How does Buy to Let END!

[JoeDavola]

1 hour ago, spygirl said:

Pretty all IO BTL.

No fucker wants them any more.

I never thought of that - so a bank can just decide that they don't want to renew any more IO BTL loans on their books an then fuck the mortgage holder with an SVR?

I'd never actually properly considered how much power the banks have over some of these people's lives.

Some, yes a minority, could be in very big trouble indeed.

[spygirl]

6 minutes ago, JoeDavola said:

I never thought of that - so a bank can just decide that they don't want to renew any more IO BTL loans on their books an then fuck the mortgage holder with an SVR?

I'd never actually properly considered how much power the banks have over some of these people's lives.

Some, yes a minority, could be in very big trouble indeed.

Not even close.

If a bank deicdes its got enough BTL on it book it jus tneeds to shut down its new BTL loans.

The BTler then has a choice to stay on SVR, or move to another bank.

However, all the baks are goign to do the same.

Now - just (2012ish) consumer  mortgages are regualted.

Banks have very struct guikldeliens and process they must follow.

 

IO BTL are commercial loans.

If a bank does not liek the pattern of your socks they can call in the loan in in a month.

This is why SME *HATE* borrowing from banks. Its great - until it isnt.

In down turns banks are notiorous for pulling in commercial loans when a few goes bad.

This is why msot comemrcial laons are udner 10 years.

And why orgs keep a rsoable chnk of chas/liquid assets just in case.

If you have, say, a company making widgets, then, if another widget company goes uinder, then the banks spoos and, even if you profiitable widget company,  the bank can and do pull the loan.

Once IO BTL loans start goign bad at a rapid clip - and the only reason why thyeve no as been ZIRP - then banks will start closin hteir position.

Any wrinkle in loan payment and - whoosh - give us our money.

 

 

 

[spygirl]

And thats a majotryer of IO TL ill be i ntrouble, not a minoitory.

~80% of BTL property are owned by ~20% of BTLers.

The majoroty  are Mum n Pop LL who own a single BTL at a low LTV

2014ish - 'Well, IR are so low, wed be a fool not to buy property ...'

2023 - 'Audrey, I think its time to sell up. We are putting 1k/m into it ....'

However the most are like the Samuel Leeds bloke - leverage on leverage. And no capicty for cash shortfalls.

 

[JoeDavola]

9 minutes ago, spygirl said:

And thats a majotryer of IO TL ill be i ntrouble, not a minoitory.

Yes but the question I guess is how much of the BTL stock out there is IO, that would be interesting to know.

I'd assume it wouldn't be most of it.

Edited July 7, 2023 by JoeDavola

[JoeDavola]

I just checked there and saw a 5 year IO BTL fix at 6%.

Not as cheap as it was, but still there'll be a few that can stumble on for quite a few years even if they've to put some money in to maintain it on top of the rent.

[Wight Flight]

6 hours ago, JoeDavola said:

 

Now that's fucking mental, but realistically how many are going to end up on an SVR? What are the conditions where you end up 'trapped' in an SVR, negative equity?

Your rental income not covering 125% (or 150% for higher tax payers) of the mortgage interest would put you there.

 

[JoeDavola]

1 hour ago, Wight Flight said:

Your rental income not covering 125% (or 150% for higher tax payers) of the mortgage interest would put you there.

Right so even if you can pay the mortgage by adding money to it, the very fact that the rent minus tax doesn't pay it means that you'll be moved to an SVR?

[Wight Flight]

2 hours ago, JoeDavola said:

Right so even if you can pay the mortgage by adding money to it, the very fact that the rent minus tax doesn't pay it means that you'll be moved to an SVR?

Obviously i am not an expert on this but yes, as far as i understand it if the rent doesn't cover the interest + x they wont offer you a standard BTL loan.

[spygirl]

13 hours ago, Wight Flight said:

Your rental income not covering 125% (or 150% for higher tax payers) of the mortgage interest would put you there.

