GOOD NEWS for BTL people...

WTF?_2

Less competition for tenants in the future!

http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article3652742.ece

Royal Bank of Scotland and Natwest are to increase the minimum size of deposits that landlords must pay from 15 to 25 per cent of a property's value from the end of today.
The banks, which previously lent up to 85 per cent of a buy-to-let property's value, said the move was a defensive measure to try and protect the service whilst they are receiving record volumes of mortgage applications.

Gotta love the way that all these moves towards more sensible lending are presented as just the lenders trying to maintain quality of service in view of overwhelming demand :rolleyes:


Also, we're repeatedly told that BTLers typically have small LTVs anyway, so what gives? Could it be that lots of idiots have been snapping up property to BTL without actually putting much of their own cash into it because they can't really afford it and haven't done their sums?

bobby-boy_2

I think a lot of small BTL landlords, like myself, raised the deposits of the back of equity not real cash and this is what is hurting them. If the deposit has been actuall cash saved up then there is less of an impact when interset rates rise etc. i think your right a lot of people did not do the maths before embarking on the venture.

WTF?_2

bobby-boy wrote: »

I think a lot of small BTL landlords, like myself, raised the deposits of the back of equity not real cash and this is what is hurting them. If the deposit has been actuall cash saved up then there is less of an impact when interset rates rise etc. i think your right a lot of people did not do the maths before embarking on the venture.

Fair do's for owning up to maybe not thinking it out before jumping in.

However, the banks don't care if you get the deposit from equity withdrawal on another property - just as long as they get the cash to cover their own backs in the event of falling prices and the borrower defaulting.

I think that this move shows
(a) The banks see appreciable house price falls as a given.
(b) The banks want to deter rampant speculation so are upping the height of the hurdles into BTL. They should get a more 'serious' class of borrower.

It's going to hit prices of houses generally since BTL was the major force driving the market after FTBers started to get priced out.

Gorgeous_George

Good news indeed! Forcing BTLers to have larger deposits (just like owner-occupiers) will ensure that BTLers do not expose themselves to unacceptable risk.

But it is bad news for:
1) tenants as they will have less choice of property to rent and
2) sellers who will have less buyers in the marketplace

GG

born_again_saver

Gorgeous_George wrote: »

Good news indeed! Forcing BTLers to have larger deposits (just like owner-occupiers) will ensure that BTLers do not expose themselves to unacceptable risk.

But it is bad news for:
1) tenants as they will have less choice of property to rent and
2) sellers who will have less buyers in the marketplace

GG

But it's good news for all the priced out FTBs if they've got less competition in the marketplace from the BTL people, as both are after similar properties. Of course, it's not such good news for the FTBs who are tenants. Although I have a hunch that the rent rises some are predicting will not materialise, say if existing homeowners need to take in lodgers, or decide to move in with relatives or friends and rent out their home for a while, in an effort not to lose the place altogether. And of course, some FTBs who are biding their time with deposits at the ready may be in a position to drive a hard bargain if/when the BTLs start to sell up and flee.

Gorgeous_George

I hope you are right but there's a chance that by the time FTBers have saved the deposit that they now need, BTLers will return to the market.


Good luck with your quest to save a deposit. You might find that the deposit will buy the house in a few years.

GG

WTF?_2

Gorgeous_George wrote: »

I hope you are right but there's a chance that by the time FTBers have saved the deposit that they now need, BTLers will return to the market.


Good luck with your quest to save a deposit. You might find that the deposit will buy the house in a few years.

GG

Personally, my deposit would now pay outright for the house I'm currently renting if it falls to the level you'd expect, based on 2000 prices + headline inflation.


However, I'd like a nicer house so I guess I'll be taking on a small mortgage. The question will be timing it right and hoping I don't lose my job in the coming recession of course. If I do then sod it, I'll go travelling in SE Asia or S America until things blow over

mystic_trev

dolcevita wrote: »

Most of the "deposits" come from MEWing anyway.

And this illusion of wealth and ability to buy more and more property is slowly disappearing form these so-called investors.

Yes it does make me smile All those highly geared 'Investors' who scoffed at the thought of House Prices going down. 'So what if they do we'll just buy a few more' :rotfl: Hmmmm what with I wonder?