Countdown to leveraged BTL going bust thread

[spyguy]

1 hour ago, iamnumerate said:

I think it is means cash buyer only, presumably because no one can get a mortgage in 2 weeks?  Or can you?

If ...... you are rich/high eanrings, have a private bank or at least a lending facility then you can draw down a quick mortgage or have a short term lending that the bank will convert to a mortgage at a later time.

However ... we are talking way under 5% of UKPOP.

Can Mr + Mrs Suburbia, with a free current account? Nope.

[Buzzardo2]

8 hours ago, spyguy said:

Probably because they are moron.

Maybe they mean 'cash buyer only'

They mean that there some issue that makes the property unmortgable - non standard construction. some funny regarding ownership etc etc etc.

Well it's certainly muddled / panicky sort of thinking.

 

If you were a motivated seller, you'd hope that - just maybe - a balanced and half-professional EA would provide better advice of the "how not to look like you're so deep in the s*** that you might almost give it away" variety...

 

BUT - a whole load of EA vermin are up to their necks in BTL. They thought "pwoperdee" was a one-way bet, and were too hubristic (or just plain ignorant) to recognise they needed to run any sort of balanced, risk-mitigating portfolio like a normal person...

 

Real-life example? Farnham's most obnoxious EA (and boy, is THAT a field with some heavy competition!!) held on to his family home while doing another "development"; expanded his nasty little sales and letting (Oops!) business into three or four other local locations - with a commercial mortgage on each of the new satellite offices; and according to school-gate legend is also up to his eyeballs in other BTL investments (and there's usually some validity to school-gate legend - even if it's only because someone's Missus has been gobbing off about how superior they are to everyone else...)

 

Well done mate.... a nicely diversified portfolio there - I mean you've got residential property (OO and BTL)....commercial property....and several EA offices dependent on the, err, property market making you a living. Genius, I tells ye!!

 

Would it not be knicker-wettingly amusing if, in this case in this thread, the apparently muddled thinking was because the scummy LL, and the scummy EA, were in fact one and the same person?!

 

I honestly think my Schadenfreudometer would explode, if it turned out that was the case.

 

I wonder if there's any easy way to find out, without blowing three quid on a Land Registry search?

 

[mrtickle]

Bump!

Pity we haven't seen more brown-trousers posts. I'm quite surprised - but on the bright side, it means the media aren't whipping it up. Just letting the LLs quietly exit and sell up.

 

[jiltedjen]

Yes very annoying we have not been hit with a flood of posts moaning about bankruptcy on other forums. I did have a quick look around but was surprised there’s no moaning. 

my best guess is that:

- some didn’t fill out a tax return

- those in the thows of going bankrupt don’t particularly want to post about it

- some have just buried their heads, and HRMC have such a back-log and are not rushing sending out demands etc

- perhaps through hell and high water, overdrafts , credit cards etc, borrowing from friends ‘to repay when one of the houses sells’ they have managed the first bill, but are now forced sellers before the next bill ends 

 

[dragging boot straps]

Anecdotal. Friend who is an 'accidental' landlord has openly stated that the tax changes were a surprise and now mean that she makes no profit on her flat. 

She's got her head screwed on and is talking about selling up. However she then said 'loathed to lose a good investment'. I tried to counsel otherwise and talk about the immorality of btl also. 

My other friends are not affected in the least as they don't fill out tax returns anyway. No news on HMRC chasing. 

If my small circle is anything to go by only 25% actually speak to HMRC anyway. The rest are unrepentant evaders. 

[Si1]

4 minutes ago, dragging boot straps said:

Anecdotal. Friend who is an 'accidental' landlord has openly stated that the tax changes were a surprise and now mean that she makes no profit on her flat. 

She's got her head screwed on and is talking about selling up. However she then said 'loathed to lose a good investment'. I tried to counsel otherwise and talk about the immorality of btl also. 

My other friends are not affected in the least as they don't fill out tax returns anyway. No news on HMRC chasing. 

If my small circle is anything to go by only 25% actually speak to HMRC anyway. The rest are unrepentant evaders. 