 

 

12 hours ago, JoeDavola said:

Right so even if you can pay the mortgage by adding money to it, the very fact that the rent minus tax doesn't pay it means that you'll be moved to an SVR?

Yeah - its this.

IO BTL manages to be both incredibly slack lending - but has very tight rules.

All was super great in the years of ZIRP .... even then banks were getting the LTV from 2004ish ~95% to ~60% by 2019ish.

IR cover has also been tweaked, going from pretty much no rules, to 140% cover.

So theres all these terms - LTV, IR cover ....

LL arnt fucking accountants ... They just 'understand' propertee.

Se that outside toilet? Splash of paint - Bijou besit!

 

 

 

[spygirl]

17 hours ago, JoeDavola said:

I just checked there and saw a 5 year IO BTL fix at 6%.

Not as cheap as it was, but still there'll be a few that can stumble on for quite a few years even if they've to put some money in to maintain it on top of the rent.

BTL (commercial) is not regulated.

That ratewill be a bit like the X ray specs advertised in old comics.

Its a con.

6% will be the absolute best case offer - 10% LTV, one BTL.

There'll also be a chunky fee with it.

Mortgage fees are one of the areas where banks have been clawing money back.

 

 

 

[spygirl]

(Thread crosser. But v important thread crosser)

As its Mansion house WE ...

A quick revisit of the one eyed cunts who was stupid enough to put it all down in writing, just before it blew up -

https://www.theguardian.com/business/2006/jun/22/politics.economicpolicy

FTAV _ worth registering (free) to read the comments.

Andrew Bailey vs the renters?

The Bank of England may have found the UK’s weak spot

https://www.ft.com/content/02f151aa-40a0-4d07-8335-61d02aa6dc4e

In case you’ve already forgotten, paragraph 42 of the latest Bank of England Monetary Policy Summary ran thusly:

The Committee was continuing to monitor closely the impact of the significant increases in Bank Rate so far. As set out in the May Report, the greater share of fixed-rate mortgages meant that the full impact of the increase in Bank Rate to date would not be felt for some time. The Committee also recognised that it had become more important to consider developments in the rental market.

The last sentence reads a little bit like “and someone should probably check out what that screaming sound coming from the basement is”, but it’s fairly important.

This is, as far as Royal Bank of Canada’s Peter Schaffrik and Cathal Kennedy can recall, “the first time the MPC had referenced the private rental sector in terms of the impact of monetary policy” — something Alphaville’s best Googling efforts corroborate.

Chief economist Huw Pill added at Sintra last week that “policy transmission was evident in private rents market”.

We mentioned the rough hand renters are being dealt in a recent piece on mortgages, and re-recommend Joshua Oliver of MainFT’s piece about the on-the-ground situation.

As Toby Nangle wrote last month, the modern mortgage/MonPol paradigm is a pretty cruel one:

— the proportion of houses owned without a mortgage has risen, narrowing the cohort hit by the higher rates

— within that cohort, the rise of fixed-rate mortgages means only those unlucky enough to be renewing in the coming months will take the brunt of the pain from higher rates, which previously (when most rates were floating) would have hit most mortgage holders at the same time

[Theres one of those HTML charts on fix terms which I cant copy, like good ole jpg)

So how does an average renter compare to a typical homeowner? Would you believe it: younger and poorer.

They are also already seeing a squeeze (rental growth is the highest on record) AND already spend more to keep a roof over their heads:

Taken together, it doesn’t make renters hugely socially-desirable pips to squeeze. The BoE may not care though. RBC cont.:

The distribution of where and by whom the impact of policy tightening is borne is not the responsibility of the central bank, however. If we accept that rising rents are linked to changes in Bank Rate then in aggregate the impact of rising rents will be just the same as changes in mortgage interest rates in that it will reduce the amount of disposable income households have and in the process reduce aggregate demand and hence inflation.

And it could be argued that those in private rented households are more exposed to rising rents than mortgagors are to rising mortgage interest rates. At every income decile bar the lowest 10% of households, rent makes up a higher proportion of renters expenditure than mortgages do for mortgage holders (that bottom 10% will, we assume have access to government housing support) . . .

