Jump to content
House Price Crash Forum
Sign in to follow this  
Neverwhere

Liar Lets: Btl Fraud

Recommended Posts

As it looks like BTL is going to blow-up spectacularly over the next few years I thought it might be interesting to have a guess at how much fraud is going to be discovered in the aftermath. We can then return to this poll at some point in the future and compare the opinions of the forum with the reality on the ground. ;)

If you vote "other" please give details in the thread.

Edited by Neverwhere

Share this post


Link to post
Share on other sites

I predict Britain will make Americas sub prime scandal look like a minor economic blip. We never did have our correction, despite what some think. I know for a fact lawyers, the LR, valuers, brokers, lenders and consumers have all been in on valuation fraud.

Edited by fluteroop

Share this post


Link to post
Share on other sites

Im not sure the system will reveal much fraud...

If its Liar Loans, then the banks wont want to advertise they were too lax in checking...against the rules.

If its lax lending, they also wont want to publish this.

It will just be down to the market conditions.

I suspect though, that to maintain their possessed asset values, we will see a quiet return to Bank owned shells buying up stock at top dollar.

Share this post


Link to post
Share on other sites

I predict Britain will make Americas sub prime scandal look like a minor economic blip. We never did have our correction, despite what some think. I know for a fact lawyers, the LR, valuers, brokers, lenders and consumers have all been in on valuation fraud.

That seems like a distinct possibility.

Personally I think the collapse of BTL will reveal widespread fraud, primarily in the inability of exiting landlords to pay their CGT bills (this indicates they may have been withdrawing a lot of money from their portfolios for personal use, over and above the original amount invested, and - if they are in a position where the tax relief changes are going to cause them a serious problem - likely still claiming the finance costs as an expense, which they have never been legally entitled to do).

It will be interesting to see either way though!

Share this post


Link to post
Share on other sites

I keep saying this but BTL has been the majority of property transactions in the towns I monitor since 2003-2004ish.

Sure, the number of transactions has been low since 2005ish, and on the floor since 2008.

I dont see how a BTLer can exit with anything like the money they put in when no other BTL is buying and OO have to jump MMR.

Share this post


Link to post
Share on other sites

I keep saying this but BTL has been the majority of property transactions in the towns I monitor since 2003-2004ish.

Sure, the number of transactions has been low since 2005ish, and on the floor since 2008.

I dont see how a BTLer can exit with anything like the money they put in when no other BTL is buying and OO have to jump MMR.

Easy...Bankers shell Companies buy up the stock....Its a circular fraud on the banks shareholders...everyone gets paid...

Share this post


Link to post
Share on other sites

Easy...Bankers shell Companies buy up the stock....Its a circular fraud on the banks shareholders...everyone gets paid...

True, apart from those outside the happy circle of debt paying debt. They get left to die

Share this post


Link to post
Share on other sites

From personal anecdotes I'd say not declaring income is fairly wide spread, especially among the 'accidental' landlords, along with OO mortgages being used for let properties, again among the 'accidental' landlords.

I don't see anything coming that will flush these guys out, though it would be good if they were. C24 doesn't make any difference if you are not declaring the income in the first place and BTL mortgage rules obviously don't apply.

Who/what is going to catch them out in the lie? Even licencing can be avoided if the tenant doesn't rat them out.

Share this post


Link to post
Share on other sites

Easy...Bankers shell Companies buy up the stock....Its a circular fraud on the banks shareholders...everyone gets paid...

Under Basel III as currently proposed that would fall into the ADC category and get risk weighted at 150% (for contrast lending to owner occupiers will be risk weighted at 25-55%) making it an incredibly expensive exercise for the banks. They would likely take a lower hit overall by letting prices do what they will and aggressively chasing borrowers for any shortfalls.

