How does Buy to Let END!

[sancho panza]

15 minutes ago, spygirl said:

From Wil!! at TOS!

https://www.themortgageworks.co.uk/lending-criteria/income#interestcover

Interest Cover Ratio (ICR)

To reflect the different taxable income levels of applicants, we have a range of ICRs that are applicable dependant on the customer and/or application. The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:

ICR
Buy to Let and Let to Buy		HMO and  Limited Company HMO	Limited Company  Buy to Let
Lower rate tax	Higher rate tax
130%	165%	175%	130%

Wow!

 

[Wight Flight]

32 minutes ago, spygirl said:

From Wil!! at TOS!

https://www.themortgageworks.co.uk/lending-criteria/income#interestcover

Interest Cover Ratio (ICR)

To reflect the different taxable income levels of applicants, we have a range of ICRs that are applicable dependant on the customer and/or application. The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:

ICR
Buy to Let and Let to Buy		HMO and  Limited Company HMO	Limited Company  Buy to Let
Lower rate tax	Higher rate tax
130%	165%	175%	130%

The point is moot.

With an interest rate of 7% and 75% LTV, a landlord needs 6.83% yield as a lower rate payer; 8.66% as a higher rater.

Rare as hen's teeth.

Especially with the reduction in values being talked about.

 

[sancho panza]

https://www.mortgagestrategy.co.uk/news/clydesdale-bank-interbay-pull-new-customer-and-btl-loans/

 

Clydesdale Bank, InterBay pulls new customer and 65% LTV landlord loans  

By Roger Baird 15^th June 2023 4:21 pm

Clydesdale Bank will “temporarily” pull all loans to new borrowers today (15 June), while InterBay has confirmed that it has withdrawn its entire buy-to-let range at 65% LTV.  

Clydesdale Bank, which is owned by Virgin Money, says the decision was forced on the lender due to “high demand”. It will withdraw these products at 5pm today.  

The firm says that its product transfer range for existing customers remains available, adding that Virgin Money offers are unchanged.  

Meanwhile, InterBay has pulled all of its buy-to-let loans at 65% LTV.  

The lender, which focuses on commercial, semi-commercial and BTL loans, withdrew this mortgage at 5pm on Wednesday.  

[spygirl]

2 minutes ago, Wight Flight said:

The point is moot.

With an interest rate of 7% and 75% LTV, a landlord needs 6.83% yield as a lower rate payer; 8.66% as a higher rater.

Rare as hen's teeth.

Especially with the reduction in values being talked about.

 

No, its got a very good point - Noone wants your fucking debt.

It just to be ~130% cover at ~4% SVR.

That was doable.

Moving  to 175% at ~8%++++ SVR ...

Its rubbing the idiots nose in their own mess.

Theyve got to stand their as the SVR icnreases rip them to shreds.

The total sense of being trapped and heading for the financial shitter...

 

 

 

[Ash4781b]

14 hours ago, spygirl said:

From Wil!! at TOS!

https://www.themortgageworks.co.uk/lending-criteria/income#interestcover

Interest Cover Ratio (ICR)

To reflect the different taxable income levels of applicants, we have a range of ICRs that are applicable dependant on the customer and/or application. The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:

ICR
Buy to Let and Let to Buy		HMO and  Limited Company HMO	Limited Company  Buy to Let
Lower rate tax	Higher rate tax
130%	165%	175%	130%

 

14 hours ago, spygirl said:

You migth to put a few numbers into excel for this.

Any porfolio IO BTL is, by default of having a rentla incoem from the portfolio, going to be a HRT.

Its a bit like having trying to chase a £100 note hangign off a stick n your head.

 

 

 

 

Yeah I don’t see how they aren’t mostly higher rate tax payers. I mean it’s suspicious if they’re not. Surely there’s not cases of people on a say £25k wage with multi million BTL portfolios. Get Ready with the clip from the big short film. 

[spygirl]

1 hour ago, Ash4781b said:

 

Yeah I don’t see how they aren’t mostly higher rate tax payers. I mean it’s suspicious if they’re not. Surely there’s not cases of people on a say £25k wage with multi million BTL portfolios. Get Ready with the clip from the big short film. 

Banks wont lend ifthe LL does not have an earned income.

Even, say, 30k, then 2 IO BTL in the South and yioull easily blow the HRT tax band.

The full roll out of S25 marked the end of IO BTL - its just possible.

