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gruffydd

Just Found This After Doing Some Digging With An Mp

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From HM Treasury: What do you make of it?

The Government provides a framework of macroeconomic stability, enabling a

healthy housing market, and within which people can make informed,

responsible borrowing decisions. We are determined that this continues. The

buy-to-let market is an important component of a healthy, diverse mortgage

market.

As you might be aware, in October 2004 and following consultation, the

Government decided to put in place FSA regulation of first-charge residential

mortgages where people’s main home was at risk in the event of default.

Buy-to-let mortgages are not secured on people’s primary residence and

therefore do not pose the same risks of consumer detriment as other

mortgages. Accordingly there is no current intention to regulate buy-to-let

mortgages.

Edited by gruffydd

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Buy-to-let mortgages are not secured on people’s primary residence and

therefore do not pose the same risks of consumer detriment as other

mortgages. Accordingly there is no current intention to regulate buy-to-let

mortgages.

Yeah, because tenants aren't really people, so who gives a toss what happens to their homes when their landlords go bankrupt? :angry:

Morons.

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From HM Treasury: What do you make of it?

:

Accordingly there is no current intention to regulate buy-to-let mortgages.

What's the sound of one hand washing?

It's a shame they've failed to regulate owner-occupier mortgages to prevent them from being used as stealth-BTL vehicles.

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How are they used as stealth buy-to-let vehicles?

Some people have fraudulently bought BTL on residential mortgages, because the requirements are different, and the interest rates have historically been a bit lower.

Presumably because there was a perception one would protect one's home over and above a mere investment.

Does this now lay them open to all their assets being seized to cover a default?

Edited by Timm

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That waffle from the govt is BS.

If you default on the mortgage of your BTL "investment" and it

is repossessed by the lender then you will be pursued, until bankruptcy

if necessary to reclaim any losses.

.

Likewise with the myth of the unsecured loan, if you default against it an

order can be made to secure it against your assets including your house.

.

ST

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Does this now lay them open to all their assets being seized to cover a default?

Nope. Only the asset against which the loan has been secured.

Lenders won't want to be seen pushing for criminal proceedings. It's Bad For Business, and shows they didn't do their underwriting properly.

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Yeah, because tenants aren't really people, so who gives a toss what happens to their homes when their landlords go bankrupt? :angry:

Morons.

Hold on a minute! You *are* protected with a SHT agreement - doesn't matter if the owner defaults, or the property changes hands, you have the right to live there for the term you agreed.

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Nope. Only the asset against which the loan has been secured.

Lenders won't want to be seen pushing for criminal proceedings. It's Bad For Business, and shows they didn't do their underwriting properly.

Rubbish, post April 2006 lenders fill in a spreadsheet with names, print it out, and have the clerk of the court at the nearest court stamp it.

Then they can reposess your house or any other assets they like.

This includes credit cards, store cards, personal loans, car loans, overdrafts, utilities, council tax... when the new law took effect in April 2006 all debt effectively became secured on your house.

The law was implemented because the lenders were getting nervous. They were looking to pull unsecured lending, which would have killed the economy, so the government agreed to make it easy to turn unsecured debt into secured debts. So easy in fact that there is no point refering to secured/unsecured debts anymore... all debts are effectively secured.

In the old days they had to go to court, at great expense, to take your house for non-payment of an unsecured debt. That's why unsecured debt was more expensive than secured debt... increased risk. The new rules aren't well known and the press buried them. They will be well known soon though.

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Hold on a minute! You *are* protected with a SHT agreement - doesn't matter if the owner defaults, or the property changes hands, you have the right to live there for the term you agreed.

Yes, it looks OK on paper. But it's something quite different when you have landlords, letting agents, surveyors, estate agents and goodness knows who else trampling through your living room for months on end. With a good landlord who's a professional operator with a long-term view, renting can be an absolute pleasure - but no-one wants the roof over their heads changing hands every twelve months because bricks and mortar didn't turn out to be the solid investment they'd imagined it should be.

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Yes, it looks OK on paper. But it's something quite different when you have landlords, letting agents, surveyors, estate agents and goodness knows who else trampling through your living room for months on end.

Utter nonsense.

As a T you do not have to let any of that lot into your home. Merely to allow L or his representative to come in with 24 hours' notice for maintenance - or to check that no maintenance is required (and that last only when reasonable - say 3/4 times a year).

Edited by Telometer

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As a T you do not have to let any of that lot into your home. Merely to allow L or his representative to come in with 24 hours' notice for maintenance - or to check that no maintenance is required (and that last only when reasonable - say 3/4 times a year).

Nonsense.

There is a huge, gaping void between the minimum that a tenant is required to do under law, and what a tenant actually has to do in order to stay on good terms with his landlord.

The landlord is permitted to enter his property given 24 hours' notice on any reasonable grounds. It doesn't have to have anything whatsoever to do with maintenance. Most courts would consider showing the property to a potential purchaser to be reasonable, or having it surveyed for whatever reason (e.g. a change of insurance policy).