Land acquisition, development and construction (ADC) lending will be risk-weighted at 150%. ADC includes loans to companies or SPVs financing any of the land acquisition, development and construction of any residential or commercial properties where the source of repayment at origination of the exposure is either the future uncertain sale of the property or cash flows whose source of repayment is substantially uncertain. ADC exposures will also include loans to companies or individuals to finance the acquisition of finished property where the repayment of the loan depends on the future uncertain sale of the property.

Share this post


Link to post
Share on other sites

Under Basel III as currently proposed that would fall into the ADC category and get risk weighted at 150% (for contrast lending to owner occupiers will be risk weighted at 25-55%) making it an incredibly expensive exercise for the banks. They would likely take a lower hit overall by letting prices do what they will and aggressively chasing borrowers for any shortfalls.

Good. Its amazing this fraud gets any rating at all.

Share this post


Link to post
Share on other sites

Under Basel III as currently proposed that would fall into the ADC category and get risk weighted at 150% (for contrast lending to owner occupiers will be risk weighted at 25-55%) making it an incredibly expensive exercise for the banks. They would likely take a lower hit overall by letting prices do what they will and aggressively chasing borrowers for any shortfalls.

This UK will end up with Basel brushed under the carper Edited by TheCountOfNowhere

Share this post


Link to post
Share on other sites

From personal anecdotes I'd say not declaring income is fairly wide spread, especially among the 'accidental' landlords, along with OO mortgages being used for let properties, again among the 'accidental' landlords.

I don't see anything coming that will flush these guys out, though it would be good if they were. C24 doesn't make any difference if you are not declaring the income in the first place and BTL mortgage rules obviously don't apply.

Who/what is going to catch them out in the lie? Even licencing can be avoided if the tenant doesn't rat them out.

It wouldn't be that hard to link up all of the various government systems to track these things down . For instance, comparing the land registry with council tax payments (or comparing council tax payments between different local government areas, for that matter) should easily identify where a property is being rented out and who the landlord is.

Share this post


Link to post
Share on other sites

This UK will end up with Basel brushed under the carper

Not going to happen. The Bank of England have been instrumental in deciding what the details of Basel III actually are.

Share this post


Link to post
Share on other sites

It wouldn't be that hard to link up all of the various government systems to track these things down . For instance, comparing the land registry with council tax payments (or comparing council tax payments between different local government areas, for that matter) should easily identify where a property is being rented out and who the landlord is.

The last HMO I was in, all the bills were in the landlords' wifes name, including council tax, and utilities. She calculated the monthly costs, and we coughed up. Actually a real pain as it was hard switching mobile contracts as they wanted utility bills as proof of address :/

Share this post


Link to post
Share on other sites

Not going to happen. The Bank of England have been instrumental in deciding what the details of Basel III actually are.

Really? Mervo the Clown had a significant hand in downgrading and postponing LCR implementation in 2012. What are the Basel Committee's legislative or enforcement powers? What's to stop the BoE or any other jurisdiction watering down or delaying aspects of Basel lll should they deem them unfit?

Share this post


Link to post
Share on other sites

Really? Mervo the Clown had a significant hand in downgrading and postponing LCR implementation in 2012. What are the Basel Committee's legislative or enforcement powers? What's to stop the BoE or any other jurisdiction watering down or delaying aspects of Basel lll should they deem them unfit?

Why would the Bank of England actively help to design rules to move risk weights at the riskier end of the market just so that they could defy themselves by not implementing them? Why not just not design the rules to move risk weights at the riskier end of the market in the first place? It would be a whole lot simpler.

Share this post


Link to post
Share on other sites

Your poll omits "all of the above" as an option!

Share this post


Link to post
Share on other sites

Your poll omits "all of the above" as an option!

:lol:

I have set the poll to allow multiple selections though, so you are free to select all of the above if that's what you think!

Share this post


Link to post
Share on other sites

I predict Britain will make Americas sub prime scandal look like a minor economic blip. We never did have our correction, despite what some think. I know for a fact lawyers, the LR, valuers, brokers, lenders and consumers have all been in on valuation fraud.

