Vote on 3x salary mortgage cap

chucky

Graham_Devon wrote: »

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=182875&nl=MM_BN&dep=webops&dte=180309

The Turner Review says the FSA is considering regulating the buy-to-let market as well as second charge mortgages.

The review says the FSA's paper later this year reviewing mortgage conduct of business rules will look at whether or not extension of its regulatory scope to these sectors is necessary.The Turner Review says: "The paper will consider whether more effective regulation of the mortgage market, through tighter conduct rules or direct product regulation, would require the extension of the FSA's remit to cover second charge mortgages and buy-to-let mortgages."

"There is a difference between someone who buys a buy-to-let property as an extension to their pension fund, who might need more protection against bad advice, and someone who owns 350 buy-to-let properties, who has a limited company in his own name, who might arguably know more about the sector than the FSA itself, and would not need the same degree of protection.

you've just confused yourself Graham

Graham_Devon wrote: »

Only established landlords with proper cash in the bank would be able to purchase them under business guises.

The Wilsons would not stand a chance under this regulation. And a good thing too, considering they are basically bankrupts now costing us all.

That article refers to people who take out 2nd charges/mortgages to buy property with regards to BTL.

The Wilsons ran a company that owned BTL's. How would the FSA be able to regulate a business or a company and tell them they can't invest in what they choose?

The point you are making is ridiculous.

Graham_Devon

michaels wrote: »

I quite agree, the proletariat are so stupid and shouldn't be left to make their own decisions, isn't that what we have a ruling class for...

They can make however many of their own decisions as they like....with their own money.

When it comes to borrowing others money, it's a different ballgame.

You seem to be expecting to make your own decisions with someone elses money at someone elses risk.

Really2

What about making everyone have a minimum 3X Salary (everyone even if you don't want a house tuff you now have a mortgage spend it.)

That would get things moving.:D

Graham_Devon

chucky wrote: »

you've just confused yourself Graham



That article refers to people who take out 2nd charges/mortgages to buy property with regards to BTL.

The Wilsons ran a company that owned BTL's. How would the FSA be able to regulate a business or a company and tell them they can't invest in what they choose?

The point you are making is ridiculous.

Easy. Something called LTV, spread across their book.

Hardly confusing.

piggeh

Really2 wrote: »

What about making everyone have a minimum 3X Salary (everyone even if you don't want a house tuff you now have a mortgage spend it.)

That would get things moving.:D

Sounds good - I guess that would only give me around £9,000 though if I'm on jobseekers Looks like its a VW campervan for me then!

chucky

Graham_Devon wrote: »

Easy. Something called LTV, spread across their book.

Hardly confusing.

You've said two conflicting points.
Comparing the Wilsons owning property through a Limited Company and a person who is letting their mortgaged 2nd property.
One can be regulated by the FSA, one can't.

If you're saying a BTL for an individual I can see what you're saying.

However, for something like the model the Wilsons, you can't - No, it's up to the banks to bite the bullet on this one. A loan on a property by a company is treated as a commercial loan. You're then looking at restricting commercial loans for potentially many purposes.

When you then say a Company that has investments I can't see it happening as you then limit too many companies and their chosen investments.

Ian_Griffiths_Halifax

I haven't posted on here in a while but I just had to comment on this one.

The FSA have proven them selves to be totally incompetent and this issue just hasn't been given any thought whatsoever. They are a waste of space and some departments are a liability to this country IMO.

There, I've got that off my chest.

What we need is for a "Cross Lender Affordability Assessment". Now you won't be able to Google that term as I've just made it up, but basically I can see a system where each lender would successively do an Affordability Check before lending. Each lender would take into account monthly "Priority" outgoings eg. Gas, Electric, Food, Transport, Council Tax, Water Rates, etc etc. All the "must pays" in life. Also, other non-essentials but normal expenses, such as Car Tax, Insurances, Telephone, existing loan/credit card payments etc.

It wouldn't take long (and it's probably been done already) to assess the typical cost of running a 1 bed flat, 2 bed flat, 2 bed terraced house, 3 bed semi etc, and these can be used as measures for the Affordability Test, when the client is doing a purchase.

Again, it wouldn't take long to assess the typical expense of having 1/2/3 children and the typical cost of feeding and clothing everybody in the house.

Each lender should be held responsible for going through this income and expenditure assessment before granting any finance. THEY should then be held liable for their own losses and actions if THEY CHOOSE to lend outside of the Affordability Calculator.

I'm sure there are some flaws in such a system, but until EVERY lender takes into account the fact that customers have finance and outgoings which are already eating away at disposable income, we will continue to have this cycle of people wanting to borrow more and more to finance a better lifestyle, but then falling into trouble.

A sensible suggestion I heard yesterday, was to stop the automatic Credit Card Limit increases, which just asks for problems.

chewmylegoff

chucky wrote: »

The Wilsons ran a company that owned BTL's. How would the FSA be able to regulate a business or a company and tell them they can't invest in what they choose?

actually i think that the wilsons are unincorporated business, as they said one of the reasons they were starting to sell is the reduction in capital gains tax rates. companies don't pay CGT so it suggests unincorporated.

re your point, the answer is that they can, but only if the business is raising money from UK investors for certain purposes. the wilsons, obviously, would not fall into this net.

however, what can be regulated is the amount of risk that a bank is allowed to take, so the bank could be prevented from lending in certain ways, rather than BTLers being prevented from borrowing in certain ways, if that makes sense.

baileysbattlebus

My daughter and her partner have a mortgage with the Nationwide - it was done in a similar manner to your description.

She had credit card debt of £3k and he had a car loan- the Nationwide offered them 2 amounts - one with their debt and one without. Upshot was the amount offered with their existing debt wasn't enough to allow them to buy the house they wanted.

The sold the car, paid of the loan with the proceeds and paid off the credit card then got the higher of the 2 amounts.

They borrowed over 3 times income - around about 4 I think it was.

kennyboy66_2

Graham_Devon wrote: »

The Turner Review says the FSA is considering regulating the buy-to-let market as
"There is a difference between someone who buys a buy-to-let property as an extension to their pension fund, who might need more protection against bad advice,

Besides the fact that BTL cannot go into a pension fund which this implies, it is the idea that regulation is some kind of panacea.

I wouldn't ever borrow more than 3 x sole income, or 3 + 1 (for joint) but thats my descision.

No doubt that this proposal would lower property prices & that may not be a bad thing in the long run.

The unintended consequence would likely to be that it would reduce house building (lower profit margins) while making yields on BTL hugely attractive. To counter this we prescibe more legislation - this time on BTL lending.

We also can guess that such legislation would either not last for ever or finance companies would find a way round it making BTL a one way bet.

If you think the Government can make better individual decisions than individuals or business perhaps you should look at the history of the Soviet Union.