How far will house prices fall [volume 4]
Discussion
NicD said:
sugerbear said:
Err.. When the lending is to a business its a commercial loan. don't you understand the difference?
what makes it a business? Just you saying so doesn't make it so.here are two definitions, neither automatically applies to every BTL
busi·ness
1.a person's regular occupation, profession, or trade.
2.the practice of making one's living by engaging in commerce.
walm said:
Why do people hate BTLers? I am just jealous of them!
I would love to have some property as part of my savings.
Hate the sin, not the sinner ... i.e. I disapprove of BTLing, but one can hardly blame BTLers for taking advantage of what is promoted as, and often is an opportunity.I would love to have some property as part of my savings.
The problem with BTL is that it distorts the demand for housing relative to other asset classes for private investors, and in doing so it creates house price inflation at just the point in the market that it is most socially damaging.
No high street bank would lend you 80k to help buy a 100k share portfolio. Not even if it was a diversified portfolio of blue chip stocks. Yet they'll do that to help you buy a BTL property. That encourages people to invest in property and crowds out investment from other asset classes making capital more expensive for small businesses amongst other things.
And the demand is squarely focused on the bottom end of the market making it very hard for many would-be first time buyers. And purely in terms of default risk, the competition is unfair. Lenders are risk averse. This means that they over-charge for credit risk. BTLers are effectively credit risk arbitrageurs. By sitting between the tenant and the bank, they are effectively gambling that the tenant's ability to pay the rent will cover the bank's demand for interest. If you like, the bank wouldn't lend the tenant the money, but the landlord will. If that arbitrage on average works, then the it tells you that the banks are mispricing the tenant's true credit risk. The landlord is earning a return from the lender's irrationality at the expense of the tenant. Now there is nothing unusual about that mechanism. It is a feature of all lending. But given how important this sector of the housing market is to people's quality of life, it strikes me we should make more of an effort to improve the market's transparency and efficiency and that we should certainly remove any artificial incentives that inflate demand.
anonymous said:
[redacted]
Strong is the anger in this one. anonymous said:
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Of course they put their business expenses as part of their business accounts. To not do so is daft.walm said:
Why do people hate BTLers? I am just jealous of them!
I would love to have some property as part of my savings.
Tonker- this is a more pleasant way of expressing envy.I would love to have some property as part of my savings.
Walm- any advice you need on the subject, feel free to ask.
anonymous said:
[redacted]
wtf are you trying to say?WRT the building society pulling a fast one, my view is that a contract is a contract, regardless of whether it's private or BTL. The offer should supercede the general conditions, especially when that's specifically stated as being the case.
Your dislike of landlords appears to be for better reason than spite.
scenario8 said:
There is a fine tradition......... tongue in cheek mocking of the Orange skinned
A tan from my month in Bali, don'cha know. 
scenario8 said:
white RRS driving
I had a red FFRR if that's an acceptable substitute?scenario8 said:
It's all part of the fun.
Thank you. I merely thought he was being a d
head. I now realise he's a dhead who runs with the herd, presumably as it reduces the need for thought.The jealous spite is still evident, though.
anonymous said:
[redacted]
What consumer protection would mean that in this contract dispute (where there is no inconsistency in the terms) the banks would behave differently?If a contract says you can adjust the spread then that's it - consumer or commercial, no?
I still think you are muddling commercial vs. consumer in order to maintain the anti-BTL rhetoric! (Which I am enjoying now I understand the issue...)
And while I am sure it's fair to say that YOU would have given legal advice that would have protected these BTLers - and IANAL - but I wouldn't be surprised for OTHER solicitors to have given the opposite advice.
If the issue was that black and white then the BTLers have received some TERRIBLE advice to have taken it this far through the courts!
anonymous said:
[redacted]
I didn't realise that the leeway was so different, thanks for that.Nevertheless it still seems odd to me that BTLing is considered so different from say investing in an ISA or SIPP or whatever.
So while it is obviously on the business terms you point out above, to have such misleading terms as it does is asking quite a lot.
For example, there were plenty of SMEs caught with some horrendous interest rate swap products who clearly had no idea what they were buying and were given some sort of mis-selling respite IIRC.
So it seems clear to me that while the law has this consumer/commercial distinction you are talking about you can't still sell complicated and egregious financial products to any old "business man" - can you?
walm said:
For example, there were plenty of SMEs caught with some horrendous interest rate swap products who clearly had no idea what they were buying and were given some sort of mis-selling respite IIRC.
I have no time for PPI parasites and the like, but IRHP misselling was somewhat different. Apart from them being a far more complex product than a mortgage, they were in a lot cases, sold in a rather duplicitous manner, and to enterprises that should never have considered them. The banks were not innocent of a 'nudge nudge' approach which made it clear, if not overt, that the funding applied for was predicated on also taking at a hedge - something that they were explicitly not allowed to do. Potential costs and break options were obfuscated or simply lied about.
People should, of course have taken better advice though.
It was a poor show all round.
walm said:
Nevertheless it still seems odd to me that BTLing is considered so different from say investing in an ISA or SIPP or whatever.
It would be very unlikely that someone would take on a financial product from a bamk to invest in an ISA or SIPP though.With a standard mortgage you take out a retail mortgage product. BTL mortgages are separate and different products- you can't use the mortgage being advertised on the telly by Jessica Ennis for a BTL.
One is advertised as "buy yourself a home to live in" and the other is "invest in property".
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