Countdown to leveraged BTL going bust thread

[Up the spout]

9 minutes ago, Si1 said:

Until the autumn Rami was paying £197 per month for his mortgage, set against rental income of £850 per month. Today his mortgage has shot up to £788 per month, and of course he has no rental income at all.

When the renovation work is complete Rami will sell up. “I have had about as much as I can take of this Government taking as much as it can, and offering no support to me as a small business owner and as a landlord,” he said.

Rami and Hiba are accidental landlords....The property has been valued at £220,000, which means that over the last 17 years the couple have seen capital growth. But Rami doubts it will be an easy sell. 

 

"It isn't my fault!"

[Innkeeper]

57 minutes ago, Si1 said:

 

• 
  
•  

https://www.telegraph.co.uk/property/buy-to-let/landlords-mortgage-payments-interest-rates-crisis/

 

Rami and Hiba are accidental landlords.  The property has been valued at £220,000, which means that over the last 17 years the couple have seen capital growth. But Rami doubts it will be an easy sell. 

 

Who writes this s**t?  Moreover who reads it 😂

[Confusion of VIs]

1 hour ago, Si1 said:

https://www.telegraph.co.uk/property/buy-to-let/landlords-mortgage-payments-interest-rates-crisis/

 

Until the autumn Rami was paying £197 per month for his mortgage, set against rental income of £850 per month. Today his mortgage has shot up to £788 per month, and of course he has no rental income at all.

 

“It is absolute madness,” said Rami.

 

When the renovation work is complete Rami will sell up. “I have had about as much as I can take of this Government taking as much as it can, and offering no support to me as a small business owner and as a landlord,” he said.

 

 

 

Rami and Hiba are accidental landlords....The property has been valued at £220,000, which means that over the last 17 years the couple have seen capital growth. But Rami doubts it will be an easy sell. 

No mention of CGT, I would guess he needs around £40k for that.

Perhaps he put his CGT aside each time he remortgaged. 

[SickOfWaiting]

56 minutes ago, Innkeeper said:

Who writes this s**t?  Moreover who reads it 😂

Yes he's made a load of money due to HPI and he's still whining.

Hope him and his family lose the lot.

[Confusion of VIs]

9 minutes ago, SickOfWaiting said:

Yes he's made a load of money due to HPI and he's still whining.

Hope him and his family lose the lot.

Probably long since spent, at best all he will be left with is his CGT bill

[SickOfWaiting]

1 minute ago, Confusion of VIs said:

Probably long since spent, at best all he will be left with is his CGT bill

An accidental landlord, accidently spending all the equity in the house!

And the LibDems think we should bail these morons out.

[iamnumerate]

3 minutes ago, SickOfWaiting said:

An accidental landlord, accidently spending all the equity in the house!

And the LibDems think we should bail these morons out.

Please tell me that isn't true.

[Si1]

6 minutes ago, iamnumerate said:

Please tell me that isn't true.

The libdems have proposed a subsidy for mortgagees to help with increased mortgage interest costs. But I don't know if that extends to BTLrs.

[Up the spout]

13 minutes ago, Si1 said:

The libdems have proposed a subsidy for mortgagees to help with increased mortgage interest costs. But I don't know if that extends to BTLrs.

Ah, bless, they're still pretending they're ever going to be able to make decisions like that again. I wonder when all of those saddled with massive student loans will forget the libdems are responsible?

[iamnumerate]

15 minutes ago, Si1 said:

The libdems have proposed a subsidy for mortgagees to help with increased mortgage interest costs. But I don't know if that extends to BTLrs.

If the Lib Dems hadn't been against all new homes and all controls on immigration - people would have spent a lot less on housing.

[Si1]

3 minutes ago, Up the spout said:

Ah, bless, they're still pretending they're ever going to be able to make decisions like that again. I wonder when all of those saddled with massive student loans will forget the libdems are responsible?

And the triple lock too. Political suicide but Cleggy got a job at Facebook.

[SickOfWaiting]

1 hour ago, Si1 said:

The libdems have proposed a subsidy for mortgagees to help with increased mortgage interest costs. But I don't know if that extends to BTLrs.

We can be sure this family have 2 mortgages, as he accidently has a mortgage for his BTL, whilst accidently buying a new family home, no doubt with a mortgage.

[Si1]

40 minutes ago, SickOfWaiting said:

We can be sure this family have 2 mortgages, as he accidently has a mortgage for his BTL, whilst accidently buying a new family home, no doubt with a mortgage.

Ah true

[spyguy]

On 15/04/2017 at 13:02, jiltedjen said:

so we know that leveraged BTL's are going to be due very large tax bills in about a years time. 

and although we have been waiting many years for a property crash, a year or two can pass really quickly. 

so im thinking a simple countdown thread would be worthwhile. a long slow countdown to a HPC celebration of moron leveraged BTL's going bust and loosing their own homes. 