2015  -

https://www.housepricecrash.co.uk/forum/index.php?/topic/205887-a-goodbye-to-all-that-buy-to-let/

Sat down and read S25.

Its purely mathematical. No 'feel for property',  no 'I understand properdee' is going to save LL.

Or the bets -'Using other peoples money to get rich ....'

Baked in.

https://www.housepricecrash.co.uk/forum/index.php?/topic/229792-countdown-to-leveraged-btl-going-bust-thread/#comment-1103223898

And for the extra kick inthe balls, all this has come to end - bar a ~2y coof pause - just as when IR swing from v3ry low to very high.

 

 

[JoeDavola]

It realy does actually feel like the end of the BTL industry - I say BTL meaning buying multiple houses using credit to rent out.

It's done. It's over. Well, for individuals. I suspect the new pattern is going to be Build to Let and it will be very large companies doing it.

[Wight Flight]

3 hours ago, Ash4781b said:

 

Yeah I don’t see how they aren’t mostly higher rate tax payers. I mean it’s suspicious if they’re not. Surely there’s not cases of people on a say £25k wage with multi million BTL portfolios. Get Ready with the clip from the big short film. 

Also the gross rent easily tips you in to the zone where you lose child allowance.

s24 was very clever / evil depending where you sit.

[Wight Flight]

https://www.property118.com/the-perfect-storm-for-landlords-and-tenants-has-arrived/

all over their forums they are blaming the BofE for their dire straits.

it never dawns on them that by outbidding everyone else for property and accepting lower and lower yields they were always creating their own downfall.

if a property couldn't make a 10% yield you have overpaid. Accept it.

[JoeDavola]

7 minutes ago, Wight Flight said:

if a property couldn't make a 10% yield you have overpaid. Accept it.

The housing crash in NI started a year or two after I started working post-graduation.

I remember in my first grad job walking past a block of flats that I can see from my window here that had just been built at the time, with a young rich Asian co-worker. He said he was thinking of buying one of them to rent out as an investment.

I did the back of a fag packet calculation and worked out the yield was 2.5%. He didn't get why that was a problem.

Over 15 years on that flat isn't worth as much in ££ as it was listed for back then.

[onlyme]

9 minutes ago, Wight Flight said:

https://www.property118.com/the-perfect-storm-for-landlords-and-tenants-has-arrived/

all over their forums they are blaming the BofE for their dire straits.

it never dawns on them that by outbidding everyone else for property and accepting lower and lower yields they were always creating their own downfall.

if a property couldn't make a 10% yield you have overpaid. Accept it.

They've bought the cheapest houses in the cheapest locations largely and bid up that pricing above the rest of the market. Those areas are now often transitory pits that even the renters don't want to rent but only doing so as all they can afford.

When there is far greater supply (already seeing it) and choice prospective owner occupiers won't want to live in those areas we'll see the true value of what they have bought.

 

[JoeDavola]

4 minutes ago, onlyme said:

They've bought the cheapest houses in the cheapest locations largely and bid up that pricing above the rest of the market. Those areas are now often transitory pits that even the renters don't want to rent but only doing so as all they can afford.

Yes this is the thing about BTL - BTL-rich areas become slums often, and no OO wants to buy them.

So typical BTL houses in BTL areas could see the biggest crashes, especially if the idea of BTL even as a cash buyer as a way of making money goes out of style.

[Wight Flight]

3 minutes ago, onlyme said:

They've bought the cheapest houses in the cheapest locations largely and bid up that pricing above the rest of the market. Those areas are now often transitory pits that even the renters don't want to rent but only doing so as all they can afford.

When there is far greater supply (already seeing it) and choice prospective owner occupiers won't want to live in those areas we'll see the true value of what they have bought.

 

An interesting twist here is that the nicer properties in better locations have been snapped up by the FHL brigade.

this only works because of the occupancy rates they have been getting, and also the longer term winter lets many of them do.

occupancy rates are falling, leading to price cutting. With the advent of the renters' reform bill the six month winter let will become impossible.

i guess many of these FHL will switch to regular rentals, and being much nicer than your average BTL will hoover up all the decent tenants.

[onlyme]

5 minutes ago, Wight Flight said:

An interesting twist here is that the nicer properties in better locations have been snapped up by the FHL brigade.

this only works because of the occupancy rates they have been getting, and also the longer term winter lets many of them do.

occupancy rates are falling, leading to price cutting. With the advent of the renters' reform bill the six month winter let will become impossible.

i guess many of these FHL will switch to regular rentals, and being much nicer than your average BTL will hoover up all the decent tenants.

