Boe Trying To Kill Btl?

[Fairyland]

Apologies if this is posted earlier.

DT: Stamp duty hikes won't kill off buy-to-let boom, says Bank of England

Higher taxes on landlords introduced by the Government are unlikely to cool rampant demand for buy-to-let investments, according to Bank of England research.

In a sign that policymakers could take further action to rein in the market, the Bank said tax changes, including the introduction of a 3pc stamp duty surcharge on buy-to-let purchases and second homes last month, would not "on their own" lead to a "substantial reduction"in purchases over the long run.

The Bank said this reflected "positive expectations of rental growth and of the continuing attractiveness of buy-to-let relative to alternative investments".

• Compare mortgages across the market

Buy-to-let has become a popular option for people wanting to grow their wealth through property instead of shares and cash.

The total stock of buy-to-let loans has soared by around 40pc since the financial crisis, compared with around 2pc for the owner-occupier market, according to Bank data. Gross advances are close to their pre-crisis peak.

Edited May 20, 2016 by Fairyland

[frederico]

Trying to please everyone, I'm worried they haven't gone far enough.

I reckon at least 50% drop is required.

[dgul]

I think they're right.

The whole BTL thing is so deeply entrenched now - logic doesn't come into it. I think in about 20 years time there'll be loads of investors looking back and saying 'well I suppose I get an income from it, but it didn't do as well as I expected, and it was hard for a few years', not even realising then that they'd have been better off just putting money in the bank (let alone investments).

That's not to say that I don't think prices will fall - it will just be 20 years of year on year gradual decline with a new set of bottom pickers thinking they're getting a bargain each year.

[interestrateripoff]

Perhaps telling people there is no money in btl and if prices and rents crash you will be bankrupt might start to put people off.

[silver surfer]

I disagree. I think the forthcoming tax changes will absolutely cripple demand for BTL in it's current guise.

Apply the realities of reducing tax deduction for mortgage interest to the kind of BTL mentality evidenced here http://www.property118.com/interest-only-vs-repayment-mortgages/ and you can see what an almighty kick has been delivered to BTL's balls,

Bad news for BTL landlords, but very good news for first time buyers and commercial operators such as this http://thestudenthousingcompany.com

What's more the really uplifting message from that article is that if I'm wrong, and "rampant demand for buy-to-let investments" doesn't cool, then "policymakers could take further action". How wonderful is that! So if by some slim chance this kick in the balls doesn't work, then the government will swing their size 12 Doc Marten back and take aim for another mighty blow!

Edited May 20, 2016 by silver surfer

[GreenDevil]

If they wanted to kill BTL all they have to do is start raising rates.

They obviously dont, the scumbags have VI in HPI to infinity.

There is not even any reason to sell your exisitng BTL now they added the 3% expemtion on main residence purchase, after the chancellor added that loophole in march.

[renting til I die]

Good news all round. However, what the BOE should really do to kill off BTL is raise interest rates! Higher IR would not only increase mortgage costs for the BTL'ers but these people would see more chance in getting a return on their savings without piling in all into a pile of bricks!

[renting til I die]

If they wanted to kill BTL all they have to do is start raising rates.

They obviously dont, the scumbags have VI in HPI to infinity.

There is not even any reason to sell your exisitng BTL now they added the 3% expemtion on main residence purchase, after the chancellor added that loophole in march.

Haha, you just beat me to it!

Edited May 20, 2016 by renting til I die

[GreenDevil]

these people would see more chance in getting a return on their savings without piling in all into a pile of bricks!

Absolutely.

Make your money/savings worth something, who are these frickin idiots running the country?

[Pindar]

If they wanted to kill BTL all they have to do is start raising rates.

They obviously dont, the scumbags have VI in HPI to infinity.

There is not even any reason to sell your exisitng BTL now they added the 3% expemtion on main residence purchase, after the chancellor added that loophole in march.

Yes, and if this had happened in say Uraguay or Bulgaria, we'd be calling it "corruption". It's funny how people can't see that their own government is corrupt to the core.

[Bland Unsight]

If they wanted to kill BTL all they have to do is start raising rates.

They obviously dont, the scumbags have VI in HPI to infinity.

