Peston sees negative impact on BTL from B&B fiasco

fatpig_2

brit1234 wrote: »

Yes but lots of investors however took equity out of existing properties for the deposit, as prices fall this wipes out this deposit equity reducing the mortgages closer to 100%.

Then there was the gift deposit scams on new builds. All these no money down deals make this sector very vulnerable especially during these record breaking price falls.

Exactly. Using the theoretical equity in one home to put down the deposit on another. And so on.... a stack of playing cards if there was ever.

neverdespairgirl

Gorgeous_George wrote: »

You have needed a deposit for most BTL mortgages for a long time (if not forever).

I don't think so - there was all that "below market value" and "no money down" malarkey until earlier this year, with Mortgage Express.

globalds

The main problem I can see with a large percentage of BTL or second homes around is what the response will be when times get tough .
If I am living in my home and things start going bad ...Then it is still in my interest to tough it out ..It is after all my home .
If I have 2 or 3 properties and the market looks to be on the turn then I would be more inclined to cut my losses ...
This property coming onto the market is only going to weaken an already falling market .The very thing I don't want ..
The last time we had property slumping we had a falling market being compounded with repossession .Still many people held onto negative equity and this in my opinion reduced the spiralling down.
I can't see that commitment off investors ....although many may just have to stick with it as they can't sell due to not having a buyer and having to take lower or no rents .
Not very optimistic I know ...But I am in no way predicting systematic failure ..I have said all along that this is far more about asset transfer than anything else.

kennyboy66_2

Gorgeous_George wrote: »

It doesn't matter whether it is a BTL or a home for oneself. It is the number of pounds spent on a property/ies that will determine losses.

I suggest that there is more risk in a bank lending £1M to a single homebuyer than to a BTLer buying 10 x £100K houses to let. Of course, it would be better to lend £100K to ten different BTL LLs.

You have needed a deposit for most BTL mortgages for a long time (if not forever).

GG

The type of person who has a single home to live in, will make all sorts of effort to cut back & keep it.

People with 10 BTL and not much equity in them already will probably be thinking how they can hide assets & go bankrupt. What a surprise it will be if their home is actually in their partners name.

amcluesent

>What a surprise it will be if their home is actually in their partners name.<

It would have been prudent to BTL via a Ltd company, with only 2*£1 shares in issue.

RabbitMad

amcluesent wrote: »

>What a surprise it will be if their home is actually in their partners name.<

It would have been prudent to BTL via a Ltd company, with only 2*£1 shares in issue.

Unfortunately not even NR allowed you to do this. I looked into it.

I actually think the future is very bright to be getting into BTL in a modest way (1 or 2 houses) provided you've got plenty of equity in your own property.

The reason being:
1 - its going to be cheaper to pay a repayment mortgage than rent (once the market has bottomed out) but there will be lots of people reluctant to buy as the property crash will be fresh in their minds.
2- If you raise the mortgage on your own property there is no BTL premium on the interest rate
3- Banks will be looking to end into this market to selected "good risk" customers because if it all goes tits up they will have 2 propertys to reposses if necessary (thats why they'll be looking for lots of equity in your current property or mortgage free)
4- House prices will double or triple from the bottom of the market to the next boom which I confidantly predict is will happen in the next 15 - 20 years.

WTF?_2

RabbitMad wrote: »

Unfortunately not even NR allowed you to do this. I looked into it.

I actually think the future is very bright to be getting into BTL in a modest way (1 or 2 houses) provided you've got plenty of equity in your own property.

The reason being:
1 - its going to be cheaper to pay a repayment mortgage than rent (once the market has bottomed out) but there will be lots of people reluctant to buy as the property crash will be fresh in their minds.
2- If you raise the mortgage on your own property there is no BTL premium on the interest rate
3- Banks will be looking to end into this market to selected "good risk" customers because if it all goes tits up they will have 2 propertys to reposses if necessary (thats why they'll be looking for lots of equity in your current property or mortgage free)
4- House prices will double or triple from the bottom of the market to the next boom which I confidantly predict is will happen in the next 15 - 20 years.

Absolutely - once the rubbish has been swept off the decks and prices have been reset to rock bottom levels there are going to be lots of opportunities for those savvy enough to have built up some capital in the good times and kept hold of it.

SouthCoast

Should I contact my landlord and offer to increase his rent, especially as his primary business will have been very badly hit by the summer weather and the crunch?

Husband_of_a_spendaholic

neverdespairgirl wrote: »

I don't think so - there was all that "below market value" and "no money down" malarkey until earlier this year, with Mortgage Express.

The maximum LTV offered on Buy to Let was 85%.

Are you perhaps referring to the fact that MX was the only lender to allow same day remortgages from bridging finance?? (Allowing buyers to take an incentive from a builder, and then re-mortgage based on full market value).

That indeed was a mistake and open to fraud.

carolt

Husband_of_a_spendaholic wrote: »

The maximum LTV offered on Buy to Let was 85%.

Are you perhaps referring to the fact that MX was the only lender to allow same day remortgages from bridging finance?? (Allowing buyers to take an incentive from a builder, and then re-mortgage based on full market value).

That indeed was a mistake and open to fraud.

No - sure that's wrong, and BTL's were available with no or little money down - maybe a broker will be kind enough to come along and clear this up for us?