Another attempt to hit BTL amateurs....

[GT03ROB]

So not content with removing tax relief on interest & putting up stamp duty.... here's the next attempt to cool the BTL market... thoughts on the success this time?

http://www.dailymail.co.uk/money/news/article-3510...

[Ozzie Osmond]

Surely the intention would not be to "hit BTL amateurs" but to protect them from themselves.

[GT03ROB]

Ozzie Osmond said:

Surely the intention would not be to "hit BTL amateurs" but to protect them from themselves.

..but surely this onslaught is depriving them of their human rights??...

[IntentionallyBlank]

Saw this coming a mile off... and with interest rates only able to move one way, it could be seen as a shrewd move against the inevitable problems the greedier among us will be facing having overstretched themselves.

I do acknowledge though that for those yet to join the BTL gang, and those who have sensibly positioned themselves, it must be very frustrating.

[TooLateForAName]

Anyone who thinks they are a BTL amateur shouldn't be allowed to BTL.

BTL is a business with significant investment and lots of legal frameworks to be dealt with.

[Ozzie Osmond]

GT03ROB said:

..but surely this onslaught is depriving them of their human rights??...

You're probably right! I saw something on TV this morning where Americans were expressing their concern about "in invasion of Political Correctness from Europe".

[Sarnie]

I posted a thread about similar back in November;

http://www.pistonheads.com/gassing/topic.asp?h=0&a...

[GT03ROB]

TooLateForAName said:

Anyone who thinks they are a BTL amateur shouldn't be allowed to BTL.

BTL is a business with significant investment and lots of legal frameworks to be dealt with.

Trouble is nobody thinks they are, but the vast majority are.

[avinalarf]

Ozzie Osmond said:

Surely the intention would not be to "hit BTL amateurs" but to protect them from themselves.

Nothing personal Ozzie but It's all very well for you,who I presume are a financially literate chap,to make such a comment and I do not doubt that some will get burnt.
However this whole subject pees me off.
Before the banking debacle most "amateurs" would not have dreamt of going into BTL and were quite content to be taking say 5% interest on most of their "nest egg "in a savings account.
For the past 8 years with interest rates kept artificially low with QE and because it suited the government for it to remain so it only left either BTL or shares to hopefully receive a reasonable return.
As far as I'm concerned BTL was the better/safer and more understandable of the two choices for that "amateur".

[jdw1234]

avinalarf said:

Ozzie Osmond said:

Surely the intention would not be to "hit BTL amateurs" but to protect them from themselves.

Nothing personal Ozzie but It's all very well for you,who I presume are a financially literate chap,to make such a comment and I do not doubt that some will get burnt.
However this whole subject pees me off.
Before the banking debacle most "amateurs" would not have dreamt of going into BTL and were quite content to be taking say 5% interest on most of their "nest egg "in a savings account.
For the past 8 years with interest rates kept artificially low with QE and because it suited the government for it to remain so it only left either BTL or shares to hopefully receive a reasonable return.
As far as I'm concerned BTL was the better/safer and more understandable of the two choices for that "amateur".

I was under the impression that BTL mortgages were all unregulated commercial loans?

[Sarnie]

jdw1234 said:

avinalarf said:

Ozzie Osmond said:

Surely the intention would not be to "hit BTL amateurs" but to protect them from themselves.

Nothing personal Ozzie but It's all very well for you,who I presume are a financially literate chap,to make such a comment and I do not doubt that some will get burnt.
However this whole subject pees me off.
Before the banking debacle most "amateurs" would not have dreamt of going into BTL and were quite content to be taking say 5% interest on most of their "nest egg "in a savings account.
For the past 8 years with interest rates kept artificially low with QE and because it suited the government for it to remain so it only left either BTL or shares to hopefully receive a reasonable return.
As far as I'm concerned BTL was the better/safer and more understandable of the two choices for that "amateur".

I was under the impression that BTL mortgages were all unregulated commercial loans?

Not any more......

[AyBee]

They've inflated the housing market with very low interest rates and now they don't want a correction...

[Ozzie Osmond]

avinalarf said:

For the past 8 years with interest rates kept artificially low with QE and because it suited the government for it to remain so it only left either BTL or shares to hopefully receive a reasonable return.
As far as I'm concerned BTL was the better/safer and more understandable of the two choices for that "amateur".

Totally agree with all of that. And now the BTL changes mean the party is coming to an end and other alternatives must be explored.

I think the long term "zero interest rate" policies will, in the longer term, be seen as a huge mistake.

Don't forget that George Osborne is also increasing taxes on stocks and shares, especially fir the better-off. The round numbers increase is +7.5% tax. (Yes, everyone gets a £5,000 allowance first). Like the BTL changes it's seen as hitting "small businesses" where dividends have previously been lightly taxed compared with salary etc.

[mph1977]

TooLateForAName said:

Anyone who thinks they are a BTL amateur shouldn't be allowed to BTL.

BTL is a business with significant investment and lots of legal frameworks to be dealt with.

yet there are thousands upon thousands of people who hae chosen to become amateur property tycoons, once upon a time small landloards where either 'accidental' or Forces people ( and often letting among the forces community )...

[AyBee]

avinalarf said:

For the past 8 years with interest rates kept artificially low with QE and because it suited the government for it to remain so it only left either BTL or shares to hopefully receive a reasonable return.
As far as I'm concerned BTL was the better/safer and more understandable of the two choices for that "amateur".