I refurbed one property - top end FHL, not had a recent update but as of January bookings had fallen off a cliff, another group of properties running a mix of let and airbnb bookings down but rents holding up. One has been sold, another up for sale but think the boat has been missed.

The maintenance / service / laundry other costs with airbb are not inconsiderable, can be high hassle too.

It is surprising, even with purchases spread out over more than 3 deacades things are looking decidely marginal and ongoing costs (without say havign decent salaries to cover gaps) is biting.

Never mind what the first property cost, if that has been remortaged to fund further purchases often all is not what it seems.

On one hand if they really do jsut shut down airports (all but three) to appease Gaia then there will still be demand, if not then unless holidays get really expensive the blip in the last two yers for expensive staycations will be just that and yes regular rentals or re-sold is the likely course.

[Boglet]

4 hours ago, Wight Flight said:

https://www.property118.com/the-perfect-storm-for-landlords-and-tenants-has-arrived/

all over their forums they are blaming the BofE for their dire straits.

it never dawns on them that by outbidding everyone else for property and accepting lower and lower yields they were always creating their own downfall.

if a property couldn't make a 10% yield you have overpaid. Accept it.

 

Sage words from Ian in the comments

Quote

Ian Narbeth

10:50 AM, 16th June 2023, About A day ago

Reply to the comment left by GlanACC at 15/06/2023 - 08:34
By letting them live rent-free, long term you would do your tenants no favours. They would have no need to strive, to get better jobs, to move to a bigger and better property.
People in subsidised housing are less mobile and less ambitious.

 

[Rare Bear]

4 hours ago, JoeDavola said:

The housing crash in NI started a year or two after I started working post-graduation.

I remember in my first grad job walking past a block of flats that I can see from my window here that had just been built at the time, with a young rich Asian co-worker. He said he was thinking of buying one of them to rent out as an investment.

I did the back of a fag packet calculation and worked out the yield was 2.5%. He didn't get why that was a problem.

Over 15 years on that flat isn't worth as much in ££ as it was listed for back then.

I did the sums on BTL back about the turn of the century and it didn't make sense to me then using realistic interest rates.

[desertorchid]

41 minutes ago, Boglet said:

 

Sage words from Ian in the comments

 

Can you imagine what a tit this bloke must be in real life to say that. A man who would use the words "reach out" out and "touch base" on a daily basis as he climbs his shit career in the civil service.  Utter tosser.

[spygirl]

‘The band has stopped playing’ for UK landlords

https://www.ftadviser.com/buy-to-let/2023/06/16/the-band-has-stopped-playing-for-uk-landlords/

I’ve been a mortgage broker for years and I’ve never seen the market like thisZara Yeganeh, KeyRate

The situation has deteriorated further in recent weeks with lenders continuing to hike rates and further tighten stress-testing.

Earlier this week, NatWest, one of the UK’s largest mortgage lenders, increased the stress test on its two-year fixed-rate buy-to-let mortgage from 6.7 per cent to 8.10 per cent and upped it from 6 per cent to 6.89 per cent on its five-year fixed product. 

...

Yeganeh explained that over the last two weeks, the monthly payments on every buy-to-let case she completed have at least doubled. 

In Yeganeh’s view, the combination of difficulties present in the buy-to-let sector - high rates, taxation issues, inconsistent valuations, affordability problems - are all about to coalesce and “crash the market”. 

Yesterday, a report from the Intermediary Mortgage Lenders Association flagged similar issues, with the trade body being highly critical of the impact proposed legislative changes may have on the sector. 

...

The buy-to-let mortgage market is currently so uncompetitive that Yeganeh said all of her portfolio landlords coming off their fixed rates have had no choice but to do a product transfer with their existing lenders. 

We have spoken with five this week who are planning to offload some or all of their portfolioMartin Stewart, London Money

Similar to Yeganeh, mortgage brokerage London Money has analysed all of its buy-to-let remortgages since the beginning of the year and on average each has seen a 102 per cent increase in the monthly mortgage payment. 

“This has led to a number of landlords now choosing to exit the market and we have spoken with five this week who are planning to offload some or all of their portfolio,” London Money’s founder Martin Stewart told FTAdviser. 

[spygirl]

LL have had 7 years to exit.

I'd assume both btl io Lls who could use excel n count above 5 have already done so.

