Countdown to leveraged BTL going bust thread

[spyguy]

I dont so much a see a 'problem'

I see a 'you problem' rather than a 'me problem'

And I see a problem that was long flagged at the start of this thread.

 

 

[jiltedjen]

Surely BTL lending is now toxic? they just won’t pay out of their own pocket, that was NEVER their goal.
 

they wanted a ‘free bet’ with other people money, with other people paying the mortgage, and they getting all the capital gain. 
 

as soon as they realise they are losing money each month, they would rather walk away, go bust. I mean they refuse to lose. Its for them to gain and the banks to lose, always was that way.

surely the BTL lending banks are facing going bust? 

[msi]

8 minutes ago, jiltedjen said:

Surely BTL lending is now toxic? they just won’t pay out of their own pocket, that was NEVER their goal.
 

they wanted a ‘free bet’ with other people money, with other people paying the mortgage, and they getting all the capital gain. 
 

as soon as they realise they are losing money each month, they would rather walk away, go bust. I mean they refuse to lose. Its for them to gain and the banks to lose, always was that way.

surely the BTL lending banks are facing going bust? 

I wouldn't say toxic, but getting the appropriate risk premium given its nature. 

[spyguy]

40 minutes ago, jiltedjen said:

Surely BTL lending is now toxic? they just won’t pay out of their own pocket, that was NEVER their goal.
 

they wanted a ‘free bet’ with other people money, with other people paying the mortgage, and they getting all the capital gain. 
 

as soon as they realise they are losing money each month, they would rather walk away, go bust. I mean they refuse to lose. Its for them to gain and the banks to lose, always was that way.

surely the BTL lending banks are facing going bust? 

Ah, yes - 'other peoples money' = £££££££££££££££

The Barclay family, the banks and the billion-pound debt

How a decade-long effort to restructure loans extended to the reclusive businessmen’s empire culminated in Lloyds Banking Group seizing control of a national newspaper

https://www.ft.com/content/322e4bea-40b3-4749-92f4-d5fa78762a14

 

The FT has spoken to multiple people involved in the debt renegotiations over the years, as well as those familiar with the Barclay family’s position and others involved in the sale process of the Telegraph.

The sudden repossession of one of Britain’s most influential newspapers by a high street bank shows the extent to which two working-class brothers from west London had built a business empire using, in the words of one person familiar with their operations, “other people’s money”. 

 

Lots of financial fkwittery, borrow here ,spend there .....

In 2004 they acquired the Telegraph, the newspaper closest to and most unstinting in its support of the Conservative party, from Canadian media group Hollinger.

People close to the family say the £665mn acquisition, sealed after a fierce fight against German media group Axel Springer and others, was never just about financial returns.

“It was their icon; they loved owning the Telegraph,” says one former business and social acquaintance. 

The loan HBOS provided for the Telegraph acquisition was described by those familiar with its terms as “a classic Cummings handshake loan”, referring to Peter Cummings, the disgraced former head of HBOS’s commercial banking unit.

HBOS was notorious for lending large amounts with few safeguards to high-profile investors. Its approach was excoriated by regulators and Cummings was eventually banned from the financial services industry for life.

When Lloyds took over HBOS, executives were dismayed to find there were few covenants that would easily give the bank the ability to enforce its rights on the Telegraph if the loan terms were breached or repayments ceased.

 

....


 

 

[Timm]

1 hour ago, spyguy said:

Ah, yes - 'other peoples money' = £££££££££££££££

The Barclay family, the banks and the billion-pound debt

How a decade-long effort to restructure loans extended to the reclusive businessmen’s empire culminated in Lloyds Banking Group seizing control of a national newspaper

https://www.ft.com/content/322e4bea-40b3-4749-92f4-d5fa78762a14

 

The FT has spoken to multiple people involved in the debt renegotiations over the years, as well as those familiar with the Barclay family’s position and others involved in the sale process of the Telegraph.

The sudden repossession of one of Britain’s most influential newspapers by a high street bank shows the extent to which two working-class brothers from west London had built a business empire using, in the words of one person familiar with their operations, “other people’s money”. 

 

Lots of financial fkwittery, borrow here ,spend there .....

In 2004 they acquired the Telegraph, the newspaper closest to and most unstinting in its support of the Conservative party, from Canadian media group Hollinger.

People close to the family say the £665mn acquisition, sealed after a fierce fight against German media group Axel Springer and others, was never just about financial returns.

“It was their icon; they loved owning the Telegraph,” says one former business and social acquaintance. 

The loan HBOS provided for the Telegraph acquisition was described by those familiar with its terms as “a classic Cummings handshake loan”, referring to Peter Cummings, the disgraced former head of HBOS’s commercial banking unit.

HBOS was notorious for lending large amounts with few safeguards to high-profile investors. Its approach was excoriated by regulators and Cummings was eventually banned from the financial services industry for life.