Not quite sure on the exact dates that the brown envalopes drop on door mates (so correct me if I'm wrong). But it's worth reminding ourselves that time marches endlessly on, and for any BTL happening on this forum to see that time is ticking. 

April 2018 - 350 days

January 2019 - 626 days

April 2019 - 715 days
 

August 2023 - IO BTL APR reach 10%-15%.

November 2023 - Banks start calliing in IO BTL loans.

Latter is going to happen.

The more BTL loans default, the more banks are going to call them in.

 

 

[jiltedjen]

the BTL are paying for the sins of the general populace in the 2007 housing bubble.

basically they took on the role as feckless speculators, which bailed out the general population who were going to be facing massive negative equity without there being a buyer of last resort 

now times moved on. and that pain was always going to be paid by someone. And it was an excellent plan to put that pain on the one group NO—ONE has any sympathy for.

they were set up like mugs. Driven by greed.

a few would of done minimal leverage and got out quickly and enough.

but I know maybe three people IRL who will be ruined. 
 

and i have to admit it’s bloody hilarious, how cock-sure these people were, that they were better, people in quite rubbish jobs, not working hard, who progress when they will retire millionaires with their portfolio? missing real opportunities in work, as they didn’t think they needed it.

I also think it’s going to cause a massive churn in the work-force. People will do anything to save themselves, that horrible stressful job they didn’t want to take? They have to take, these people keeping average wages down as they thought work wasn’t that important and never moved. And kept wages low.

there is a huge churn coming. 

people will have to reset their lives, god help landrover dealerships being over-loaded with white landrovers when the keys are handed back.

rent will probably go hellish for the next 24 months just as the repossessions take stock off the market with banks terrified of selling the stuff at the new market rate (30-40% less) as it will wipe out the loan book.

we are going to have a rent crisis, and millions of empty homes. that’s not going to play well politically. and the gov can’t force them onto market as it will take down the banks and the economy. 

Edited June 23, 2023 by jiltedjen

[spyguy]

On 19/06/2023 at 14:35, Innkeeper said:

Who writes this s**t?  Moreover who reads it 😂

Who writes it? Some excitable young property gal at the Telewag. Normally a Phoebe or Naomi.

Who read it. Me, for one.

Its more who believe the tales of  BS, leverage and 'accidental' LLing - most IO BTL LLs.

 

[Dames]

11 minutes ago, spyguy said:

August 2023 - IO BTL APR reach 10%-15%.

November 2023 - Banks start calliing in IO BTL loans.

Latter is going to happen.

The more BTL loans default, the more banks are going to call them in.

 

 

Could u expand on this please.

Do they do a sort of margin call on btl?

Just interested to understand the mechanics of it .

 

D

[jiltedjen]

15 minutes ago, Dames said:

Could u expand on this please.

Do they do a sort of margin call on btl?

Just interested to understand the mechanics of it .

 

D

Imagine your a bank and lend some moron loads of money.

and other banks also lent money to the same morons.

whoever asks for their money back first is most likely to get most of their money back.

when rates go up. They can see on paper that a lot of their borrowers are going to go bankrupt. And can’t afford to pay you.

so logically the first bank which panics first, get out in the best shape.

 

so it’s a race to call in loans. 

Edited June 23, 2023 by jiltedjen

[Dames]

Just now, jiltedjen said:

Imagine your a bank and lend some moron loads of money.

and other banks also lent money to the same morons.

whoever asks for their money back first is most likely to get most of their money back.

when rates go up. They can see on paper that a lot of their borrowers are going to go bankrupt. And can’t afford to pay you.

so logically the first bank which panics gets on in the best shape.

 

so it’s a race to call in loans. 

Ok got it thankyou.

 

D 👍

[spyguy]

3 minutes ago, jiltedjen said:

the BTL are paying for the sins of the general populace in the 2007 housing bubble.

basically they took on the role as feckless speculators, which bailed out the general population who were going to be facing massive negative equity without there being a buyer of last resort 

now times moved on. and that pain was always going to be paid by someone. And it was an excellent plan to put that pain on the one group NO—ONE has any sympathy for.

they were set up like mugs. Driven by greed.

a few would of done minimal leverage and got out quickly and enough.

but I know maybe three people ITL who will be ruined. 
 

and i have to admit it’s bloody hilarious, how cock-sure these people were, that they were better, people in quite rubbish jobs, not working hard, who progress when they will retire millionaires with their portfolio? missing real opportunities in work, as they didn’t think they needed it.

I also think it’s going to cause a massive churn in the work-force. People will do anything to save themselves, that horrible stressful job they didn’t want to take? They have to take, these people keeping average wages down as they thought work wasn’t that important and never moved. And kept wages low.

there is a huge churn coming. 

people will have to reset their lives, god help landrover dealerships being bloody with white landrovers when the keys are handed back.

rent will probably go hellish for the next 12 months just as the repossessions Lee stock off the market with banks terrified of selling the stuff at cost as it will wipe out the loan book.

we are going to have a rent crisis, and millions of empty homes. that’s not going to play well politically. and the gov can’t force them onto market as it will take down the banks and the economy. 

