Thousands hit by buy-to-let fraud

Gorgeous_George

dopester wrote: »

We bought a Hewlett Packard calculator for 20p last year. Listed it on ebay, and it got bid up to £118. Turned out there is a collectors market for calculators. Posted it out to a collector in Denmark. It was worth that to him, so he paid it.

Nice!

dopester wrote: »

Freaking hell - whoever paid £179,995 for that 2-bed Leeds house deserves everything they get.

It doesn't matter what the person before bought it for... a market participant paid the asking price. Perhaps the buyer should have done some research of what that sort of money would buy in other locations, or sought a second valuation.

I'll try to explain by way of an hypothetical example.

1. You buy a house for £50K and sell it to a friend for £150K (using crooked valuer to ensure the mortgage is approved).

2. The friend stops paying the mortgage and gets repossessed.

3. House is sold at auction but this time for £50K.

4. Friend declares himself bankrupt/moves abroad/disappears.

5. You see him alright later.

That is how mortgage fraud could work and I fear is how terrorism is funded (at least in part).

GG

RomansProperties

He must have a lot of friends.

I know of at least 4 that are for sale now and now many have been repo'd and sold in the past.

There also must be plenty of people who are still paying the mortgages they have on houses which are not worth any where near what they paid for them.

If you look on rightmove at Armley, Beeston, Headingley, Burley
Any street if it was sold in 2004/6 and then again for a massive difference someone else has been ripped off.

Gorgeous_George

The person who has been ripped off is likely to be A&L, Bradford and Bingley, Northern Rock, the taxpayer.

GG

Dylanwing

In other words, the taxpayer!
No expert on this, but I know a lot of people who bought BTL thinking it was a guaranteed winner, and 'their pension', rather than a business with an element of risk.

Gorgeous_George

It's important to differentiate between legitimate BTL and large scale fraud facilitated by companies like Inside Track (allegedly).

GG

2912pwil

Gorgeous... (years ago there was a professional dancing partner for little old ladies at the Imperial Hotel, Torquay, know as Gorgeous George.. was that you??).

The tax advantage is you can offset the costs of interest payments for B2L mortgages (most are interest only) against income thereby paying no tax (or almost) - assuming you were making a profit.

This is unlike the situation with an owner occupier mortgage where there has been no tax relief for years.

For this reason I (and many other Landlords) have no mortgage of their own home but big ones on the rented properties.

Clearly if property prices keep going southwards landlords are at risk - if they ever want to sell...

Cheers! (Sitting waiting for the double-glazing fitters at the student house I rent out - using the Broadband I provide to the students, Broadband also claimed as a business expense.)

Gorgeous_George

Not me. I dance like my dad.

A legitimate business expense is hardly a tax advantage. I think this is where many people go wrong.

If you hadn't bought the BTL you could have cleared your own mortgage therefore, the BTL Mortgage is a cost of running the BTL property (or business). Just as any other business borrows capital from the bank and declares the interest as a business expense.

BTL profits are all taxed.

I would have liked to see Mortgage Interest Relief at Source (MIRAS) for FTBers upto £100K, for a period of 3 years per working adult, introduced as part of the emergency measures that HM Treasury announced recently. 2.5% off VAT is barely noticeable and benefits the rich muchmore than the poor.

GG

silvercar

FTBers don't really need MIRAS with rates so low, what they need is help to gather a deposit.

Gorgeous_George

silvercar wrote: »

FTBers don't really need MIRAS with rates so low, what they need is help to gather a deposit.

Tax free cash-ISAs fit the bill.

GG

WTF?_2

Gorgeous_George wrote: »

Nice!



I'll try to explain by way of an hypothetical example.

1. You buy a house for £50K and sell it to a friend for £150K (using crooked valuer to ensure the mortgage is approved).

2. The friend stops paying the mortgage and gets repossessed.

3. House is sold at auction but this time for £50K.

4. Friend declares himself bankrupt/moves abroad/disappears.

5. You see him alright later.

That is how mortgage fraud could work and I fear is how terrorism is funded (at least in part).

GG

That would work pretty well in a fast rising market, but a lot trickier to do with prices slumping.