The Next Nail in the Coffin

cells

mwpt wrote: »

No, that'll never work. Many BTL speculators already (if reading the btl forums on property118 and propertytribes is anything to go by) find any way they can to expand their portfolios. It'll be pretty easy to rig that sort of requirement.

Also, I doubt the concern is so much about a slump causing panic selling because clearly they don't do this if they're not forced. You can't use 2008 as an example of lack of panic selling though because interest rates were slashed and debtors (including over extended BTLers) bailed out. My guess what they are really concerned about is a market event forcing interest rates up resulting in forced sales from BTL. Or worse, they could end up totally underwater, can't cover mortgage interest, can't exit in profit and the banks taking the loss. It would not surprise me to find that MEWing on existing properties to expand the portfolio has resulting in some quite fanciful evaluations to extract the capital.

I really don't want even more of my tax money going to bail out more banks and property hoarders and I'm guessing the government doesn't have much appetite for this either.

Imposing controls on BTL, in my humble opinion is a combination of a political move, a small tax grab and preempting actual systemic risk that could exist in the future.

but none of that bears any resemblances to reality

BTL holdings massively increased during and after the crash.

If anything your theory is the complete opposite of what happened. The landlords stepped in and bought property off the market thus supporting prices and helping the recovery


so you have a choice, look at what happened and go off that
or make things up and ban a practise you dont seem to approve off for no other reason that you dont approve of it. The latter at least has some merit while the former is just plain stupid


PS this isnt just you but the general theme and thoughts of BTL is a risk what if they all jump ship at once. Its not likely it hasn't happened in the past and everything shows the opposite is true the landlords find value before the general population does and they buy property during the recessions and crashes.

cells

michaels wrote: »

Interestingly it seems that even with all the 'tightening' and restrictions the BOE still see the direction of travel in the next 5 years as being from OO to BTL rather than the other way.

Not at all the BTL sell off with cheap homes for OO that some posters on here have been speculating about (wishing for)....

If the government wanted to end BTL and see it shrink there is a very easy way to do it and that is to put a 30% stamp duty on second home purchases.

Buying would stop instantly. While landlords always sell due to death divorce and disinterest. The sector would shrink I think by as many as 250,000 units a year. Prices would crash/correct substantially

The tax changes are just enough to increase tax take and to put off a good deal of would be landlords they are not obviously changes to completely kill off BTL.

However that is not to say it wont happen. George might get rid of the remaining interest as a cost and could well up the stamp duty on second homes to 5% maybe even more that would certainly stop the growth and possibly push it back. As always in government its a balancing act, even if they did want to get rid of half the rented properties they could only do so gradually so as not to cause a house price crash

cells

mwpt wrote: »

No, that'll never work. Many BTL speculators already (if reading the btl forums on property118 and propertytribes is anything to go by) find any way they can to expand their portfolios. It'll be pretty easy to rig that sort of requirement.

its prudent to have a cash buffer im sure most landlords do. I dont read the property 118 forums much at all but I do recall the main guy their the owner mark suggests and encourages holding a good pot of money in savings to make it over tough periods. He said that it was his method as he started in the 1990s downturn and he saw what a difference it made to the landlords that had it and didnt

mwpt

cells wrote: »

but none of that bears any resemblances to reality

BTL holdings massively increased during and after the crash.

If anything your theory is the complete opposite of what happened. The landlords stepped in and bought property off the market thus supporting prices and helping the recovery


so you have a choice, look at what happened and go off that
or make things up and ban a practise you dont seem to approve off for no other reason that you dont approve of it. The latter at least has some merit while the former is just plain stupid


PS this isnt just you but the general theme and thoughts of BTL is a risk what if they all jump ship at once. Its not likely it hasn't happened in the past and everything shows the opposite is true the landlords find value before the general population does and they buy property during the recessions and crashes.

No, I disagree with all of that and you're arguing against someone else because it isn't what I said.

I said (not sure why I should repeat it) that BTL is a big risk if some market event forces interest rates up. I specifically didn't say that BTL sell in a general slump, I said the opposite. 2008 event was a general slump but interest rates did the opposite and that is precisely why BTL stepped in and why they have continued to bid prices up as their mortgage costs were lowered.

michaels

I guess the issue is even if BTL are not 'panic selling' if they go from being 40% of new purchasers (does anyone have this figure) to being 5% when interest rates rise then that is a huge chunk of demand taken out and easily enough to tip the market into stagnation. This analysis requires btl investors to be much more interest rate sensitive than OO buyers - is there any evidence for this?

wotsthat

It does get more 'interesting' for BTL. They've all been targeted for more stamp duty, the highly leveraged amongst them are going to have to find a way to pay/ mitigate the new taxes and, now, potentially the less well of BTL'ers won't be able to get finance.

A few years of the rich mopping up cheap properties because it was oh so risky to lend to owner occupiers and now a few years of weeding out the wrong sort of BTL owner - property heading back from the poor to the grateful hands of the wealthy.