There is not even any reason to sell your exisitng BTL now they added the 3% expemtion on main residence purchase, after the chancellor added that loophole in march.

Is the wrong answer.

To kill buy-to-let you don't need to raise rates, you need to raise the interest rates on buy-to-let mortgages. Fortunately that is exactly what they are going to do, and as you'd expect, we have a thread on it.

Of course, if you stitched that together with the changes to the income tax framework and a PRA enforced tightening of BTL underwriting standards you would anticipate a face-ripping for the ages...

Edited May 20, 2016 by Ghost Bird

[Venger]

I disagree. I think the forthcoming tax changes will absolutely cripple demand for BTL in it's current guise.

Apply the realities of reducing tax deduction for mortgage interest to the kind of BTL mentality evidenced here http://www.property118.com/interest-only-vs-repayment-mortgages/ and you can see what an almighty kick has been delivered to BTL's balls,

Bad news for BTL landlords, but very good news for first time buyers and commercial operators such as this http://thestudenthousingcompany.com

What's more the really uplifting message from that article is that if I'm wrong, and "rampant demand for buy-to-let investments" doesn't cool, then "policymakers could take further action". How wonderful is that! So if by some slim chance this kick in the balls doesn't work, then the government will swing their size 12 Doc Marten back and take aim for another mighty blow!

Yes it's looking good for HPC. BTLers are going to be challenged, and some will have to say hello to big CGT when they try to sell. Enough to cause bankruptcy for some of the biggest chancers.

Will be great if FTBs get same opportunity you did. Able to buy from incomes without Bomads, and have money left over to spend in the economy.

I bought my first house in the very early 1980's. It was three bedroomed terraced house in a decent part of Sheffield, it cost about £10,500 and my pay was about £5,750.

After a couple of years my job took me to London, in price terms I virtually swapped my Sheffield house for a one bedroom flat with an SW1 post code, Sloane Square was less than a five minute walk away and the nearest "off licence" was Berry Brothers & Rudd.

A couple of years after that I paid about £22,000 for a two bedroom flat in Fulham, I think at the time my wages had topped £10,000. Property costs can't have been too much of a burden because soon after I bought a Porsche.

Incidentally, I had no student debts and a rock solid final salary pension that subsequently allowed me to retire at 55.

Absolutely none of this is available to my children. They're fortunate in that I can afford to match for them the benefits that I was lucky enough to enjoy, but anyone from my generation who thinks their own hard work and industry were the keys to their good fortune is just taking nonsense. We were the most privileged generation that has ever lived.

And I'm more optimistic than ever, that we have a chance. Was optimistic back when you were positioning this way. The banks/gov have many reasons to allow HPC and go for fresh lending to younger generations. In part so we can go back to having a functioning fair society, and because the implied profits for the financial system from HPC and fresh lending are incredible. HPI egos need to be brought down.

Tomorrow is looking much better, and there were many reasons why authorities might turn on the BTLers and HPI egos.

What a great article. And he's absolutely right, ultimately there is only one solution...build more houses.

But as that's not going to happen any time soon the only rational conclusion is that any meaningful fall in house prices is probably a generation away.

Or much sooner.

Now isn't a good time to buy. But tomorrow won't be much better.

House prices are way too high in most of the UK, but with ultra low interest rates set to continue for many more years there's no reason why prices won't stay high for many years to come.

The only exceptions are areas like the North East where some isolated pockets of sanity exist. Although there's a good argument that says even there prices may drift down further so you could still be better off waiting.

Unless you really want to own a property for non financial reasons, and can afford to buy outright, then the rational thing is to reconcile yourself to a lifetime of renting and structure your personal affairs accordingly.

No.

[...]I'm sure some inheritances are squandered, or the recipient is a cat's charity as the deceased has no living relatives. But a very large percentage of those inheritances will surely flow straight into the UK property market. Especially as Picketty pointed out the tendency in the UK to pass on wealth via gifts rather than wait until bequests after death. It all suggests a more sinister interpretation of the Bank Of Mum And Dad, a future where if you're lucky enough to have the right parents you can expect a substantial helping hand into a property of your own. But if you're not that fortunate then you either have to rent for your entire life or accept a sharply lower standard of living as you're saddled with repaying a crushing mortgage debt.