When Lloyds took over HBOS, executives were dismayed to find there were few covenants that would easily give the bank the ability to enforce its rights on the Telegraph if the loan terms were breached or repayments ceased.

 

....

Thank you very much for posting this - I was not aware.

But I don 't understand.

If "executives were dismayed to find there were few covenants that would easily give the bank the ability to enforce its rights on the Telegraph if the loan terms were breached", then how did HBOS / Lloyds size control? One would have to assume that the covenants were adequate if that was the outcome?

[jiltedjen]

They scrapped plans to force landlords to make houses more efficient?! 

That’s a real shame would of forced some parasites out of the market and allowed innocent FTB in. 

typical Tory government. 

[spyguy]

11 hours ago, Timm said:

Thank you very much for posting this - I was not aware.

But I don 't understand.

If "executives were dismayed to find there were few covenants that would easily give the bank the ability to enforce its rights on the Telegraph if the loan terms were breached", then how did HBOS / Lloyds size control? One would have to assume that the covenants were adequate if that was the outcome?

Up to 2008, banks esp HBOS did some of the most nuts lending ever seen.

With commercial loans there usually lots of clauses and tweaks to force the borrower to stay on the straight n narrow.

Basically, a bank can lend of the borrower and force them to pay off more of than the debt then required, or not to take more debt on.

Commercial lending tends to be complex and have lots of TnCs.

With the Barclays Bros Id guess that theyd have eventually fail of he very few covenants on the loan, so the bank pounced.

[spyguy]

11 hours ago, jiltedjen said:

They scrapped plans to force landlords to make houses more efficient?! 

That’s a real shame would of forced some parasites out of the market and allowed innocent FTB in. 

typical Tory government. 

The insinuation stuff was always a pointless but of greenery. shoved on by the dafty Pols.

Its S24 thats doing the heavy lifting.

And now IO BTL SVR getting touching 10% has lent a hand.

 

[PeanutButter]

https://www.theguardian.com/money/2023/sep/21/landlords-yorkshire-abandon-buy-to-let-market-high-interest-rates

[12fixer]

https://www.bloomberg.com/opinion/articles/2023-09-20/uk-rents-are-soaring-but-the-golden-days-of-buy-to-let-are-over?utm_campaign=socialflow-organic&cmpid%3D=socialflow-twitter-view&utm_medium=social&utm_source=twitter&utm_content=view 

[spyguy]

2 hours ago, PeanutButter said:

https://www.theguardian.com/money/2023/sep/21/landlords-yorkshire-abandon-buy-to-let-market-high-interest-rates

Bizarre article.

“But my phone started ringing again this month,” he says, with relieved customers’ growing expectation that interest rates are close to their peak. “They are thinking, ‘We need to deal with the devil we know. What are we doing, are we moving, are we trading up or down, what are we going to do?

And? Just ends on that.

 

[Si1]

On 21/09/2023 at 18:48, spyguy said:

Bizarre article.

“But my phone started ringing again this month,” he says, with relieved customers’ growing expectation that interest rates are close to their peak. “They are thinking, ‘We need to deal with the devil we know. What are we doing, are we moving, are we trading up or down, what are we going to do?

And? Just ends on that.

 

OMFG. Just had an apparently genuine conversation with a BTLr on Twitter who's genuinely bamboozled by the idea that you have to tell HMRC anything. Saying it's private business and what's it got to do with them. Big fat skinhead. Not a cliche at all 

[Si1]

"but that's not fair because it will just end up being paid by the tenants"

(Implying that non declaring BTL income is actually a benevolent act)

[spyguy]

49 minutes ago, Si1 said:

OMFG. Just had an apparently genuine conversation with a BTLr on Twitter who's genuinely bamboozled by the idea that you have to tell HMRC anything. Saying it's private business and what's it got to do with them. Big fat skinhead. Not a cliche at all 

I think the problem with S24 is that the BoE and Treasury seriously underestimated how fking dumb IO BTLer are.

And, by proxy, how stupud the banks werelending to them.n

Best thing HMRC can to to forcethis is to levy a charge for taxes on the property, let the banks mop up their own mess.

 

 

[iamnumerate]

1 hour ago, Si1 said:

OMFG. Just had an apparently genuine conversation with a BTLr on Twitter who's genuinely bamboozled by the idea that you have to tell HMRC anything. Saying it's private business and what's it got to do with them. Big fat skinhead. Not a cliche at all 

No one can be that thick can they?

[Sackboii]

15 minutes ago, iamnumerate said:

No one can be that thick can they?

Is it really any different to your local sole trader doing 'jobs for cash' that don't appear anywhere on any books ? Therefore don't count as income and no tax is paid on it ? This whole tax evasion thing is rife in this country unless you're solely on PAYE.

