Landlords could be a threat to banks and wider financial stability

CLAPTON

Generali wrote: »

If the bank didn't do the original mortgage they almost certainly don't know what was paid for the house. It's unlikely that they do even if they did the original mortgage.

true
but if it's important to the stability of our whole financial system, then collecting the purchase price seems pretty straightforward.

Generali

CLAPTON wrote: »

true
but if it's important to the stability of our whole financial system, then collecting the purchase price seems pretty straightforward.

I suspect the main cause for concern is the default rate under extremely benign interest rate conditions.

If you can't make the mortgage when interest rates are this low then you've gotta wonder when you can.

wotsthat

There are lots of questions on a mortgage application. It wouldn't be too difficult to ask applicants what their CGT position would be should they had to liquidate their holdings today and to take account of this in the lending criteria.

Generali

wotsthat wrote: »

There are lots of questions on a mortgage application. It wouldn't be too difficult to ask applicants what their CGT position would be should they had to liquidate their holdings today and to take account of this in the lending criteria.

It's a bit more complicated than that as:

1. Mortgage applicants lie
2. Mortgage applicants aren't tax experts and may well not know their CGT position
3. Tax rules change regularly and unpredictably. What do you imagine a Corbyn Government's attitude towards landlords would be do you think? I can't imagine it being especially benign.

CLAPTON

which still leaves the questions : who, if any one is accountable for the stability of our financial system and what action are they taking?

Generali

CLAPTON wrote: »

which still leaves the questions : who, if any one is accountable for the stability of our financial system and what action are they taking?

http://www.fca.org.uk/

HTH.

wotsthat

Generali wrote: »

It's a bit more complicated than that as:

1. Mortgage applicants lie
2. Mortgage applicants aren't tax experts and may well not know their CGT position
3. Tax rules change regularly and unpredictably. What do you imagine a Corbyn Government's attitude towards landlords would be do you think? I can't imagine it being especially benign.

BTL mortgage applicants may not know their CGT position but given the devastation people seem to think landlords have the potential to cause maybe they should.

Of course the lender can only issue a mortgage based on today's criteria. If a future government increased CGT on BTL then lenders would have to take that into account at the time and the Daily Mail could start ticking time bomb stories about mortgage pre-Corbyn.

I suggest the stocks for people who lie on mortgage applications.

You may gather that I'm not losing too much sleep about people who are sat on large capital gains.

CLAPTON

Generali wrote: »

http://www.fca.org.uk/

HTH.

now that's what I thought too
so I wonder why doesn't the BoE act on it's own concerns

Generali

CLAPTON wrote: »

now that's what I thought too
so I wonder why doesn't the BoE act on it's own concerns

I don't think they have the power to do so. I'm not in compliance and I've not worked under the current UK system.

What they could do, I think, is reduce the reserve impact that BTL mortgage assets have on banks' books, in effect making it harder for banks to lend on BTL mortgages.

CLAPTON

Generali wrote: »

I don't think they have the power to do so. I'm not in compliance and I've not worked under the current UK system.

What they could do, I think, is reduce the reserve impact that BTL mortgage assets have on banks' books, in effect making it harder for banks to lend on BTL mortgages.

In essence that is why I'm confused: basically what powers do they want and why they haven't asked for them
no point in waiting for another melt down and say 'we knew all about that'