'green Tax' To Hit Landlords With £5,000 Bill On Buy-To-Let Homes

[spyguy]

There are a two of weak points in your argument, the first I've covered already but is worth repeating, the second is new.

Firstly you are assuming incorrectly that a property crash necessarily entails losses on residential lending and that the problems are so severe that the system cannot tolerate the buy-to-let guys taking a hiding and that as a consequence the government will actively support house prices. This is a claim you've completely failed to substantiate.

Secondly, you are now proposing that there is a problem with my claim that the system's leverage is lower and the absolute amount of capital is higher. You're contesting that claim using a source which says the stress tests are inadequate. This again shows that you don't know what you are talking about. The capital is higher and the stress tests almost certainly intentionally flatter to deceive. Both assertions are true, there is no contradiction.

The Kevin Dowd Adam Smith Institute report which supports your link is very interesting. I've only had time to skim the summary. I see that he offers his thanks to Anat Admati, co-author of The Bankers' New Clothes. (I really enjoyed it - have you had time to read it?)

Looking at Dowd's report you discover this section at the beginning of Chapter 8:

The thrust of the argument in The Banker's New Clothes is that capital levels at banks should be much, much higher, in essence that banks should be lending the money they got from their equity investors to the tune of 20% of their funding. I agree but it represents a very, very significant change to get there from where we started in 2009. My personal take is that Dowd's laudable ends mean he's rather over-egging the pudding in dismissing the stress tests.

Even if we accept that the system is weaker than we would like that does not mean that it is not much stronger than it was (as I claimed). Neither does it mean that the banking system is not strong enough to take a few buy-to-let cretins getting creamed by a house price crash, which is the idiocy you're pimping.

Also, the other point I've already made still stands. The government can watch the BTL guys get gutted like fish and then bail out the banks directly as and when losses hit and the need arises.

Your claim that the government has to support house prices is nonsense.

I semi-skimmed way through the Adam Smith paper.

In summary, we've still got a long way to go re: banks.

One of the biggest problems is the gaming of risks and capital - its always worth it for the bank, in the short term, to game both, at considerable expense.

I put a link to report on another thread.

Here's the link on an FTAV page I grabbed it from, just i ncase its a different report:

https://static1.squarespace.com/static/56eddde762cd9413e151ac92/t/579f53b66b8f5ba10895862b/1470059502224/No+Stress+II

My reckoning?

Banks are going to hold a lot more capital.

The only banks that will be undewritten by a soverign are going to be simple, narrow banks.

The banking crisis/crash of 2008 has not stopped, its carried on, see Brexit, Trump, etc.

The crash was too big to be swept under the carpet a la S+L 1989.

There's a comment in the AS report about HBOS being bust 4+ times over.

That in itself ought to give any regular pause for concern.

Again, banks ability to classify risk and slice and dice is being removed.

Banks ability to leverage is being ratchet down.

[spyguy]

I am not arguing they must i made that perfectly clear in my last email, please stop making things up to suit your argument. I am saying they have protected house prices at all costs.

And the reason they brought S24 in at all is because if landlords continued to buy up the property in the way they have been doing in the last 15 years and especially the last few under Osbornes stewardship the Tory party would not stand a chance in the future, and when it did go tits up it would do so in a spectacular way. Besides when one section of buyers get tax breaks its rather unfair.

You seem to be denying that the govt have completely rigged and controlled the market with constant schemes in the last 8 years whereas i am at the other end of the spectrum.

LL buying up propert on IO BTL is not just a lost Tory chance for future voters but a fcking risky venture by the banks that will see the country fcked again.

Anyoen whos took on an IO BTL loan inthe last 5 years is proably going to lose their 'investment' and their OOO.

[Crumbless]

LL buying up propert on IO BTL is not just a lost Tory chance for future voters but a fcking risky venture by the banks that will see the country fcked again.

Anyoen whos took on an IO BTL loan inthe last 5 years is proably going to lose their 'investment' and their OOO.

I hope you are correct and its sooner rather than later.

[Bland Unsight]

I am not arguing they must i made that perfectly clear in my last email, please stop making things up to suit your argument. I am saying they have protected house prices at all costs.

And the reason they brought S24 in at all is because if landlords continued to buy up the property in the way they have been doing in the last 15 years and especially the last few under Osbornes stewardship the Tory party would not stand a chance in the future, and when it did go tits up it would do so in a spectacular way. Besides when one section of buyers get tax breaks its rather unfair.

You seem to be denying that the govt have completely rigged and controlled the market with constant schemes in the last 8 years whereas i am at the other end of the spectrum.

E-mail? They are called posts.

This is the post you made that I think is problematic and is the reason that I'm still kicking the ball around with you here.

As it would cause a HousePriceCrash of unknown proportions. Being as its the main asset class banks are invested in, it will create misery for them. And judging by the actions of the govt in the last 8 years a HPC is something they've done everything in their power to protect the banks from.

Hence why like you say the govt are bringing in S24 over 6 years as opposed to overnight as they're petrified of a HPC and its effects on the banking system.

You're claiming that the government are "petrified" of a house prices crashing. You suggest that this is because a crash in house prices will "create misery" for the banks. You're also running a line of argument about "constant schemes" over the last eight years as if all those schemes lean in the same direction, but that's wrong.

Whilst the government has been responsible for some high profile schemes (HTB equity loans, for example) the government also set up the Mortgage Market Review under the now defunct FSA and set up the new FCA which implemented it, essentially driving interest-only, self-certified lending out of the mainstream mortgage market for owner-occupiers.

Now the government has made it impossible to have a large high-leveraged BTL portfolio as an individual whilst knowing full well that the CGT will make it impossible for the investors to incorporate. The end of the summer will bring new BTL underwriting rules from the PRA, an institution created by the government.

Woe is me 'the government have rigged the game' posting is all well and good as a pastime, but it doesn't stand up to scrutiny. The government has taken steps which might have been expected to precipitate a correction and it has taken steps likely to light a fire under prices. The greatest support for prices has been the collapse of interest rates. That has been a global phenomenon and is not, when you get right down to the details, in the gift of either the Chancellor of the Exchequer or the Governor of the Bank of England.