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/reporting-tax-evasion

[dragging boot straps]

13 minutes ago, Si1 said:

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/reporting-tax-evasion

Why should I have to be a snake to solve this?  HMRC need to use their big data and get mining. There are millions out there for them to find and very easily found at that. 

One of the friends actually using a letting agent and bought another house recently and had to fill out the 3% stamp duty surcharge. 

Wonder who actually checks that 3% surcharge form by the way...how infallible is that?

Edited March 10, 2019 by dragging boot straps

[Si1]

13 minutes ago, dragging boot straps said:

Why should I have to be a snake to solve this?  

You're being a snake by NOT reporting them.

[mrtickle]

6 hours ago, jiltedjen said:

- some have just buried their heads, and HRMC have such a back-log and are not rushing sending out demands etc

 

I hope so. And/or they are going for the "Just before Good Friday" method of when to post the letters.

 

[rantnrave]

New Fitness for Human Habitation Act in rental homes comes into force today

https://www.propertyindustryeye.com/new-fitness-for-human-habitation-act-in-rental-homes-comes-into-force-today/

A quick reminder to readers: the Homes (Fitness for Human Habitation) Act 2018 comes into force today, Wednesday.

It will apply to all new tenancies lasting up to seven years granted on or after today. It will also apply to existing tenancies that go periodic tomorrow or afterwards.

It will also apply to all periodic tenancies in existing from now in 12 months’ time.

Essentially, properties must be fit for human habitation when the lease is granted, and remain fit for human habitation during the course of the tenancy.

The Act strengthens tenants’ means of redress and they will be able to take action against landlords who fail to maintain their home, including any common parts of the building.

Unfitness claims will be decided in the courts, with legal aid available. The courts may order the landlord to pay compensation to the tenant.

The landlord will also have to remedy unfitness in their properties, unless it is caused by tenant behaviour or natural events such as storms and floods. Another exemption is if the landlord cannot get consent, eg planning permission.

The Act only applies to individuals, not to tenants who might be institutions, housing associations or local authorities.

It also only applies to people with tenancy agreements, as opposed to licences to occupy.

It is expected that there will in due course be more guidance emerging from the courts.

David Cox, CEO of Propertymark ARLA, said: “We’re pleased the Homes Act is coming into force today and congratulate Karen Buck MP on her work to provide a better private rented sector for all.

“This new legislation will give renters greater protection against criminal operators, and means they will now be able to take direct legal action if their agent or landlord does not comply.”

A series of official guides can be found at the link below:

https://www.gov.uk/government/publications/homes-fitness-for-human-habitation-act-2018

[thewig]

Fitness for human habitation? How the fck did that one get voted through? Most of my lot are more like ANIMALS than humans. (Animals that pay the rent on time and in full so help them god)

[mrtickle]

great to see that Property Tribes have followed our lead and have their own thread: 

https://www.propertytribes.com/april-part-section-24-kicking-t-127639568.html

5 April - Part 3 of Section 24 kicking in

(they even got the date wrong!)

[user not found]

8 hours ago, mrtickle said:

great to see that Property Tribes have followed our lead and have their own thread: 

https://www.propertytribes.com/april-part-section-24-kicking-t-127639568.html

5 April - Part 3 of Section 24 kicking in

(they even got the date wrong!)

I ended up chatting with a buying agent on the weekend at a kids party. He said landlords weren't phased by s24 because they could just become ltd companies. Doesn't that involve selling the property to the Ltd? Doesn't the Ltd then pay CGT when they sell it?

This chap also said prices only ever rise, renting is dead money, houses aren't expensive because as soon as you give them a lick of paint you've made £50k profit. I could go on...

[spyguy]

5 hours ago, Sausage said:

I ended up chatting with a buying agent on the weekend at a kids party. He said landlords weren't phased by s24 because they could just become ltd companies. Doesn't that involve selling the property to the Ltd? Doesn't the Ltd then pay CGT when they sell it?

This chap also said prices only ever rise, renting is dead money, houses aren't expensive because as soon as you give them a lick of paint you've made £50k profit. I could go on...

Yes.

LL would need to sell, at market price to LtdCo, which are separate legal entity.