My usual repose for the last *ALMOST* 20y on here -

When you talk to a SME they *hate* bank debt.

These companies turnover a few single to 10s million, employ 10s of people, produce something of value to the UK - even export.

The commercial debt is expensive, tied to the life of the first born, very time limited- less than 10y.

And both sides are very pleased when the debt is paid off.

Yet in his same town of wary SME n banks, the local BS manages to lend ~1.2m IO BTL to some COPD scratter on DLA when he rolls into their HQ on his wheelchair with his oxygen tanks strapped to the side.

No earned income Sir? Not a problem.

1.2m IO Not a problem.

You will be able to pay the debt back in 25y? We can take your word for that.

This BS went bust.

 

 

 

[spyguy]

44 minutes ago, Dames said:

Could u expand on this please.

Do they do a sort of margin call on btl?

Just interested to understand the mechanics of it .

 

D

There is a margin call.

But its commercial debt. They dont need any concrete reason to call in a loan. They just do it.

This is standard bank practise.

If they saee, say, several business go under they will call in loans from similar business theyve lent, just to derisk.

If thers a sniff of default, say, one loan payment missed, theyll pull the lot.

 

 

 

[spyguy]

44 minutes ago, jiltedjen said:

Imagine your a bank and lend some moron loads of money.

and other banks also lent money to the same morons.

whoever asks for their money back first is most likely to get most of their money back.

when rates go up. They can see on paper that a lot of their borrowers are going to go bankrupt. And can’t afford to pay you.

so logically the first bank which panics first, get out in the best shape.

 

so it’s a race to call in loans. 

Yep.

 

[Horseradish]

5 minutes ago, spyguy said:

When you talk to a SME they *hate* bank debt.

 

5 minutes ago, spyguy said:

Yet in his same town of wary SME n banks, the local BS manages to lend ~1.2m IO BTL to some...

This is at the core of the UK's productivity problems. Banks love to lend against housing, because they can always reposess the house and get most, and likely all, their money back. And they can lend out at a much higher ratio (per Basel). That money cycles through the economy, allowing ever more loans to be made, and lending is no longer restricted by reserves, so this feedback loop spirals house prices ever further up.

If the government actually wants the UK to be productive again, it should preference loans towards small SMEs. The banks will never, ever choose to do that on their own.

[spyguy]

51 minutes ago, Dames said:

Could u expand on this please.

Do they do a sort of margin call on btl?

Just interested to understand the mechanics of it .

 

D

OK, this is a slightly *LESS* dramatic, more polite depiction of what happens.

 

 

In real ife it will be just a bunch of fat old blokes running around swearing and kickign everyone.

 

[spyguy]

On 01/04/2023 at 08:49, spyguy said:

Mortgaged landlords face falling profits and refinancing hurdles

24 London council areas no longer likely to be viable for higher borrowers, research finds

https://www.ft.com/content/d7b15309-7b27-4649-9838-895c43be1bc8

blah blah

An investor looking to refinance a two-year interest-only fix on a rented home valued at £200,000 will see their average rate jump from 2.2 per cent to close to 5 per cent — meaning their annual interest payments would leap from £2,666 to £6,060.

Under Hamptons’ estimate of an average 6 per cent gross rental yield in England and Wales — producing £12,000 a year in rental income — such a landlord paying basic rate tax would see their profits after tax plummet from £4,490 to £1,780. A higher-rate payer — following buy-to-let rule changes introduced in 2016 — would be left with just £120 after mortgage interest, maintenance costs and tax.

Numbers used by Hamptons are waay out.

Yields are much lower, barely 2% in London./SE.

Refi costs SVR are much higher than 5%, touching 8%-10% *IF* you can get the mortgage.

Anyhow, came to post the comments -

BTL landlords getting squeezed out of the market, by the design of George Osborne.

yep, flat/appartment prices (i.e many of the buy to let-able stuff) have been flat since 2015 and the changes Osborne made. Not saying it's a bad thing, just saying. This story has been building for a while.

 

Why didnt anyone tell these poor LL?

Where was the internet posts telling LL what was going to happen ~6y ago>?

Who can LL sue?

 

 

 

On 18/06/2023 at 09:46, jiltedjen said:

Turns out we are now only 6-12 months away now. 
 

in the end it’s the 6-7% mortgage rates coming for the leveraged BTL.

all those tasteless chav ‘new money’ white landrovers and grey garden furniture flooding the market soon. 

Wonder how many going bankrupt will find themselves paying abusive levels of rent on a shite-hole. 

how many boomers were doing just fine without BTL with charmed lives, but got greedy with BTL and now losing the lot? 

Theyd love your 6%-7% SVR ....