People are going to find their landlords gentrifying over time. In the next measure tenants will probably have to start to doff their caps to the landlord.

cells

mwpt wrote: »

No, I disagree with all of that and you're arguing against someone else because it isn't what I said.

I said (not sure why I should repeat it) that BTL is a big risk if some market event forces interest rates up. I specifically didn't say that BTL sell in a general slump, I said the opposite. 2008 event was a general slump but interest rates did the opposite and that is precisely why BTL stepped in and why they have continued to bid prices up as their mortgage costs were lowered.

ok

but we have periods of interest rates going up and there is no clear evidence that landlords sold up during those times. eg 2003-2007 when rates went from 3.5% to 5.75%

From what I have read and looked into the private rental stock seems to shrinks or grows due to 1 regulations and 2 build rates 3 population changes

not due to interest rates going up or down.

Landlords became big buyers during and after the recession (and perhaps mostly virtual buyers in the form of letting out inherited property rather than selling it) not because interest rates went down because well they didnt. The credit crunch pushed rates up and mortgage numbers down during 2008-2010 yet rentals increase very rapidly during those two years. The private rental sector expanded rapidly during 2008-now due to 1 regulations, 2 build rates, 3 population changes not due to interest rate changes


yes? no? maybe?

cells

michaels wrote: »

I guess the issue is even if BTL are not 'panic selling' if they go from being 40% of new purchasers (does anyone have this figure) to being 5% when interest rates rise then that is a huge chunk of demand taken out and easily enough to tip the market into stagnation. This analysis requires btl investors to be much more interest rate sensitive than OO buyers - is there any evidence for this?

I dont think so not as a whole for multiple reasons

most rentals have no mortgage so it doesnt matter to those landlords if interest rates are 3% or 6%

most the remainder have a small mortgage and if you are getting £2k rent its not all that much of a worry if the £300 a month mortgage becomes a £600 per month mortgage

Most BTL purchases are probably not BTL purchases but inheritances or gifts which may be direct or indirect (eg inhering a million and buying 5 BTLs with it cash). Some 440,000 increase in rentals last year while only some 100,000 BTL mortgages were issued

we have periods of increasing rates and stress. The period 2008-2010 saw higher rates and stress yet areas of high BTL like hackney did not seem to suffer a bigger crash than areas of high OO

Also there are always BTL landlords selling and buying. There really needs to be a big change for a BTL landlord to be a forced seller. Interest rates going up 1-2-3 points is a significant additional cost but is it really that big a change as to force a sale and the effort/time/money that takes.


most landlords also have better than average income assets and cash buffers

Crashy_Time

chucknorris wrote: »

I'm not hung up over the SVR, the point that I am making is that when the base rate reaches 3%, there will be mortgages available that are well below 6.6% (i.e. below a mark up over the base rate of 3.6%). I was originally responding to Crashy's assertion that when the base rate goes up, mortgage interest rates will rocket and crash the housing market.

What I actually said was that FTB`ers won`t be lining up to pay half a million for an ex-council flat in Battersea.

Crashy_Time

westernpromise wrote: »

It cracks me up when the likes of Crashy "125% BCR" Time insist that landlords took no risks or were just lucky.

The risk we took was to ignore the wise counsel of people such as Crashy, the likes of whom can still be found online in Usenet archives from 1996, assuring us that property was overvalued and still had further to fall. In fact, throughout the whole last 20 years, there have been crashtrolls insisting on the same thing.

We trusted our judgment instead of that of Mr. 125%. Admittedly, to have done so looks like a small risk now, but many successful risks look in hindsight like they weren't risks at all. A lot of crashtrolls now wish they had bought in 2006 or 1996, on the basis that it was risk free. At the time, however, they didn't because they were all convinced it was far too dangerous. As prices rose, first they went into denial that it was even happening, then there was despair, and finally they became angry, and looked for someone to blame other than the mug in the mirror.

We have also thought long-term, where Mr. 125% has only ever thought short-term. You don't wait 15 years to buy something you intend to hold for 10. You don't wait and hope that at some point over those 15 years the nominal buying price will get cheaper. You look at the complete 10-year picture, and you buy when you think it looks cash-flow positive. This can mean either that it lets for more than the cost of ownership over that time, or that buying it is cheaper than renting it over that time.

What you do not do is speculatively short it, on the assumption that it's all going to crash - an assumption you make because the alternative is to concede that your judgment of these matters is poor beyond all belief.

I had no interest in buying property or BTL at all during the time period you mention, so your "shorting the market" fantasy doesn`t really work, and I only got interested in the fact that UK property is a massive bank/government rigged bubble on finding the HPC website around 2007. I might buy the right house again, at the right price, but not while the present debt mess persists, something has to give first. TBH the situation in Scotland is shaping up perfectly for a reality check, with Aberdeen leading the way of course, and as my rent is so cheap watching landlords on here sweat about every little tweak the PTB come out with to try and sort the mess they were complicit in creating is just free entertainment.
:rotfl:


The length and frequency of your rants just screams out the fact that you are not totally comfortable with the decisions you have made.