Saturday, September 25, 2010

Bye-bye buy-to-let

Lloyds slams brakes on buy-to-let mortgages

Lloyds Banking Group, which provided 60% of all buy-to-let mortgages last year, is to cut maximum lending to landlords to a fifth of what the bank was willing to advance in 2009. Mortgage brokers claim the move will restrict choice and weaken confidence, with the value of homeloans of all types already at a 10-year low and prices slipping, but Lloyds said the move was part of a routine review. With effect from the close of business on Friday, September 24, Lloyds – which owns Cheltenham & Gloucester (C&G) and BM Solutions – will restrict maximum buy-to-let loans to £2m per person, secured to no more than three properties. Ray Boulger of mortgage brokers John Charcol said: “They are slamming the brakes on after lending up to £10m per person on up to 10 properties last year."

Posted by drewster @ 11:23 AM (3839 views)
Please complete the required fields.



8 thoughts on “Bye-bye buy-to-let

  • They clearly see larger property values holding up better than the sub £250k properties that would have previously made up the bulk of their btl lending.
    I suspect they anticipate government policy being in favour of ftb’s with moves not to support prices at the lower end of the Market, whilst maintaining the value of conservative voters 500k properties.

    Now how could they implement policies that would achieve that ?

    Maybe do nothing, maybe move the 5% stamp duty level upto £750k.

    Maybe I’ve read too much into this.

    Reply
    Please complete the required fields.



  • Does make you wonder if they’ve been ‘advised’ from on high to ‘re-position’ their lending to help manipulate prices at various levels.

    It would help reduce prices at the lower end of the Market for MPs ageing children (now they’ve offloaded their btl portfolios) whilst enhancing the value of their tax free family homes.

    Everyone’s a winner – if your an MP.

    Cynical me 🙂

    Reply
    Please complete the required fields.



  • You’re an MP

    Reply
    Please complete the required fields.



  • Anything that upsets Ray Boulger and puts him in his place has to be good news!

    Reply
    Please complete the required fields.



  • Well we do now own most of Lloyds…

    Reply
    Please complete the required fields.



  • “Maybe I’ve read too much into this.”

    Yes, you have..

    ..play a mortgage lender’s stress test exercise comparing BTL lending with buy to live in lending..

    ..the house you live in is your home. Everyone has to live somewhere, so throwing in the towel on your home mortgage is not something you’d do at all lightly, and most people would continue to pay down a mortgage, even if they were in a fair degree of negative equity – provided they can afford to do so.

    Now look at the circumstance of the BTL portfolio holder – he has ten properties perhaps plus his own home, and suddenly they are all in negative equity. With rental and personal income he might be able to tick over – just – but his net liabilities might exceed his net assets by a million quid maybe – that’s an awful lot of red ink..

    ..so logic says stop paying the mortgages, bank as much rental income offshore as he can before the mortgage lenders foreclose on him, and conceal or re-assign any other assets he may have. Then go bankrupt…

    Messy, but at least he has that rental income nest egg to tide him over until you can get back on his feet, while the mortgage lender has to shell out a fortune to cover not only the negative equity he left behind, but also the nightmare of disposing of properties that have sitting tenants they don’t know, with tenancy agreements they don’t have copies of..

    BTL lending will go very bad – I estimate total write-downs in the order of £50bn..

    ..every lender should be running away from this one.

    Reply
    Please complete the required fields.



  • tenyearstogetmymoneyback says:

    Very good points Uncle Tom

    I can remember calculating one year in the mid nineties that my bargain £65K house was costing me about £1200 a month (including depreciation) when I was earning about £1500 a month. However, I did start out with about 40% equity (which dropped to about 16%)
    so I stuck with it and by the end of the decade was back where I had started.

    How many people would be prepared to do the same for a BTL ? As for the comment about putting rental income offshore, couldn’t a BTLer
    just put their main house in their wifes name then go bankrupt ?

    Reply
    Please complete the required fields.



  • Just 1.1% of all buy-to-let loans are more than three months in arrears, against 1.33% in the broader market.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>