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OK, so here's how the market is being fuelled at the moment: new entrants to the market

From mortgage brokers information (can't remember the precise source, but it was on here recently):

Foreign buyers: 45% of purchases

FTB: < 15% of new puchases

Leaving at least 40% of people buying either a second (or third, fourth..) homes, either for pleasure or BTL.

'Above the line' BTL is quite small - only 15% of mortgages are officially BTL, I think? Which means a whopping one quarter of the whole market of new buyers consists of old buyers MEWing to BTL.

It makes some sense - if I owned a home and wanted to buy now (neither of which is the case, but just suppose), I'd MEW to BTL rather than take out a BTL mortgage. It's a far easier way to take out a mortgage.

And the point is... there is a limit to the amount people can MEW to BTL. Which means the HPI fuel must soon run out.

Sorry for the ramble - and feel free to correct any inaccurate facts. But I think the MEW-to-BTL lobby is an iceberg below the surface here, and one which must soon melt with market warming!

:blink:

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OK, so here's how the market is being fuelled at the moment: new entrants to the market

From mortgage brokers information (can't remember the precise source, but it was on here recently):

Foreign buyers: 45% of purchases

FTB: < 15% of new puchases

Leaving at least 40% of people buying either a second (or third, fourth..) homes, either for pleasure or BTL.

'Above the line' BTL is quite small - only 15% of mortgages are officially BTL, I think? Which means a whopping one quarter of the whole market of new buyers consists of old buyers MEWing to BTL.

It makes some sense - if I owned a home and wanted to buy now (neither of which is the case, but just suppose), I'd MEW to BTL rather than take out a BTL mortgage. It's a far easier way to take out a mortgage.

And the point is... there is a limit to the amount people can MEW to BTL. Which means the HPI fuel must soon run out.

Sorry for the ramble - and feel free to correct any inaccurate facts. But I think the MEW-to-BTL lobby is an iceberg below the surface here, and one which must soon melt with market warming!

:blink:

Sounds about right... :ph34r:

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People who MEW to buy-to-let face the possibility of both properties plummeting in value.

Not a nice thought (well it is to me :lol: )

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Don't forget the other hidden plank to prop up BTL -- guaranteed minimum rents for social housing from Housing Associations and Councils. This has made the bottom end profitable -- because of artificially inflated & guaranteed rents -- when it otherwise would not be.

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I was thinking about who makes up BTL.

I know 5+ people that rent but have a BTL. For instance if you live in London and earn say £40,000 you can't even afford a decent 1 bed flat near where you work. So a lot rent in London and buy a BTL further out. More people will buy in their home towns (a lot of people working in London are not originally from London) and rent in London.

It is possible that a large proportion of BTL are actually ftb that can't afford to buy in a place they want to live in so are kind of renters, ftb and btl's all at the same time. Add in couples that move in together and keep on the old flat / house and it becomes hard to distinguish between the different 'sectors' of the market because the boom has caused people to make different decisions than before the boom.

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I was thinking about who makes up BTL.

I know 5+ people that rent but have a BTL. For instance if you live in London and earn say £40,000 you can't even afford a decent 1 bed flat near where you work. So a lot rent in London and buy a BTL further out. More people will buy in their home towns (a lot of people working in London are not originally from London) and rent in London.

It is possible that a large proportion of BTL are actually ftb that can't afford to buy in a place they want to live in so are kind of renters, ftb and btl's all at the same time. Add in couples that move in together and keep on the old flat / house and it becomes hard to distinguish between the different 'sectors' of the market because the boom has caused people to make different decisions than before the boom.

So these people choose to take a BTL mortgage and pay the extra interest rather than buying the house on a normal mortgage and then renting it out?

A FTB that buys a BTL on a normal mortgage (ie their one and only mortgage) will not show up in the figures as a BTL.

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What are the penalties for not declaring a mortgage is btl?

and more to the point, how would anyone know?

The process described is not buy to let. The MEW is performed on the primary residence whilst the rental property is owned outright.

Where's the problem?