Only the fuckwits are left.

Sadly for them 99.99% of io btl Lls are the fuckwits.

As a rule, you've got to exit a position  *before* it becomes too expensive to keep, not*afterwards*

I am soooo looking forward to the flood of property in btl hotspots.

Scabby is one.

Reading, Bstoke, Leeds, Boro, Bmouth, etc etc.

 

[JohnnyB]

4 hours ago, Boglet said:

 

Sage words from Ian in the comments

 

Hope one of his tenants is a history buff and re-enacts a bit of Cultural Revolution on his arse.

[JoeDavola]

Went on Money Suprmarket here and took a look at the BTL loans...seems they aren't quite as steep as I'd thought?

 

That's a repayment on a £180K flat with a £36K deposit.

A city centre 2 bed flat seems to rent out for £1100-1300 a month (which is shocking to me but that's the figures I'm seeing).

So even take £1200 - 850 (repayment mortgage 25 years) - 100 (building maintenance fees) - 90 (council tax that the owner pays not the renter) - 40 (mortgage provider product fee 1000 over 24 months) = 120 quid a month to cover letting agent fees and any repairs to the inside of the flat over time.

It's maybe just about possible to make it work, but it's pretty fucking tight, and thats with a 20% deposit as well.

They can have an extra £300 a month by going interest only on the mortgage, but that's a ballsy fucking move these days. And even if some are doing that now, will there be many wanting to enter the BTL market these days as IO mortgage holders?

I really don't see there being much scope to put the rentals up either, it already amazes me that there are people willing to chip in £600 a month each to share a pokey 2 bed slave box flat in Belfast.

Overall however....I don't see those figures being so dire as to completely put people off BTL.

Edited June 18, 2023 by JoeDavola

[With a crooked smile]

On 16/06/2023 at 14:56, sancho panza said:

The firm says that its product transfer range for existing customers remains available,

No changes there then. Very little to see here

[With a crooked smile]

13 minutes ago, JoeDavola said:

Went on Money Suprmarket here and took a look at the BTL loans...seems they aren't quite as steep as I'd thought?

The thing is as well @JoeDavoladespite what you read on here more of us have loads of equity built up and just transfer from one product to another. I have one flat on £350ish a month io currently bringing in £1300 a month rent (and we've not adjusted that rent for 2 years).

I have a second flat paying £1100 a month owned outright. Worse case I could turn that into a holiday let based on where it is and I'd earn more.

I currently dont as 1 i have enough going on and 2 i get a warm fuzzy feeling inside knowing its rented via an employer i like to two people who work locally.

Gives me plenty of time prepare for whatever a product transfer looks like in 3 years time.

If they didn't know what I say is truth there wouldn't be so much bile and "the sector is fucked" on here.

Edited June 18, 2023 by With a crooked smile

[JoeDavola]

2 minutes ago, With a crooked smile said:

The thing is as well @JoeDavoladespite what you read on here more of us have loads of equity built up and just transfer from one product to another. I have one flat on £350ish a month io currently bringing in £1300 a month rent (and we've not adjusted that rent for 2 years).

Gives me plenty of time prepare for whatever a product transfer looks like in 3 years time.

If they didn't know what I say is truth there wouldn't be so much bile and "the sector is fucked" on here.

Yes if you own a lot of equity in a flat then the obscene rents these days represent quite a good income for you. Questionable morality at these rental rates as I say it must be desperation that is fuelling people spenning £600 to live on top of another person in a wee flat.

But even at the most extreme end, i.e. a new entrant to the market, someone with a bit of money sat in the bank doing nothing, I think the figures still just about work to the extent that some people will still do it.

There's also the factor that there are lots of boomers in this country with houses owned and hundreds of K sitting in the bank doing nothing. Heck even my parents have £100K+ sitting doing nothing for over a decade...and in the UK most people do see property as the only investment they won't go anywhere near the stock market.

And in that respect buying a £180K flat outright to rent out for £1200 a month is still better return than a bank gives you.

[With a crooked smile]

3 minutes ago, JoeDavola said:

But even at the most extreme end, i.e. a new entrant to the market,

True, I can't imagine many do this. But those that do must have zero imagination and zero work ethic. I'd look to start a new business frankly.

I think for many they'll just look at what capital appreciation is likely to be like over 20 - 30 years and the fact you can avoid capital gains tax and inheritance tax when you pass over to your kids (if you time it right and preplan)