No. HPC, and fairness.

Why "sure"?

I used to work in Russia and recently I've had a few calls from Russians wanting to know about the UK property market and/or the prospects for work in the UK. These aren't the headline grabbing billionaires buying Kensington mansions, but upper middle class professionals and business people with assets of perhaps a few £m. The issue they all mention is the risk of exchange controls, which if enacted would prevent them from taking their roubles out of Russia. Many Russians are coming to the conclusion that, even though they've been pummelled by exchange rates, if they wait too long for a rouble recovery bounce they may find themselves locked in.

Now they can look to find buyers of their HPI investments, into a HPC.

[pig]

If they wanted to kill BTL all they have to do is start raising rates.

They obviously dont, the scumbags have VI in HPI to infinity.

There is not even any reason to sell your exisitng BTL now they added the 3% expemtion on main residence purchase, after the chancellor added that loophole in march.

No. They would be extremely reluctant to kill the whole economy for the sake of BtL.

HOWEVER, there's a problem, conversely it would seem efforts to stimulate the economy means dislroprortionately stimulating BtL Which as I recall is a danger to the economy according to the BoE - I'd wager more specifically anti-BtL measures on their way.

[Venger]

Apologies if this is posted earlier.

DT: Stamp duty hikes won't kill off buy-to-let boom, says Bank of England

They're just singing up to all sides. Let the BTLers go into it to very last moment. They'll be happy with that.

Some people seem to accept everything out of authority without questioning it - and the fantasy is enhanced when they're on the extreme winning side of the market with little by way of thinking of circumstances of others - where they feel they have even more mad-gainz to come their side. Perhaps why Silver Surfer so certain it was generation rent / no chance, just a year or so ago, for HPC, or more fairness.

Even the BoE Deputy Governor let this slip just a few weeks ago.

Sir John Cunliffe, Deputy Governor of the Bank of England (Financial Stability)

Sir Jon Cunliffe: The other thing that has come in increasingly over the last 15 years is not owners occupiers but buy to let. Virtually all the growth in mortgages over the last few years has come from buy to let, not owner occupier.

..Sir Jon Cunliffe: A lot of the growth that we have seen has been because this has looked to be an asset that gives relatively good return at a time when many other assets - pensions or otherwise - are not giving a good return.

- re long passage on BTL / not knowing how BTLers-landlords would react / different opinions OBR vs Council of Mortgage Lenders and others =

..Sir Jon Cunliffe: Of course, you also need to estimate whether, if a number of buy-to-let landlords with mortgages exit the market and the flow of new buy-to-let mortgages goes down because of the extra stamp duty, that means more first-time buyers coming into the market because there is a slowing in house-price growth.

HPC doesn't kill the economy - although HPI heads can't get past that. It's pain for some then rebalancing, and new growth.

Edited May 20, 2016 by Venger

[pig]

They're just singing up to all sides. Let the BTLers go into it to very last moment. They'll be happy with that.

Some people seem to accept everything out of authority without questioning it - and the fantasy is enhanced when they're on the extreme winning side of the market with little by way of thinking of circumstances of others - where they feel they have even more mad-gainz to come their side. Perhaps why Silver Surfer so certain it was generation rent / no chance, just a year or so ago, for HPC, or more fairness.

Even the BoE Deputy Governor let this slip just a few weeks ago.

Sir John Cunliffe, Deputy Governor of the Bank of England (Financial Stability)

HPC doesn't kill the economy - although HPI heads can't get past that. It's pain for some then rebalancing, and new growth.

I think they're keen to avoid the kind of HPC (I'm not talking a piddly 20% fall) caused by out of control BtL as much as worries that it's sucking investment out of the economy.

Potentially I can't help but have mild admiration for that kind of statement. It seems neutral, apolitical and factual. Well maybe it is. But if it was in a boxing movie it would seem to be telling BtL 'we told you to stay down, you didn't, now we're really going to have to break you'.

[spyguy]

The biggie that no one is picking up is Basel3. It will hammer BTL IO mortgages, existing ones too.

[Bland Unsight]

The biggie that no one is picking up is Basel3. It will hammer BTL IO mortgages, existing ones too.