Edited by Lionel Richtea

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OK, so here's how the market is being fuelled at the moment: new entrants to the market

From mortgage brokers information (can't remember the precise source, but it was on here recently):

Foreign buyers: 45% of purchases

FTB: < 15% of new puchases

Leaving at least 40% of people buying either a second (or third, fourth..) homes, either for pleasure or BTL.

:blink:

If we assume that a proportion of the foreign buyers are buying as investors i.e. landlords i.e. BTL -it would suggest that perhaps as many as 50% of new entrants to the market are buying as investors (or second homes).

No wonder you're priced out.

Surprised you are not a bit miffed at watching more and more of the housing in this country move into the hands of investors (at the rate of 300,000 properties a year) - pricing you out and fording you to face the prospect of renting forever.

I am very much afraid you are living in cloud cuckoo land if you think this massive shift in property ownership that has been going on now for 7 or 8 years is going to be reversed by a house price correction or recession. Of course this may have a marginal effect - but that is all - BTLs that bought more than a year or two ago have plenty of equity to ride out any storm and, if and when property prices do fall, they will simply add to their portfolios.

You really need to stop and understand what is happening. You are witnessing a complete and structural change to the way property is owned in this country. Whereas only 10 years ago the vast majority of people owned just one house - now a very significant number of people own 2 or 3 and another bunch own 5, 10 or even 50.

You are not going to be able to undo this. BTL will, in due course, be seen to be a huge social evil. What is the best you can now hope for? A benevolent landlord you can strike up a long term relationship with.

How you can kid yourselves that some sort of massive market correction is coming which will turn the clock back 10 years really does baffle me. If we get a correction it will be slow and will affect nothing - as successful BTL investors (who have been at it for a few years) will buy in ahead of you on the way down. Let's face it, if prices drop yields will go up and, as property IS a good long term investment, and as everyone always thinks property cannot go down (and if it has, it has already reached bottom and is just waiting to bounce) - existing BTLetters will simply expand their portfolio and new ones (perhaps desperate because of redundancy or lack of pension provision) will use the equity in their properties to join in.

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The process described is not buy to let. The MEW is performed on the primary residence whilst the rental property is owned outright.

Where's the problem?

Wouldn't the MEWer have to pay tax on the whole of the rental income instead of being able to deduct the interest costs?

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If we assume that a proportion of the foreign buyers are buying as investors i.e. landlords i.e. BTL -it would suggest that perhaps as many as 50% of new entrants to the market are buying as investors (or second homes).

No wonder you're priced out.

Surprised you are not a bit miffed at watching more and more of the housing in this country move into the hands of investors (at the rate of 300,000 properties a year) - pricing you out and fording you to face the prospect of renting forever.

I am very much afraid you are living in cloud cuckoo land if you think this massive shift in property ownership that has been going on now for 7 or 8 years is going to be reversed by a house price correction or recession. Of course this may have a marginal effect - but that is all - BTLs that bought more than a year or two ago have plenty of equity to ride out any storm and, if and when property prices do fall, they will simply add to their portfolios.

You really need to stop and understand what is happening. You are witnessing a complete and structural change to the way property is owned in this country. Whereas only 10 years ago the vast majority of people owned just one house - now a very significant number of people own 2 or 3 and another bunch own 5, 10 or even 50.

You are not going to be able to undo this. BTL will, in due course, be seen to be a huge social evil. What is the best you can now hope for? A benevolent landlord you can strike up a long term relationship with.

How you can kid yourselves that some sort of massive market correction is coming which will turn the clock back 10 years really does baffle me. If we get a correction it will be slow and will affect nothing - as successful BTL investors (who have been at it for a few years) will buy in ahead of you on the way down. Let's face it, if prices drop yields will go up and, as property IS a good long term investment, and as everyone always thinks property cannot go down (and if it has, it has already reached bottom and is just waiting to bounce) - existing BTLetters will simply expand their portfolio and new ones (perhaps desperate because of redundancy or lack of pension provision) will use the equity in their properties to join in.

Yes, but that only works in low IR situations. Low prices + high IRs destroy the whole BTL cycle unless people can sustain the losses. People who bought ~2000/2001 might be able to. But not the 2002+ people.

Edited by abaxas

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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