For your highly leverage loon whos withdrawn equity to buy house #2, then house'3 etc etc. then that will trigger a massive inviestigation and CGT bill.

And abnks will just not lend that money to indivuals or potless LtdCo.

 

 

[jiltedjen]

i will have to update the countdown this weekend

[mrtickle]

On 03/04/2019 at 07:36, Sausage said:

I ended up chatting with a buying agent on the weekend at a kids party. He said landlords weren't phased by s24 because they could just become ltd companies. Doesn't that involve selling the property to the Ltd? Doesn't the Ltd then pay CGT when they sell it?

This chap also said prices only ever rise, renting is dead money, houses aren't expensive because as soon as you give them a lick of paint you've made £50k profit. I could go on...

I presume those were your questions to the LL. Was he not phased by them?

Hope you laughed loudly in his face, anyway.

 

[Orb]

On 4/3/2019 at 7:36 AM, Sausage said:

chap also said prices only ever rise, 

But that's true, until they don't. 

[nothernsoul]

Apologies, for very slightly diverting this thread, but would genuinely like to hear peoples opinions on this, as it doesnt make sense to me. I work with somebody who is outwardly very right on and PC, makes their own deoderant, judgementally tells you off for not recycling a bus ticket etc, yet they are massively into buy to let with all the real  negative consequences we all know about. Seriously, how do they reconcile all this?

[Confusion of VIs]

On ‎03‎/‎04‎/‎2019 at 07:36, Sausage said:

I ended up chatting with a buying agent on the weekend at a kids party. He said landlords weren't phased by s24 because they could just become ltd companies. Doesn't that involve selling the property to the Ltd? Doesn't the Ltd then pay CGT when they sell it?

This chap also said prices only ever rise, renting is dead money, houses aren't expensive because as soon as you give them a lick of paint you've made £50k profit. I could go on...

Your were clearly talking to a property Guru. Some people have to pay £1,000 for these pearls of wisdom.

[stop_the_craziness]

11 hours ago, nothernsoul said:

Apologies, for very slightly diverting this thread, but would genuinely like to hear peoples opinions on this, as it doesnt make sense to me. I work with somebody who is outwardly very right on and PC, makes their own deoderant, judgementally tells you off for not recycling a bus ticket etc, yet they are massively into buy to let with all the real  negative consequences we all know about. Seriously, how do they reconcile all this?

Greed.

And self-delusion.

That's how all my relatives live with themselves.  They have lots of conversations about how other people "misunderstand" landlords and the "service" they are providing to "all those people who WANT to be renting".

Edited to add:

And every single one of them claims to be setting rents at "below market rate" because, hey, they are the "nice landlords" who are basically doing people a favour.

Edited April 6, 2019 by stop_the_craziness
Extra point

[Sawitcoming]

1 hour ago, stop_the_craziness said:

Greed.

And self-delusion.

That's how all my relatives live with themselves.  They have lots of conversations about how other people "misunderstand" landlords and the "service" they are providing to "all those people who WANT to be renting".

Edited to add:

And every single one of them claims to be setting rents at "below market rate" because, hey, they are the "nice landlords" who are basically doing people a favour.

And a good many of them with a genuine conviction about this. Its like the renting of the home is their generous act. The amount of money and poor terms are just market forces that are beyond their scope of influence so nothing to do with them.

My last landlord was one of those. He used to really poke his nose in my family business on the pretence that he was like a family friend. What he was really doing was business intelligence gathering in an attempt to work out how to extract the maximum rent. 

*puke

[mrtickle]

8 hours ago, Sawitcoming said:

My last landlord was one of those. He used to really poke his nose in my family business on the pretence that he was like a family friend. What he was really doing was business intelligence gathering in an attempt to work out how to extract the maximum rent. 

That's nasty. I know the type. How did you deal with him? I find if you push back, they get incredibly offended and act shocked.

 

[Confusion of VIs]

Apologies if you have already included it

Lettings relief is almost certainly going to be abolished from April 6th 2020. This is the loss of a tax relief worth up to £13,000 in hard cash, or to put it another way equal to a drop in the value of your property of £18,000.

