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wherebee

Landlords: please, please, please do this...

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Don't know how they have the nerve to go to the press, imo.

It is utter cringe - laying claim to so many properties, imo.   His debt.  His BTLing choice.  Enjoy S24 and a whole lot more.  Diddums about become higher rate tax payers, after such claims on houses.   Astonishment that things can turn against the Big-Ego-BTLers - things can turn.

Must be a shock; the magnificence of being happy at being nearly mortgage-free on your own home, to having to consider 75% LTV new mortgage on that £500K home to try and juggle debts on their BTLs  - if they can qualify for it at 49 and with MMR and BTLs.   This is how things turn imo.

Quote

 

49, owns five student properties in Cambridge, with a combined value of £1.7m. He has outstanding mortgages of £695,000, and pays £4,650 a month in repayments and interest. 

He and his wife also own their own home, mortgage-free, near the university town. It's worth about £500,000, and the couple are thinking about taking out a mortgage on it to pay down the cost of the buy-to-let mortgages. 

 

 

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Why doesn't be just cash in 2 or 3 of his rental properties and be mortgage free on the others plus his personal home?

Or sell the lot and still be a frickin' millionaire?

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Article is tosh.

The whole thing assumes that he owns the BTL in his own name (not company) and then:

'Keeping the debt secured against buy-to-let properties removes the risk that you might have to sell your own home, should the business fall into difficulties'

That will make many BTL sigh with relief. Fools.  I think it very unlikely to be the case.

There is a reason this statement is true

 ' Most buy-to-let landlords are also homeowners. It's difficult to get a buy-to-let mortgage if you don't already have a residential one, and most people buy their own home first. '

And it is not to protect the borrower.

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I dont think this guy is actually in that bad a position. Hes got a relatively small mortgage 650k compared to value of the houses 1.7m. 

Hes mortgage free on his own house, so all he is doing is switching to cheaper debt. Or paying off the more expensive debt first.

Quids in either way.

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12 minutes ago, 999house said:

I dont think this guy is actually in that bad a position. Hes got a relatively small mortgage 650k compared to value of the houses 1.7m. 

Hes mortgage free on his own house, so all he is doing is switching to cheaper debt. Or paying off the more expensive debt first.

Quids in either way.

That assumes that the valuation on the student properties is right.  Seeing how many city areas used by students are basically shiteholes, when a downturn comes, will those values be anything like?

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5 minutes ago, wherebee said:

That assumes that the valuation on the student properties is right.  Seeing how many city areas used by students are basically shiteholes, when a downturn comes, will those values be anything like?

Hes got a 500k house and a 650k mortgage and the mans an IT contractor probably making 500 quid a day paying 20% tax, 2k a week takehome. He has no risk whatsoever.

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Will you still be able to offset the debt?

It may not be well known by many, but if the owner-occupier mortgage is taken out and used solely for the purpose of paying down the debt on a buy-to-let, or to buy a new one, the landlord should still be able to offset the interest costs against their rental income - to the extent that that relief persists. 

But this is not correct.  If paying down the existing BTL debt, it's possible to get tax relief on the new OO mortgage loan only up to  the amount that restores the total debt to the original cost of the BTL property.  Not its current value.

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If had ever known a BTL landlord that wasn't a total *****, I might feel vaguely bad that the tax laws had changed so dramatically under them. A stable and predictable tax regime is, after all, one of the fundamental requirements for a strong economy. But, since I haven't - and I have known quite a few - they can all burn in tax hell as far as I'm concerned. 

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1 hour ago, TheBlueCat said:

If had ever known a BTL landlord that wasn't a total *****, I might feel vaguely bad that the tax laws had changed so dramatically under them. A stable and predictable tax regime is, after all, one of the fundamental requirements for a strong economy. But, since I haven't - and I have known quite a few - they can all burn in tax hell as far as I'm concerned. 

 

The BTLers "stable and predictable tax regime" with 'their tax-relief' (in the words of management of one LL organisation!  - 'their tax relief' lol) was a total anomaly caused by a fractured narrow world-view and has encouraged some to take extreme risks and be filled by extreme ego - it's being put somewhat to rights.

Spent a long time telling them they were dancing into trouble.  If something can't go on forever it will stop.

This guy is okay and not at any risk?  We shall see.  So many BTLers encountered total astonishment as 'core-voters' with Section24, and many a way for a market participant to peel away such high valued assets from the highly indebted.   At 49, thinking of remortgaging his own mortgage-free home to try and help with his predicament? :lol:

4 hours ago, CunningPlan said:

And it is not to protect the borrower.

Exactly.  It's there for the lenders to have security on, against the BTLers own choice people-farming ways.snapback.png

Frugal Git, on 14 Jul 2015 - 10:50 PM, said:

 

 It seems that you cannot or will not accept that borrow to let is just one type of business, and thus had its own unique risk profile. You don't have to consider every eventuality, no. But you should be at least marginally intelligent enough to recognise the clear ones if you go into any business.

The risks with borrowing to let were entirely obvious from the beginning - the biggest of all being the eventual taxation target. From the point of view of the business side of it - not the ethics, that was the *first* thing that came to mind for me when discussing its 'merits' with people on that basis.

Playing with leverage was a close second, but that is beside the point. Legislation legislation legislation.

If it was obvious to someone who had no desire to do it, wtf were people who actually signed up to borrow money smoking if they couldn't spot that their terms were more favourable then they were getting on their own home? Did they genuinely think that was fair? That it wasn't eventually going to be spotted?

Especially due to the not inconsequential nature of it growing out of control site to the previous favourable terms, and housing being unlike running a widget business in that whilst a widget is a discretionary purchase, a place to live isn't. And the general public tend to eventually get angry when their ability to shelter themselved becomes increasingly difficult.

Building is part of a solution - no doubt. But levelling the playing field, rather than just building on it is even better.

 

Quote

Life is not static. It is turbulent to its very essence. Human societies, like all complex systems, are constantly fluctuating. This fundamental ebb and flow is the source of cycles in human affairs, including economic cycles. As Emerson says, there is a "deep remedial force that underlies all facts." At every point where something goes up, nature is constantly compensating by finding a way to bring it down.

On 11/16/2014 at 2:51 PM, Venger said:

There is much evidence that human expectations tend to be linear. Most of the time, most people expect current conditions to continue for the indefinite future. Wherever prosperity exists, it is natural for people to expect prosperity to continue. For this reason, much of the history of human society is a record of astonishment.

Time and again, people have marginalised their affairs, rendering themselves increasingly crisis-prone. They have gone into debt, extending claims on resources to an extreme that could be supported only if current conditions were sustained uninterrupted into the future. Time and again these hopes have been disappointed.

LovelyRum - it is relevant.

 

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He's only quids in if tenant demand stays high. With an oversupply of BTLers competing for the same tenants plus the reported rise in first time buyers plus a load of EEs leaving now that £/€ rate not worth it plus a fall in uni applications that was noted last year he might soon be brought down to earth with a bump.

Edited by EnglishinWales

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