BTL ..... who should pay?

penguine

macaque wrote: »

IBTLs and property speculators have been bailed out of their foolishness (temporarily). I find it quite extrodinary that, rather than taking heed of the warnings' more BTL lemmings are using this lull in the storm to climb abord the as yet unlit pyre. That was the point of the OP.

Have they been bailed out though? I don't really see how they're benefitting from anything other than low interest rates at the moment, which weren't intended to bail them out really.

And I wonder how many BTL lemmings really are climbing aboard now. Some of the regulars on here talk about buying up more properties but how many new BTL landlords are going to be able to get financing? I'm guessing anyone who wants to go into BTL now is going to have to stump up a big deposit.

Thrugelmir

JonnyBravo wrote: »

Real wealth?
Are you trying to get at the fact that it needs to manufacture to be a business?
It supplies a service. It provides accomodation for those unwilling or unable to buy.

Agree it provides a service. But what else?

chucky

penguine wrote: »

I'm guessing anyone who wants to go into BTL now is going to have to stump up a big deposit.

a 70% LTV is required.

anything higher incurs higher fees.

there is a way round this of course by remortgaging a property six months after purchase which makes it less of a risk for lenders and attracts better rates.

JonnyBravo

Thrugelmir wrote: »

Agree it provides a service. But what else?

Eh?

What else does it need to provide?

Thrugelmir

penguine wrote: »

Have they been bailed out though? I don't really see how they're benefitting from anything other than low interest rates at the moment, which weren't intended to bail them out really.

And I wonder how many BTL lemmings really are climbing aboard now. Some of the regulars on here talk about buying up more properties but how many new BTL landlords are going to be able to get financing? I'm guessing anyone who wants to go into BTL now is going to have to stump up a big deposit.

Where are BTL investors going to raise their capital from for deposits ? Unless they are making high after tax profits , thereby generating cash. They can't. Thats the reason that property investment historically was the preserve of the capital rich.

Extracting equity from existing property is getting more difficult. Lloyds has capped number of properties to 9. So forcing some BTL landlords to reduce the size of their portfolios.

And as we know BTL aren't making significant reductions in the capital balance owing on their mortgages despite low interest rates. Majority of BTL investors borrowed on interest only terms. So with falling equity increasing LTV the best lending rates are unavailable to them.

Ultimately they are putting their own homes at risk as thats the price they pay for clearing debt owed.

Thrugelmir

JonnyBravo wrote: »

Eh?

What else does it need to provide?

So once we all own a BTL to generate an income to live on, then what happens?

penguine

Thrugelmir wrote: »

Ultimately they are putting their own homes at risk as thats the price they pay for clearing debt owed.

Would setting up their business enterprise as a plc mean they avoided this risk? And if so how difficult would this have been for the amateur BTL landlord to do?

penguine

Thrugelmir wrote: »

So once we all own a BTL to generate an income to live on, then what happens?

I think this was discussed on this board a year or so ago, and the conclusion was that everyone in the country should own a BTL and also rent a home to live in, thus ensuring the system could survive in perpetuity.

Thrugelmir

JonnyBravo wrote: »

Not really no.

What is the percieved value of the assets that the loans are tied to please?
That will put the risk into perspective a little better.

A house is only worth what somebody else can raise ( in cash and credit) to pay for it. The UK's housing stock is worth around £3,400 billion. So thats only £2,200 billion of equity.

The mortgage debt is borrowed money on future earnings, by no means guaranteed.

chucky

Thrugelmir wrote: »

Where are BTL investors going to raise their capital from for deposits ? Unless they are making high after tax profits , thereby generating cash. They can't. Thats the reason that property investment historically was the preserve of the capital rich.

exactly where they raised them before and probably more likely to invest in property now especially with lowish savings rates, most people aren;t comfortable or understand investing in the stock market. - have a look at the Housing and Renting board to see the increasing number of questions about people wanting to invest in BTL.

Thrugelmir wrote: »

Extracting equity from existing property is getting more difficult. Lloyds has capped number of properties to 9. So forcing some BTL landlords to reduce the size of their portfolios.

Lloyds is not and does not monopolise the BTL market.
Why did you not choose Mortgage Works as your example of a BTL lender :rolleyes:

Thrugelmir wrote: »

And as we know BTL aren't making significant reductions in the capital balance owing on their mortgages despite low interest rates. Majority of BTL investors borrowed on interest only terms. So with falling equity increasing LTV the best lending rates are unavailable to them.

Why should you lose your tax efficiency and pay more income tax
paying capital back makes no sense whatsoever unless you are wanting to sell the property. that's the point of BTL - it's a tax efficencies are extremely important.

Thrugelmir wrote: »

Ultimately they are putting their own homes at risk as thats the price they pay for clearing debt owed.

if it's being let - the debt is being repaid by the income received from the rental income. how are you putting your family at risk?