At the moment few LLs seem to be aware of this and if they haven't already started the sale process are already leaving it a bit late to remove tenants, do the place up to a reasonable  standard and get a sale in advance of the rush to sell off before the change hits.

As a cliff edges go, this is a lot bigger one for most of the accidental LLs than s24. 

    

Edited April 6, 2019 by Confusion of VIs

[jiltedjen]

So a new tax year is upon us! any more additions please flag to me and i will edit. 

April 2019 - 0 days 0 lots of rent away

• Start to build up even more tax liabilities (Section 24 tapering increases from 50% to 75%)
• Potential implementation date for Basel 3 rules killing a lot of high LTV lending. 
• Mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 3-year introductory rate will go onto SVR.
• Tenant fee ban 'expected sometime after april 2019' = more costs passed onto landlords

January 2020 - 269 days  9 lots of rent away 

• Last chance to pay 2018/2019 tax bills
• 600,000 people have interest-only mortgages due to mature (a large % will be forced sellers) - this will be ramping up so technically this is already happening. 

April 2020 - 360 days 12 lots of rent away 

• Start to build up even more tax liabilities  (Section 24 tapering increase from 75% to 100%)
• All tenanted properties have to be E or higher.
• Lettings relief is almost certainly going to be abolished from April 6th 2020. This is the loss of a tax relief worth up to £13,000 in hard cash, or to put it another way equal to a drop in the value of your property of £18,000.

January 2021 - 635 days 21 lots of rent away 

• Last chance to pay 2019/2018 tax bills

April 2021 - 725 days 24 lots of rent away

• Glut of Mortgages taken out at the April 2016 to avoid the stamp duty charge which had a 5-year introductory rate will go onto SVR

January 2022 - 1000 days 33 lots of rent away 

• Last chance to pay 2020/2021 tax bills

May 2022 - 1120 days 37 lots of rent away 

• Disruption leading up to general election and the usual cooling property prices

Other stuff:

• Landlords expecting 13+ weeks to sell, coupled with long voids as tenants leave when 'for sale' signs are stuck up.
• Brexit, job losses, inflation, EU workers heading home
• Due to new 'Insolvency check' Those BTL trying to go bankrupt who have potential access to good pensions, will find HRMC could take % of said pension funds. 

Plus already in play:

• MMR rules
• BOE started raising rates
• Fed and now BOE raising rates
• 3% second home charge
• Political risk
• End of one version of HTB
• FPC have now been granted powers of direction over BTL lending
• Universities building own custom accommodation destroying the market for Uni BTL. (ongoing)
• Banks forced to assess whole portfolio when remortgaging
• Landlords with student loans have to pay more back
• For those selling CGT due within 30 days
• The 'Funding for Lending scheme', which has artificially forced down mortgage rates since its introduction in 2012 ended
• Universal Credit is diverting money away from landlords who are not directly receiving the housing benefit 
• For existing tenancies its illegal to rent properties with an EPC rating lower than 'E' (better hope your current tenants don't move out)
• Section 24 tapering doubled from 25% (year 1) to 50% (year 2)
• landlords on 2 year fixed rate mortgages to avoid stamp duty hike now on SVR due to bank now having to assess entire portfolio affordability
• Mandatory electrical safety checks required starting September 2018, although only a £300 cost every 5 years is still another blow (introduced sept 2018)

[stop_the_craziness]

11 hours ago, Confusion of VIs said:

Apologies if you have already included it

Lettings relief is almost certainly going to be abolished from April 6th 2020. This is the loss of a tax relief worth up to £13,000 in hard cash, or to put it another way equal to a drop in the value of your property of £18,000.

At the moment few LLs seem to be aware of this and if they haven't already started the sale process are already leaving it a bit late to remove tenants, do the place up to a reasonable  standard and get a sale in advance of the rush to sell off before the change hits.

As a cliff edges go, this is a lot bigger one for most of the accidental LLs than s24. 

    

I did not know this.

I think the "accidental landlords" are the least switched-on to these sorts of changes because they don't really take a lot of notice of their "accidental income" (often undeclared to HMRC too) that just comes off their own magic money tree each month.

Interesting times ahead.