A buy-to-let investor does not need to understand property. There's nothing to understand. They need to understand their lenders.

The behaviour of asset prices over the last twenty years has resulted in a significant proportion of the adult population believing that it's never the wrong time to buy and that you can never be kippered by falling house prices, hence you can never pay too much.

Given that mindset it was always going to be the case that the lenders would get cold feet on the bubble before the punters did. Of course it's worse, because the lenders have only gotten cold feet because their emergency lender, the lender of last resort, the Bank of England, got cold feet on the buy-to-let miracle.

These hapless tw@ts don't understand their lenders, let alone their lenders' lender. Hence they are still rushing in even as Barclays and TMW pay due heed to the noises from the Basel Committee on Banking Supervision and from the PRA and start jacking up the rental covers. Ever thus to deadbeats.

[frederico]

Absolutely.

Make your money/savings worth something, who are these frickin idiots running the country?

Yep, the time they've taken to notice what is going on beggars belief.

The next thing they have yet to notice is current accounts used as savings accounts.

A bunch of inept idiots

[Frugal Git]

I am currently on a train and a 'millenial' behind me is advising a boomer to get into buy to let because he was complaining about his savings rates and pension. He agrees of course.

And yesterday we had a member of the BOE himself saying he doesn't understand pensions. Pure propaganda. Pensions are a piece of piss to understand - and are flipping incredible tax efficient saving vehicle beasts - provided you are not a pwoperdee brainwashed certified halfwit. Sadly hello at this point to the majority of the UK population.

BOE, if you have any balls at all step in now, and outlaw IO BTL mortgages. You won't though will you? Nevermind, Basel 3 will force the issue, the 'owner' occupier IO time bomb approaches rapidly and UK wages are so pathetic you'll not be able to do jack.

Rant over back to my kip.

[Venger]

I think they're keen to avoid the kind of HPC (I'm not talking a piddly 20% fall) caused by out of control BtL as much as worries that it's sucking investment out of the economy.

Potentially I can't help but have mild admiration for that kind of statement. It seems neutral, apolitical and factual. Well maybe it is. But if it was in a boxing movie it would seem to be telling BtL 'we told you to stay down, you didn't, now we're really going to have to break you'.

Why? Because of core-voters maybe? Savers have already been thrown under the bus, then rolled over again during QE and reflation.

When banks are ready, and Carney has been overseeing this, (everyone blind to the stress tests?) I suggest HPIers will be thrown under another.

I suggest you may underestimate the gains from HPC to the wider economy.

There are parents who own who want hpc for their own children's prospects - not those who have got a view of it only being HPI and BOMADs to be homeowners, and tell you to prepare to be a renter forever (seemingly now reversing entirely away from that, claiming moves against BTLers great for FTBs).

We've got the Sceppy positions... sigh. Against long-wave HPI and BTL speculators, and all views from others, who had HPI long wave ride, that young people better get used to be rent-forevers with no chance of homeownership. Take young renter-savers savings to protect the ponzi house price bubble. No way. HPC it. An ego-HPC for many, with no harm other than to their riddled messed up HPI identities. Needs to happen.

...Like it or not housing and land will always fall into the category of useful assets, and further they will be priced highly when growth is low, as long as there is sufficient economic surplus to physically maintain them. Not sure there is anything to be done about that really.

A decent house on any street in the UK well served by amenities will always qualify (and rightly so) as a quality, welfare enhancing asset and we would expect them to serve as a social yardstick for who is asset rich and who is not especially when growth is low and financial assets which carry rights to claim assets created in future are naturally scarce or low quality.

The bad assets are various financial liabilities associated with the tangible housing and land stock as well as various public liabilities (gilts etc) and I don't see that meaningful reform can be had without purging them. Unfortunately, the bad liabilities I am talking about are going to be someones savings. No getting away from that. Although in many cases the holders of the bad assets are not personally to blame for the situation, it doesn't alter the fact that their claims are rotten and are propping up bad rents.

Taxing bad rents does nothing to structurally eliminate them, rather it legitimises them which in my view is the wrong path to take.

