. “There is so much anger and frustration out there from people who feel they are excluded from the market. I also think here should be restrictions on the types of properties buy-to-let is allowed on"

The debate doesn't seem to have attracted as much media attention as previous years. Next years may be called the great buy to let postmortem.

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No crazy ARLA neck brace jewellery this time?

Sadly, no. ARLA couldn't send a representative as the scheduled date clashed with their Festival of Medals, (a big date in the ARLA calendar). As best I can judge the President gets a medal, the President Elect gets a slightly less bling medal and the Immediate Past President doesn't get a medal at all, (see here). Personally I feel it would be better if a system of medals covering all letting agents was implemented, right down to the tea boy in the office, who'd get a zinc washer on an string lanyard, or something like that.

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Nothing at all wrong with buy-to-let.......it is borrow-to-let where there is a problem, like borrow-to-bet......would they encourage borrow-to-buy a blue chip stock/share portfolio, pays a high dividend?

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Nothing wrong with buy to let? I guess you mean on a business level winkie? Harvesting a locked out generation to to make landlords rich(er) is like selling extortionately priced food to the starving. The morality is the same whether the portfolio....(that word is so toxic when used for property), is bought with loose change or loans.

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Been looking out for the 2016 Paragon Great Buy-to-let debate.

Oddly this year it's the subs bench for Richard Dyson and the journalist selected to balance the lenders and their landlord customers is Patrick Collinson of The Guardian.

Sadly, they did not go with my proposal for a flyer, as proposed back in November - apologies for re-posting.

Flyer.png

There's some discussion on the Mortgage Finance Gazette website. The MFG website is a trip down memory lane apparently having been put together shortly after Tim Berners-Lee's invention of the World Wide Web in 1989.

Source

Somebody at MFG has a sense of humour. Compare and contrast.

March 2015 debate.

Great-Buy-to-Let-Debate-panellists-LR-10

March 2016 debate:

btlpanelparagon-1024x683.jpg

Even I had to look up who David Whittaker is. He's the MD of BTL and commercial mortgage broker called Mortgages for Business. Wriglesworth runs The Wriglesworth Consultancy which is a PR and 'research' business with a finance focus. Lambert is the chair of the National Landlords Association and Heron is the MD at Paragon.

Jelly and Ice Cream all round when Buy To Let Dies

JellyIceCream.jpg

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Nothing wrong with buy to let? I guess you mean on a business level winkie? Harvesting a locked out generation to to make landlords rich(er) is like selling extortionately priced food to the starving. The morality is the same whether the portfolio....(that word is so toxic when used for property), is bought with loose change or loans.

Everyone talks about buy to let when what they really mean is borrow to let.

Buy = 100% your own money, borrow = getting as big a mortgage as you can.

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Everyone talks about buy to let when what they really mean is borrow to let.

Buy = 100% your own money, borrow = getting as big a mortgage as you can.

But buy to let, which started in the 90s, is in reality borrow to let.

Before this abomination started we had professional landlords, some good, some bad, who built up their small "portfolios" of a few houses over a number of years by reinvesting their profits. Now we have relatively new entrants into BTL with hundreds of houses, all bought with borrowed money which they have no real intention of repaying.

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"Estate agents are probably going to be the biggest losers as people are going to have problems with the taxes and structure that specialists could provide answers to."

Well as some round here have creamed off a lot of houses at good prices over the years it would be nice to think it's going to cost them CGT etc.

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But buy to let, which started in the 90s, is in reality borrow to let.

As I understand matters, back in 1996, when the plans were coming together, the marketing guys at ARLA and the banks wanted to call it FSI (F**king Stupid Idea) but corporate PR said no.

Spiv BTLer: "Yeah, I got twenty shit flats at 90% LTV, all on FSI mortgages. You can't go wrong with pwoperdee."

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"Estate agents are probably going to be the biggest losers as people are going to have problems with the taxes and structure that specialists could provide answers to."

Well as some round here have creamed off a lot of houses at good prices over the years it would be nice to think it's going to cost them CGT etc.

Presumably a great many estate agents and letting agents are actually in the BTL game as well. Perhaps some of the cannier operators have been selling to the clowns rushing in to beat the SDLT surcharge. Informational asymmetry abounds.

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James (mortgage) Bond stars in the new 2017 blockbuster...Buy and let Die!

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Btl was always a ponzi investment. Those who got in early have made a nice profit anyone stupid enough to have invested in the past decade will take a loss. Which is the risk in all investments. You should only invest what you can afford to lose but btl allows you to lose leveraged money which implies it's not real investing.

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This will depend on where you have invested. In London and SE prices have risen by 20% in the last year and by 50 to 60% over the last six years. Where we live a standard flat that was 80k in 1996 is now (asking) 475k and selling for 200 to 220k in 2005 so they have basically doubled in the last ten years. But most LL see these gains as being due to their skill and insight whereas in reality they have been very lucky as no one predicted 7 years of ZIRP and more recently HtB which have fuelled HPI. I suspect that most LLs will continue to invest (solicitors working are busy as we speak completing before the end of March deadline) sure in the knowledge the path to wealth is set in stone. Rent always cover all the investment and running costs and prices double every ten years and constant MEW fund the ever increasing portfolio.

Its MEW that kills many.

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This will depend on where you have invested. In London and SE prices have risen by 20% in the last year and by 50 to 60% over the last six years. Where we live a standard flat that was 80k in 1996 is now (asking) 475k and selling for 200 to 220k in 2005 so they have basically doubled in the last ten years. But most LL see these gains as being due to their skill and insight whereas in reality they have been very lucky as no one predicted 7 years of ZIRP and more recently HtB which have fuelled HPI. I suspect that most LLs will continue to invest (solicitors working are busy as we speak completing before the end of March deadline) sure in the knowledge the path to wealth is set in stone. Rent always cover all the investment and running costs and prices double every ten years and constant MEW fund the ever increasing portfolio.