IT IS ALL PART AND PARCEL OF THE WORLD'S GREATEST EVER PYRAMID PONZI SCAM -- INVENTED IN THE UK & EXPORTED TO THE WORLD ...

THE "HOUSING MARKET" FUELLED AND PUMPED & PROPPED UP BY

PREDATORY LIAR LOANS

Share this post


Link to post
Share on other sites

The last HMO I was in, all the bills were in the landlords' wifes name, including council tax, and utilities. She calculated the monthly costs, and we coughed up. Actually a real pain as it was hard switching mobile contracts as they wanted utility bills as proof of address :/

Presumably - if council tax bills were compared across LCs - married couples with different residential addresses for council tax purposes would be a red flag to HMRC.

Eventually we will reach a point were the costs of setting such systems up will be significantly outweighed by the amount of tax that could be collected as a result of them. We may already be well past that point.

Share this post


Link to post
Share on other sites

Why would the Bank of England actively help to design rules to move risk weights at the riskier end of the market just so that they could defy themselves by not implementing them? Why not just not design the rules to move risk weights at the riskier end of the market in the first place? It would be a whole lot simpler.

For the same reason that Mervo and Stupor Mario sandbagged the original LCR rules in 2012: special pleading from the banking industry. And the takeaway? If banks can't make regulation pay, it won't happen.

Again, as a matter of interest: What are the Basel Committee's regulatory and enforcement powers?

Edited by zugzwang

Share this post


Link to post
Share on other sites

For the same reason that Mervo and Stupor Mario sandbagged the original LCR rules in 2012: special pleading from the banking industry. And the takeaway? If banks can't make regulation pay, it won't happen.

Again, as a matter of interest: What are the Basel Committee's regulatory and enforcement powers?

The Bank of England take away your banking licence. Regulatory capital is not a side show. Why do you think the banks went to such enormous trouble to move stuff off balance sheet pre-2008?

Share this post


Link to post
Share on other sites

I've had a few conversations about this with a friend-of-a-friend, who is the archetypal BTL landlord with a portfolio of 15 or so flats at the bottom end of the market (ex council, tower block sorts). He maxed out the number of bedrooms in each flat by effectively putting extra walls in, so a two bed flat became a four bed flat. He only rents to those on benefit because 'they have such low standards'. He picks flats in cheapest boroughs/counties that are right on the border with more affluent boroughs/counties because the higher benefits will overflow from the more affluent to the cheapest.

I can't recall who his lender is, but it's not a well-known or high street bank/BS -- it was one I'd never heard of before. He said they're as 'dodgy as hell', and they're the only ones who would continually give him more and more and more loans as he flipped flats and bought more from auction. That was several years ago. He said he knew lots of other people who use this 'technique' and they often saw each other at the auctions as they bid against each other for the same flats.

How's he doing now, this 'millionaire on paper'? His entire porfolio is a house of cards -- he admitted this to our mutual friend in a vulnerable moment. It's all built on enormous amounts of debt, he makes IO payments from the rental income. He took a hit from the bedroom tax already, and can't raise the rents because they're all housing benefit tenants. He isn't going to be able to make repayments when the rates go up and he won't be able to sell if the values crash (as featured in today's news). He was one of those who said 'rates go up, I remortgage -- easy!'. Er, not in the near future, he won't. He hasn't been able to buy any more flats for the last four years, and he recently put three of his flats into his nieces/nephew's names (he had the nerve to say he was 'buying the nieces and nephew their own flats' haha I don't think so!).

There are hundreds of BTL landlords in this situation. Hundreds. They were all trained the same, in some kind of 3-day 'investment seminar' in a tatty three-star hotel conference room several years ago. So what happens to this guy will happen to them all.

Share this post


Link to post
Share on other sites

...he recently put three of his flats into his nieces/nephew's names (he had the nerve to say he was 'buying the nieces and nephew their own flats' haha I don't think so!)...

Somehow I don't think they're going to thank him for that in the long-term. :blink:

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   91 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.