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

[The Knimbies who say No]

Just hopefully sowing a bit of FUD about possibilities- a further hike in SDLT, the possible cancellation of the basic rate relief on mortgage interest. It's good that further measures are being mooted. I hope the basic rate relief is cancelled, and that SDLT is hiked further.

Edited May 20, 2016 by The Knimbies who say No

[Drummer]

Don't think increasing taxation is going to be fully effective when many landlords can't be arsed completing a self assessment return!

[Venger]

I am currently on a train and a 'millenial' behind me is advising a boomer to get into buy to let because he was complaining about his savings rates and pension. He agrees of course.

And yesterday we had a member of the BOE himself saying he doesn't understand pensions. Pure propaganda. Pensions are a piece of piss to understand - and are flipping incredible tax efficient saving vehicle beasts - provided you are not a pwoperdee brainwashed certified halfwit. Sadly hello at this point to the majority of the UK population.

BOE, if you have any balls at all step in now, and outlaw IO BTL mortgages. You won't though will you? Nevermind, Basel 3 will force the issue, the 'owner' occupier IO time bomb approaches rapidly and UK wages are so pathetic you'll not be able to do jack.

Rant over back to my kip.

Obviously I'm inclined to believe all that.

No to banning BTL.

It's so sweet. It's happening in the background. Section 24, stamp duty hikes, tighter lending criteria, and more expensive BTL lending criteria. And they're going to position to make lending to FTBs easier, as things get tough for BTLs into HPC.

Live and die by BTL. Not banned, they danced into it, and it will be a situation where they the authorities make them know they danced into it, into the HPC. Their MADIS touch messes them up. Learn the hard way with no one to blame but themselves.

Also they're recapitalising the banks with every BTL they take. 25% deposit and their own boomer long-wave HPI home on the line (to sell to make the banks whole in a HPC)... and who can afford to buy. The BTLers more likely to be in double trap, having to sell their own nice homes off cheap.

Quite amusing how the Dyson piece gradually works its way into CML lobbying against tightening of credit underwriting on regulated mortgages.

IMO from a pro-hpc perspective we want as much new BTL lending as possible as soon as possible. All this buy-to-let is going belly-up shortly, after even a mild move in interest rates or a mild recession. In the meantime these good people are shoring up the banks' balance sheets one BTL deposit at a time. By increasing the depth of supply they are weakening the ability of landlords to effectively coordinate and drive up rents. And when the gap between income and expenses forces them to sell up the fact that there are so many of them will increase the extent to which they move prices downwards, turning a correction into a crash. The first act was BTLers making out like bandits, this is the second act. The final act is them crying into their beer once they finally understand that the leverage enabled a small correction in prices to wipe out all their capital and and leave them owing money to the bank - probably not the best kind of pension planning. Ever thus to deadbeats.

'Gents, we are not in disarray! We are falling back. And all the time, their supply lines get longer. The home-owners, buyers and investors must be taken to the point where they start to think about pulling back, then present them with the possibility - the seeming possibility - of a knock-out blow. But it won't knock us out - it knocks them out.'

Most of the renters looked at all the territory they had lost, and the fraction they had left, and thought it was all over for them. The HPC senior members looked at their relatively unscathed divisions, fresh units, crack squads, all positioned just where they should be, knives laid against and inside the body of an over-extended, worn-out enemy, just ready to cut...

[Tweaked from Use of Weapons.]

Edited May 20, 2016 by Venger

[Venger]

Don't think increasing taxation is going to be fully effective when many landlords can't be arsed completing a self assessment return!

Markets move at the margin.

Enough BTLers are known about by HMRC.

Thanks though 64. Also not an increase in taxation as such (Section 24) but a reduction in relief.

[Frugal Git]

I agree Venger that buy or rather borrow to let itself should not be banned. As Ghost Bird said, making the terms of the BTL mortgage so punitive is happening anyway.

I guess my little outburst was just this - if the BOE want to prove they have powers, then can regulate the problem of furthe Interest only buy to let out of existence within a month. The quick short sharp shock and the brutal ghostly faces of the spivs would be a delight as they realise they were the greatest fools. But yeah,there's an equal amount of popcorn and schadenfreude in the death by a thousand cuts approach.

Either way works ;-)