Except that I'd wager the majority of BTL investors (certainly those over the last few years) have been gambling on capital appreciation rather than the return that the rent provides them with. That capital appreciation is as a large result of affordable interest rates and were they at 4%, there would be a huge chunk of people who couldn't afford those BTLs and house prices would have a chance of returning to a normal level. This just smacks as an "oh st, we've created a bubble, now what do we do".

[DonkeyApple]

IntentionallyBlank said:

Saw this coming a mile off... and with interest rates only able to move one way, it could be seen as a shrewd move against the inevitable problems the greedier among us will be facing having overstretched themselves.

I do acknowledge though that for those yet to join the BTL gang, and those who have sensibly positioned themselves, it must be very frustrating.

True. But we only have these low interest rates so that those with money can underwrite the interest costs of those who borrowed too much. Ie they are an emergency function of excess debt and systemic failure. Allowing a group to then use leverage yet again to build up yet another systemic system risk when we haven't even dealt with the last one properly isn't prudent.

BTL isn't dead and there is nothing wrong with BTL and nothing has been put in place to stop it. All that is happening is that it is being deleveraged and about time too.

The banks/lenders have priced the risk of their BTL debt based on their own book of business but the regulator and State looks at the whole picture and it is extremely clear that a decade of high LTV lending on speculative property investments has created a serious risk to the stability of the housing market and therefore our banking system.

You can go out tomorrow and buy 1000 BTL properties. All that has changed is that you will actually have to have money in order to do so. And frankly, it should always have been that way.

[mph1977]

DonkeyApple said:

True. But we only have these low interest rates so that those with money can underwrite the interest costs of those who borrowed too much. Ie they are an emergency function of excess debt and systemic failure. Allowing a group to then use leverage yet again to build up yet another systemic system risk when we haven't even dealt with the last one properly isn't prudent.

BTL isn't dead and there is nothing wrong with BTL and nothing has been put in place to stop it. All that is happening is that it is being deleveraged and about time too.

The banks/lenders have priced the risk of their BTL debt based on their own book of business but the regulator and State looks at the whole picture and it is extremely clear that a decade of high LTV lending on speculative property investments has created a serious risk to the stability of the housing market and therefore our banking system.

You can go out tomorrow and buy 1000 BTL properties. All that has changed is that you will actually have to have money in order to do so. And frankly, it should always have been that way.

exactly

[avinalarf]

The whole system is fecked up and the current BTL bubble is only just another example.
When I was a lad businesses were built on proper foundations and reward gained by achievement.
Nowadays it's all scams.....built on fluff.
I hate that mantra "Greed is good" but it typifies the way many conduct themselves.....shysters and crooks that play games and are allowed to get away with it ...."not me guv ".
Short termism....asset stripping......make a quick buck.....and look how it ends.
Ordinary folk having to bail out the shysters.
Our governments are useless....tinkering.....meddling ....fiddling.......while Rome burns.
Phew......glad I got that of my chest.

[nct001]

AyBee said:

avinalarf said:

For the past 8 years with interest rates kept artificially low with QE and because it suited the government for it to remain so it only left either BTL or shares to hopefully receive a reasonable return.
As far as I'm concerned BTL was the better/safer and more understandable of the two choices for that "amateur".

Except that I'd wager the majority of BTL investors (certainly those over the last few years) have been gambling on capital appreciation rather than the return that the rent provides them with. That capital appreciation is as a large result of affordable interest rates and were they at 4%, there would be a huge chunk of people who couldn't afford those BTLs and house prices would have a chance of returning to a normal level. This just smacks as an "oh st, we've created a bubble, now what do we do".

As one of those landlords I can correct you - 2.25 per cent standard variable rate and not 4 per cent - discounted standard variable rate - 1.25 per cent for three years on a £800k mortgage balance 1.25 per cent those were the days - money for old rope.


1.25 per cent ... Do the maths if tenant paying 5.5 per cent of capital value and rate drop do the maths - it's £100ks


Thank you so much discounted tracker mortgages, which were sold as a requisite due to low capital returns.

[AyBee]

nct001 said:

AyBee said:

avinalarf said:

For the past 8 years with interest rates kept artificially low with QE and because it suited the government for it to remain so it only left either BTL or shares to hopefully receive a reasonable return.
As far as I'm concerned BTL was the better/safer and more understandable of the two choices for that "amateur".

Except that I'd wager the majority of BTL investors (certainly those over the last few years) have been gambling on capital appreciation rather than the return that the rent provides them with. That capital appreciation is as a large result of affordable interest rates and were they at 4%, there would be a huge chunk of people who couldn't afford those BTLs and house prices would have a chance of returning to a normal level. This just smacks as an "oh st, we've created a bubble, now what do we do".

As one of those landlords I can correct you - 2.25 per cent standard variable rate and not 4 per cent - discounted standard variable rate - 1.25 per cent for three years on a £800k mortgage balance 1.25 per cent those were the days - money for old rope.

1.25 per cent ... Do the maths if tenant paying 5.5 per cent of capital value and rate drop do the maths - it's £100ks

Thank you so much discounted tracker mortgages, which were sold as a requisite due to low capital returns.

Perhaps you'd like to do the reading also (and writing in full sentences would also help, I'm not entirely sure what you've written actually makes sense)? I said "were they at 4%". My point is, a lot of people (maybe not you) are borrowing because money is cheap, interest only mortgages mean that the rent just needs to cover the interest on the mortgage (plus maybe some repairs and some down time) and the real returns come from the house value increasing. Once you take away tax relief on the interest, the borrowing in a lot of cases just doesn't make sense without relying on the value increase. As soon as interest rates increase, a lot of people will either need to increase rent to cover the increased cost of their mortgage (sustainable?) or end up losing money and want to sell up.