40% to 50% of the money going into BTL is in the South East/ Greater London area. A lot will feel the pain and not have the yield cushion.

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Presumably a great many estate agents and letting agents are actually in the BTL game as well. Perhaps some of the cannier operators have been selling to the clowns rushing in to beat the SDLT surcharge. Intellectual asymmetry abounds.

Corrected for you....the info is all out there, just not the smarts to go looking for it.

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From the 2016 bling-bling medal show...

The Basel Committee on Banking Supervision has proposed that lenders should set aside more capital to cover buy-to-let mortgages as a buffer to limit risk. Heron described the proposal to increase capital requirements on buy-to-let as “nonsense”.

“How could you have a capital requirement for a loan that has half the arrears of owner-occupied lending requiring twice as much capital or more? It just doesn't make any sense at all,” said Heron. “If we look at buy-to-let throughout history, except for one relatively small dip caused by one or two lenders during the financial crisis, buy-to-let arrears have been half the level of owner-occupation. The general credit profile has been significantly superior because you are dealing typically more mature individuals who require much lower loan-to-values and put more of their own capital in and retain the profits for long-term for investment,” he added.

Whittaker said that buy-to-let lending over time has been superior to that of homeowners. “It does seem bizarre that the current proposal is to take buy-to-let assets from 35% risk asset weighting up to 91%. If you look at that in isolation, that’s an increase of 160%. “Developer deals are currently 100% risk asset weighted, so you’re saying buy-to-let is only 9% less risky than doing a greenfield development site when you don’t know what’s going to happen between putting your first spade in the ground? That has to be the most extraordinary mathematical computation I think we’ve ever heard.”

http://www.mortgagefinancegazette.com/general-news/landlords-are-being-used-as-a-scapegoat-paragon-btl-debate/

We don't need you outbidding the young for houses, via MEW and superior tax advantages, to rent back those houses back to them.


Let's see how mature intelligent individuals (described so often as the 'core-voters' by many others) cope with the brunt of the market, having put capital down, and leverage with it, into BTL - into a more illiquid buyer side market, and C24 & Stamp Duty hike.

So funny, the contrast between 2015 and 2016 publication photos.

http://www.mortgagefinancegazette.com/general-news/landlords-are-being-used-as-a-scapegoat-paragon-btl-debate/

I have previously posted some of David Whittaker's thoughts on BTL. He can be quite amusing at times.

“Are landlords going to bail out? They didn't in July 2007 when rates were 5.75% and I see nothing to suggest that they will do so now. Landlords are intelligent people and if some of them are going to bail out, they will do it progressively over time before the tax disincentives bite in 2016 and 2017.”

Patrick Collinson seems to have spoken some sense saying that the tilting of the playing field back towards first-time buyers was good.

“There has been no level playing field between landlords and first-time buyers. “There is so much anger and frustration out there from people who feel they are excluded from the market. I also think here should be restrictions on the types of properties buy-to-let is allowed on"

The debate doesn't seem to have attracted as much media attention as previous years. Next years may be called the great buy to let postmortem.

:lol::lol:

I knew Assetz HQ was somewhere in Stockport but I was caught offguard a few years ago, when I was on an industrial estate, got out of my car, and found myself looking at the sign for their HQ. Assetz spelt out large. It was like the world closed in a little on me, and air went away. Some anxiety. 'Too close to a main BTL source.' One day, BTL will crash out hard, I recall telling myself.

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Quote

Whittaker said that buy-to-let lending over time has been superior to that of homeowners. “It does seem bizarre that the current proposal is to take buy-to-let assets from 35% risk asset weighting up to 91%. If you look at that in isolation, that’s an increase of 160%. “Developer deals are currently 100% risk asset weighted, so you’re saying buy-to-let is only 9% less risky than doing a greenfield development site when you don’t know what’s going to happen between putting your first spade in the ground? That has to be the most extraordinary mathematical computation I think we’ve ever heard.”

I could easily accept that high-LTV BTL has an equivalent risk to greenfield.

For a greenfield, you have fairly decent returns baked-in over a shortish timescale, but with staggered development to limit risk. Professionals are present at all stages, and there is background evidence of experience with previous developments. In the event of a downturn the developers can mothball to limit exposure and hopefully ride it out. As a commercial investment it is fairly straight-forwards.

Amateur BTL, however, is a minefield. You lend money to people who don't know what they're doing, based on a financial fad ('it's me pension') and where the 'investment' (debt) is long term, often without any actual mechanism to pay it down. For one or two properties the risk is minimal (ie, they can support the payments out of cash-flow if there are a few dry months, or if there is a need for extraordinary payments (eg, repair)) - but once you get above a threshold (I'd say about 6 properties) there becomes no mechanism to cope with a sequence of bad events. There might be evidence of low problems in BTL, but this is against a background of previously unheard of government support and largess, a situation which isn't normal and isn't likely to be able to continue much longer.

I'd say that BTL and developers are probably evenly matched risk-wise.

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I knew Assetz HQ was somewhere in Stockport but I was caught offguard a few years ago, when I was on an industrial estate, got out of my car, and found myself looking at the sign for their HQ. Assetz spelt out large. It was like the world closed in a little on me, and air went away. Some anxiety. 'Too close to a main BTL source.' One day, BTL will crash out hard, I recall telling myself.

Everything about that business says broker. IMO that is not the source.

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