[Blobsy]

2 hours ago, Si1 said:

OMFG. Just had an apparently genuine conversation with a BTLr on Twitter who's genuinely bamboozled by the idea that you have to tell HMRC anything. Saying it's private business and what's it got to do with them. Big fat skinhead. Not a cliche at all 

Time to tag HRMC in your reply?
I know there’s nothing lower than a grass but I reckon it’s ok when it concerns BTL 😂

[Si1]

43 minutes ago, iamnumerate said:

No one can be that thick can they?

Basically what @spyguy said. People are dumb. BTL mortgages given out with no due diligence 

[iamnumerate]

1 hour ago, Sackboii said:

Is it really any different to your local sole trader doing 'jobs for cash' that don't appear anywhere on any books ? Therefore don't count as income and no tax is paid on it ? This whole tax evasion thing is rife in this country unless you're solely on PAYE.

But they know that they are breaking the rules - from what @Si1 they didn't know - which is harder to believe

 

Saying that people can always be very thick.

[Si1]

8 minutes ago, iamnumerate said:

But they know that they are breaking the rules - from what @Si1 they didn't know - which is harder to believe

 

Saying that people can always be very thick.

Many people's opinions of what is legal or not, are not based on the letter of the law but rather on "what works"

For example there's a popular opinion that private escooters are legal because frankly they're widely used and the police don't enforce the actual total ban on their public use. In practice why is that view naive when they are de facto legal in a practical sense?

I suppose sole traders all fill in tax returns so realise they are fiddling the figures when they fill it in.

But many BTLrs probably don't submit a tax return so wouldn't know. Since their mates are at it too then they'll take the view of "what works". If they aren't intellectual thinking types (and that's not a crime) them how would they know different?

[Sackboii]

Don't banks inform HMRC when someone takes out a BTL mortgage ? Wouldn't that make sense ?

Oh, wait...😆

[spyguy]

4 hours ago, Si1 said:

Many people's opinions of what is legal or not, are not based on the letter of the law but rather on "what works" what  their mate told them.

For example there's a popular opinion that private escooters are legal because frankly they're widely used and the police don't enforce the actual total ban on their public use. In practice why is that view naive when they are de facto legal in a practical sense?

I suppose sole traders all fill in tax returns so realise they are fiddling the figures when they fill it in.

But many BTLrs probably don't submit a tax return so wouldn't know. Since their mates are at it too then they'll take the view of "what works". If they aren't intellectual thinking types (and that's not a crime) them how would they know different?

 

[Si1]

29 minutes ago, spyguy said:

 

Don't bring Rishi Sunak's views on the working classes into this now...

[highcontrast]

On 27/09/2023 at 10:09, Blobsy said:

Time to tag HRMC in your reply?
I know there’s nothing lower than a grass but I reckon it’s ok when it concerns BTL 😂

 

https://www.gov.uk/report-tax-fraud

 

I have absolutely no qualms about reporting the shady BTL parasite scum types near me, I have reported several already. You're welcome.

Edited September 28, 2023 by highcontrast

[spyguy]

From TOS

https://www.theguardian.com/money/2023/oct/26/people-falling-behind-on-mortgage-repayments-interest-rates-arrears

Ignore the othe fkwits.

Sophie Siangolis, buy-to-let borrower

Siangolis, who owns 16 rental flats with her husband in her home town of Weston-super-Mare, Bristol and Highbridge in Somerset, says relentless interest rate increases this year will almost certainly force them to sell their properties.

“The rents are no longer covering our mortgages; we’ve had a shortfall every month of between £2,500 and £3,500 for the past six months. We’re on SVR and the payments have doubled. I tried a couple of days ago to talk with some lenders about switching to a fixed rate, but they wanted to charge a fee of £3,000 for each property to go on a fixed deal, so it’s not worth it.

“We’re now in arrears of around £900 with service charges that we can’t pay. We’re panicking because we’ve got no money left, and can maximally carry on for another three months.”

Siangolis says the mortgage for one of her flats in Highbridge now costs £1,000 a month, plus £120 service charge. “But I only get £650 rent. We’ve put the rents up but they’ve got to be affordable for people. I can’t increase them further.

“We’ve had these properties for a long time, from between 2005 and 2007, but we’re having to sell them now, if we can.”

One of their properties, Siangolis says, is on the market, “a tiny two-bed flat in Bristol”, but the couple have only had one viewing and no offers. Some of their properties are in negative equity as they were bought in 2007, before the global financial crash.

“One sympathetic lender said to me: ‘A lot of people are in the same position as you.’ It frustrates me that the government can’t see the bigger picture. There’s a shortfall of rentals already,” Siangolis says.

“I feel sorry for some of my tenants who have rented from me for years, some are single mums and on benefits. Where are they gonna go? What happens to all the people renting from landlords like myself who are selling up now?”