Buy to Let landlords face extra Margin Call payments

Max_Headroom_3

Well I've adjusted my specs and I'm afraid I sitill see the same thing, which is that I (and those around me) seem to have managed to sustain my life pretty well so far without a gun, food however I find pretty essential.

What next in your life sustaining list, a snorkel "provided you happen to be two feet underwater"?

sabretoothtigger

Every household in iraq was allowed to retain a gun after the invasion as it was considered an essential life saving item. All depends how privileged you are I guess

If you fish the sea bed for a living or food then yep a snorkel too, all us westerners need is electricity, the internet & a debit card

GDB2222

I'm not trained as a hunter, so I have to go to places where food is so easy to find that even I can manage it, such as tesco, waitrose etc.

fatpig_2

Heyman wrote: »

...which would lead to mass evictions of tenants and a dearth of property on the rental market, not to mention financial ruin for the 1 million BTL'ers in this country (shafting an already shafted economy) who would sell up at a loss or get repossessed, and a housing market overflowing with houses that no-one would be buying.

I don't have any sentimentality here, just what I think would happen if your soundbite was implemented.

Why do you think this would be a good idea?

People who can't afford to buy now would be able to afford to buy when all the greedy BTL landlords are forced to sell their properties.

lic

fatpig wrote: »

People who can't afford to buy now would be able to afford to buy when all the greedy BTL landlords are forced to sell their properties.

Interesting. At what price does a 3 bed semi with garage and gardens become affordable?
Surely it depends where you live, and how much you earn.
The problems with post such as yours is that you are harking back to the 1960's and 1970's, when 1 wage was sufficient to buy a house, normally the mans' wage. The wife (I know its old fashioned but that's how people used to co habit) who not earn any money and stay at home and look after the kids.
WAKE UP! The world has changed, you earn more than they did, you spend more than they did, and most people want it now unlike they did. They saved and paid and worked their way up.
If you cannot afford to buy in an area, you need to look in a cheaper area, and work your way up the property ladder.
That is the way it has always been, and hopefully will remain.
Obviously in the mid 20th century they had MIRAS aswell, but as I say the world has changed move on!

Gorgeous_George

Any BTL LL should monitor their LTVs from time to time. With just one BTL with a small mortgage, monitoring my LTV is simple but for larger portfolios could take a few hours.

There is a possiblity that lenders could make margin calls. How large this possibility is will depend on the lender, the depth of the credit crunch and the risk level placed on the BTL LL's mortgage account(s). LLs should make an estimate of this possibility. If it is zero then they need do no more.

Assuming it is greater than zero, the BTL LL needs a plan. Essentially, the plan needs to detail what they will do if their lender makes a margin call (of various values). I have sufficient savings to fully pay my BTL mortgage so my plan is kept in my head. Those who cannot repay their mortgages may wish to write their plans down on paper for easy reference should the (margin) call come.

Effective plans may include:

1. depleting savings
2. selling property(ies)
3. increasing residential mortgage
4. borrowing unsecured funds
5. insurance

It is a little tedious when the BTL LL gets such a bashing on threads such as this one. However, we should not reject out of hand the underlying message which may be valid.

I suggest LLs take the current low interest rates as an opportunity to make some provision. When setting rent levels, factor in the risk of margin calls.

GG

silvercar

To say that all BTL mortgages have margin calls written into their T&Cs is false.

Portfolio loans may be on a more commercial basis but a lot of single property BTL mortgages are on residential mortgage conditions with the understanding that the properties can be let to tenants under an AST.

Gorgeous_George

I know but there's no harm in charging a little more rent to cover the margin call risk.

GG

RomansProperties

It is also specifically for Buy to Let rather than residential. Margin Calls are common in the business world and buy to let is a business after all.

I personally think mortgage providers will be more concerned with the ability to meet the interest payments, covering the terms of the agreements.

I agree with “Gorgeous George” about mainting LTV Levels, although most of our property is valued based on yields rather than property value. I believe if you can have properties returning 10-15% you should be ab le to ride the storm nicely.
Yes banks are getting nervous about property lending but I cant see them asking for people to make large payments back to them if they are making their regular interest payments.

Cleaver

ad44downey wrote: »

Pimps and drug dealers make profits too. That doesn't mean they're doing right though

The most pointless post I've read on here for a while.