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How are they used as stealth buy-to-let vehicles?

A friend of mine: 70% LTV on his BTL mortgage, and the remaining 30% by MEWing his home, about 12 months ago.

If I'd had known before his intentions I would have tried to talk some sense into him. When I asked him (after the fact) if his rent covered his outgoings, he said, "No, I'm in it for long-term capital increase". Oh my.

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Rubbish, post April 2006 lenders fill in a spreadsheet with names, print it out, and have the clerk of the court at the nearest court stamp it.

Then they can reposess your house or any other assets they like.

This includes credit cards, store cards, personal loans, car loans, overdrafts, utilities, council tax... when the new law took effect in April 2006 all debt effectively became secured on your house.

The law was implemented because the lenders were getting nervous. They were looking to pull unsecured lending, which would have killed the economy, so the government agreed to make it easy to turn unsecured debt into secured debts. So easy in fact that there is no point refering to secured/unsecured debts anymore... all debts are effectively secured.

In the old days they had to go to court, at great expense, to take your house for non-payment of an unsecured debt. That's why unsecured debt was more expensive than secured debt... increased risk. The new rules aren't well known and the press buried them. They will be well known soon though.

OMG, Thanks for posting that. That's going to change the way I'd respond to the poll about how bad this recession will be. :blink:

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OMG, Thanks for posting that. That's going to change the way I'd respond to the poll about how bad this recession will be. :blink:

Agreed good post. I was working on info on the old way of working, I knew it

was possible to secure debts against assets after the fact but I did not know

this had been made easier.

.

Do you have any references or further info you can give on this?

Are you related to this procedure by business in any way?

.

Thanks.

.

ST

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Rubbish, post April 2006 lenders fill in a spreadsheet with names, print it out, and have the clerk of the court at the nearest court stamp it.

Then they can reposess your house or any other assets they like.

This includes credit cards, store cards, personal loans, car loans, overdrafts, utilities, council tax... when the new law took effect in April 2006 all debt effectively became secured on your house.

The law was implemented because the lenders were getting nervous. They were looking to pull unsecured lending, which would have killed the economy, so the government agreed to make it easy to turn unsecured debt into secured debts. So easy in fact that there is no point refering to secured/unsecured debts anymore... all debts are effectively secured.

In the old days they had to go to court, at great expense, to take your house for non-payment of an unsecured debt. That's why unsecured debt was more expensive than secured debt... increased risk. The new rules aren't well known and the press buried them. They will be well known soon though.

Which law was this?

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I don't think it's QUITE as simple as this - can I repossess BT's assets 'cos they owe me from when I moved house, please?

I was vaguely aware of a change in the law; but would much appreciate chapter & verse

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Guest An Bearin Bui
Rubbish, post April 2006 lenders fill in a spreadsheet with names, print it out, and have the clerk of the court at the nearest court stamp it.

Then they can reposess your house or any other assets they like.

This includes credit cards, store cards, personal loans, car loans, overdrafts, utilities, council tax... when the new law took effect in April 2006 all debt effectively became secured on your house.

The law was implemented because the lenders were getting nervous. They were looking to pull unsecured lending, which would have killed the economy, so the government agreed to make it easy to turn unsecured debt into secured debts. So easy in fact that there is no point refering to secured/unsecured debts anymore... all debts are effectively secured.

In the old days they had to go to court, at great expense, to take your house for non-payment of an unsecured debt. That's why unsecured debt was more expensive than secured debt... increased risk. The new rules aren't well known and the press buried them. They will be well known soon though.

Do you have a reference for this 2006 regulation? That is reallly interesting if that is the case - it would explain a lot of the willingness of banks to hand out money to anything with a pulse. I am aware that the Bush government in the US changed the laws on credit card debt around 2006 to stop cc debtors from using bankruptcy as a way out of credit card debt. This was hugely protested at the time by consumers rights organisations but it passed anyway. It's now possible for credit card companies to chase borrowers into the grave.

The real development here is that legislation is changing to put the onus on the borrower to inform and protect themselves and but no-one has bothered to tell consumers this. Previously the onus was on the lender to ensure they were protecting themselves from bad debt by making rigorous checks on borrowers but many are still under the impression that companies have their best interests at heart and that, ultimately, the law is on the side of the consumer. Things have changed and very few consumers are paying attention to that.

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I don't think the "2006 Regulation" exists. Unsecured creditors still have to apply before a judge to secure a judgment debt on a property.

And contrary to what another poster said about BTL defaults only being enforceable against the secured property - like non-recourse laws in the US - there is no restriction (outside of bankruptcy) on the selection of property to satisfy a judgment debt.

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Still waiting on the 2006 law change info, would be very interesting.

.

re. the securing of a debt against assets there was a thread on hpc about it. where it had happened to someone. or was it a link to mse?

.

either way, excellent thread.

.

ST

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  • 294 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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