Carney vows to take action on the BTL sector

Prothet_of_Doom

It's very easy. We need stability. Stable interest rates, stable taxation rules. What we don't need is massive changes, because it creates instability. Instability is bad, because people either procrastinate, or they suddenly make changes to protect their own money.

So 3% on buy to let stamp duty will have a short term price increase, and a longer term rent increase.

Changes to the rules in whether interest is an allowable business cost or not, will force those who have large portfolios with significant loans, to either sell to use to pay the loans on the others, or raise rent to compensate.
If more houses come into the housing market, prices will drop, BUT to sell those houses will need to be tenant free, so they'll be less houses being rented out, which means rents will go up.

If I'm incorrect, and something different happens, then I'm right, because change only causes instability and uncertainty.

Crashy_Time

ukcarper wrote: »

This post is bad even by your standards.

That reply is quite good by your standards.

Bluebirdman_of_Alcathays

Crashy_Time wrote: »

Houses are not a liquid investment and the best thing for the economy would be a HPC as there will be a surge in new lending and a rush to stock up on building and DIY materials as new homeowners tart their places up. The government and the banks don`t care if someone with no mortgage loses 200 or 300k of imaginary money off the price of their house, they only care about lending and getting the economy running so they can cream off some tax. The banks are stable enough now to weather a big HPC, but QE is not having the desired effect in the real economy, hence the attempt at rate rises and the sacrificing of BTL mugs.

I don't have time now, but this is one of the most stupid things I've read on the Internet, ever. Wanted to quote it so this moron doesn't have the chance to edit/delete it. Will respond in full in the morning if this thread is still going.

And no, I'm no bull.

Crashy_Time

Bluebirdman_of_Alcathays wrote: »

I don't have time now, but this is one of the most stupid things I've read on the Internet, ever. Wanted to quote it so this moron doesn't have the chance to edit/delete it. Will respond in full in the morning if this thread is still going.

And no, I'm no bull.

Oh go on, stretch yourself, give us some of your wisdom now :j

michaels

ukcarper wrote: »

This post is bad even by your standards.

Actually although I disagree with the basic premise and some of the suggested linkages I thought the argument was more internally consistent than a lot of My Crashy's contributions.

Crashy_Time

michaels wrote: »

Actually although I disagree with the basic premise and some of the suggested linkages I thought the argument was more internally consistent than a lot of My Crashy's contributions.

So you still think houses are a liquid investment?

cells

michaels wrote: »

Perhaps it is not the losses on the btl properties that they are worried about but the impact on the economy as a whole of a housing market crash, the issue with btl is not the risk of bank losses on the btl properties but the risk to the economy of house price instability with a large share of the market being held by investors who see it as a liquid investment not a home.

If we look at say Hackney (lots of BTL) and Hounslow (virtually the same population and housing stock but less renters and BTL) we can see volumes fell towards a very similar low level which means that neither owners or BTLs were willing to sell "below what its worth". volumes also recovered after 2009 at very similar levels

Price from the height of the madness in mid 2008 to mid 2009 fell about the same but they recovered more in BTL Hackney post 2009-2012 than they did in Hounslow

The BTL sector did not liquidate, just like the owner sector they held on.

So the BOE does not need to guess. Just go compare high BTL boroughs vs lower BTL boroughs and see if the BTL sector panic sold and made things worse or not.

EDIT:
I think this makes a lot of sense, with the round trip cost of selling and buying back so high not to mention the big time and stress of evicting tenants putting on the market waiting (much longer in a downturn) to sell. Then after the crash buying and doing up and re-renting. Its a stress and burden not many landlords will take or want especially as the future is foggy and 10x more true if the meida is saying the banks are all going to fail so whats a landlord to do sell up and put the money in a bank so as to lose all of it rather than 10-20% of it via a HPC?

cells

mwpt wrote: »

I'm starting to suspect that TBTB are actually a little worried about HPI in general rather than BTL in isolation. Worst case scenario for the Tory government is a housing bust just before the next elections, so perhaps they're trying to engineer a slow down now, and can always ramp up prices with more props closer to election time. Too cynical?

there has been no HPI in three regions of England with lots of people and homes in those places prices are lower than they were 10 years ago

overall something like 70% of the UK is between cheap and affordable

I would hope they do not scew up a mostly reasonable housing market in much of the country just to pop a few inner London boroughs

princeofpounds

The BTL sector did not liquidate, just like the owner sector they held on.

Well of course they didn't - they were handed thousands of pounds a year each on the back of slashed interest rates to their mortgages. It's not exactly a scientific trial.


The danger for BTL liquidation doesn't come from the set of circumstances we had in 08-09. It comes from a different scenario where house prices fall whilst market rates rise (because they don't always do what the BoE wants them to, you know).


(For those with memories longer than 20 years, or an international understanding, this is quite a 'normal' crisis scenario)

Graham_Devon

princeofpounds wrote: »

Well of course they didn't - they were handed thousands of pounds a year each on the back of slashed interest rates to their mortgages. It's not exactly a scientific trial.

Nail hit head.

People tend to ignore everything that was done to keep things afloat when looking back at what happened after 2007.

Rates can't get much lower for mortgage borrowers. The base rate can, but I doubt there will ever be a situation whereby the bank is paying you interest on your mortgage payments.

So any new crisis is not going to see huge reductions in mortgage payments.

We may see all manner of intervention, but I can't see how any of it will help landlords...bar massive state subsidy.