Debate House Prices


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Global regulators join crackdown on buy-to-let

Bad news continues for the sector.
Global officials at the Basel Committee, which sets financial standards for the whole world, want banks to hold twice as much capital against mortgages when the repayments are dependent on income from tenants, joining the Bank of England and the Treasury in warning of growing risks in the sector.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12043703/Global-regulators-join-crackdown-on-buy-to-let.html

Comments

  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    Ouch! Can just see the posting rate of CrashNorris and co. dropping dramatically as they rush around trying to sell some of their hutches...:rotfl:
  • Jason74
    Jason74 Posts: 650 Forumite
    Ouch! Can just see the posting rate of CrashNorris and co. dropping dramatically as they rush around trying to sell some of their hutches...:rotfl:

    Some over leveredged BTL will struggle, yes. No question about that. And forcing some of those players out of the game can only be a good thing imho. But Chuck and others in his position will be completely unaffected by these changes as you will know from his posts. I'm sure he appreciates your concern though :rotfl:
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    The RBA announced a while back that investor loans could only grow at 10% pa maximum.

    What is particularly interesting is that the Chinese Government seems to be concentrating on reimposing FX controls. A common theme across the English speaking world is that Chinese money seems to be driving prices up. There are developments in Texas that are aimed squarely at Chinese people that even include a driver to drive residents while they get used to the Roman alphabet.
  • cells
    cells Posts: 5,246 Forumite
    in countries that have reasonable landlord rules and regs (which will be most) property will act like an asset class and the major determinant will be yields

    If property in the UK yields say 5% net. If borrow to buy gets taken away the result will be that the yields on property will go up (and the prices down) but not by much.

    For example property could not go to 10% yield or a lot of the money in the stock markets would pour out of the FTSE and buy 10% yield property for cash. Property could not go to 10% yield or a lot of the money in government debt would put out and buy 10% yield property

    without borrow to buy there will be somewhat of a correction but it would be mild because the asset managers and small time investor will look at property and buy outright for the yield.


    This is already largely the case in commercial property and ground rents
    A lot of the listed big commercial property players have only about 20% debt on their books. They are largely "cash" buyers. If cash buyers can sustain 4-5% yields on commercial property why could cash buyers not sustain 4-5% yields on residential property?
  • mwpt
    mwpt Posts: 2,502 Forumite
    Sixth Anniversary Combo Breaker
    Cells, yields on property can go down through other mechanisms but the price of the asset. You know this, right? You seem to believe London is absolutely bullet proof.
  • cells
    cells Posts: 5,246 Forumite
    mwpt wrote: »
    Cells, yields on property can go down through other mechanisms but the price of the asset. You know this, right? You seem to believe London is absolutely bullet proof.


    I think London residential is a still a good risk weighted bet. Of course the risk part are just assumptions and mine could be wildly different to yours or someone else risk assumptions.

    IMO London prices wont go up by as much in the next 5 years as the last 5 but its still going to be a lot better than a 1% return on a 5 year gilt

    The debate about borrow to let is complicated but my general view is if borrow to let is taken out the asset managers will just funnel money away from stocks/shares/bonds/corp-paper and into property.
  • mwpt
    mwpt Posts: 2,502 Forumite
    Sixth Anniversary Combo Breaker
    cells wrote: »
    I think London residential is a still a good risk weighted bet. Of course the risk part are just assumptions and mine could be wildly different to yours or someone else risk assumptions.

    IMO London prices wont go up by as much in the next 5 years as the last 5 but its still going to be a lot better than a 1% return on a 5 year gilt

    The debate about borrow to let is complicated but my general view is if borrow to let is taken out the asset managers will just funnel money away from stocks/shares/bonds/corp-paper and into property.

    I can appreciate that angle.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    Jason74 wrote: »
    Some over leveredged BTL will struggle, yes. No question about that. And forcing some of those players out of the game can only be a good thing imho. But Chuck and others in his position will be completely unaffected by these changes as you will know from his posts. I'm sure he appreciates your concern though :rotfl:


    Wrong. The players being "forced out of the game" have to sell first (or go bankrupt) they are the direct competition to Chucky in his efforts to sell. Why else do you think Fergus is releasing stories of very high sold prices? He needs to keep the illusion of Not A Crash alive.
  • chucknorris
    chucknorris Posts: 10,793 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Jason74 wrote: »
    Some over leveredged BTL will struggle, yes. No question about that. And forcing some of those players out of the game can only be a good thing imho. But Chuck and others in his position will be completely unaffected by these changes as you will know from his posts. I'm sure he appreciates your concern though :rotfl:

    Yes, its very heart warming to be reminded as Xmas approaches how some still place a value on goodwill to all mankind.
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • chucknorris
    chucknorris Posts: 10,793 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 12 December 2015 at 11:18AM
    Wrong. The players being "forced out of the game" have to sell first (or go bankrupt) they are the direct competition to Chucky in his efforts to sell. Why else do you think Fergus is releasing stories of very high sold prices? He needs to keep the illusion of Not A Crash alive.

    If there is a rush to get out Crashy, the value will be in doing the reverse, and staying in the market. My increasing willingness to sell some property is related to my age and the amount of equity that needs to be spent (before death), rather than what the market is doing. It isn't an easy decision to sell, because they are very profitable investments, it wouldn't take that much for me to change my mind. I (we) have plenty other assets that I can start spending first, my portfolio isn't where it was 10 years ago, when it was a one trick (property) pony.

    There is only one thing that would cause me to rush to get out of the market, and that is rent controls, and I mean full rent controls, not the watered down type that labour were previously proposing, I don't see those as a threat at all, apart from if it is 'the thin end of the wedge'.
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
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