We think the inclusion of recent references to the private rental market in MPC public statements reflected a possible concern emerging around risks of overtightening given that so much of what has been announced to date has yet to be transmitted through the housing market.

However, what is likely to blunt the impact of rising rents is that (nominal) increases in wages are outstripping (nominal) increases in private rent. As in so many other areas, therefore, the ultimate factor blunting the transmission of Bank monetary policy is the tightness of the labour market. Until a more meaningful loosening is evident the MPC keep tightening policy but that concern around the risks of overtightening is one of the factors that we think will prevent current market expectations for Bank Rate being met.

Let’s return quickly to that ambiguous first quote:

The Committee also recognised that it had become more important to consider developments in the rental market.

Is there a hint of mercy there? It’s impossible to tell. We think it can be read two ways: — the committee is simply acknowledging that its rate hikes are being transmitted through the rental market, and is basically OK with that — the committee is recognising that signs of over-tightening may be appearing in the rental market, but is basically OK with that (for now)

It could, of course, also be both. But we’re less confident than RBC that it’s a note of concern. The MPC is under tremendous pressure to show that it is doing something to tackle inflation — and may have made peace with itself that hitting renters as the way to do it.

[spygirl]

The issue is simple - and goes beyond BTL.

All of Brown fuckwittery needs to be rolled back.

In housing, the massive issues are IO, both resi (200-2015ish, mainly in London/SE) and IO BTL.

 

Trying to drain cash from economony just doesnt work when youve got ~60% of the pop drawing from the state rather than working.

AS pointed out by @DurhamBorn and others, BoE has been printing to support UKGOV benefit spending.

That fuckwittery has to be cut back.

The BoE has to raise rates and UKGOV has to cut spending. A lot.

And its spending on benefits.

State pension - leave alone.

Pension credit - cut.

All in work benefits -cut.

All access to benefit and public services for non Brits - cut.

 

I thought - and probably so did BoE/Treasury, that S24 would have killed off BTL, both banks n borrower.

However IO BTL LLs and their banks are that fucking stupid. They carried on borrowing, refusing the exit their positions when they could.

Who are the innocents the unravelling for Gordys slumlording going to affect?

1) Young - and now not so young -  single workers - sharing/renting.

This is tough and I have every simplify for these.

If rents raise then theyll either push for higher wages or leave expensive areas and crash somewhere.

The old working HMOs/house shares can be very elastic.

 

2) A smaller number of working renting families.

Every sympathy here. Hopefully courts will block evictions, flipping the cost to LL n banks.

 

3) 15m-20m migrants whove poured in since 2000.

They can fuck off to where they came from.

 

4) Shazza 10 kids whove used the expansion of PRS to move away from home town. Courtneeey, Tysn fancy living in Scabby/Whitby/Bmouth/seaside/IOW ....

She can fuck off and get a job and go back to LHAs.

 

 

[DurhamBorn]

1 hour ago, spygirl said:

The issue is simple - and goes beyond BTL.

All of Brown fuckwittery needs to be rolled back.

In housing, the massive issues are IO, both resi (200-2015ish, mainly in London/SE) and IO BTL.

 

Trying to drain cash from economony just doesnt work when youve got ~60% of the pop drawing from the state rather than working.

AS pointed out by @DurhamBorn and others, BoE has been printing to support UKGOV benefit spending.

That fuckwittery has to be cut back.

The BoE has to raise rates and UKGOV has to cut spending. A lot.

And its spending on benefits.

State pension - leave alone.

Pension credit - cut.

All in work benefits -cut.

All access to benefit and public services for non Brits - cut.

 

I thought - and probably so did BoE/Treasury, that S24 would have killed off BTL, both banks n borrower.

However IO BTL LLs and their banks are that fucking stupid. They carried on borrowing, refusing the exit their positions when they could.

Who are the innocents the unravelling for Gordys slumlording going to affect?

1) Young - and now not so young -  single workers - sharing/renting.

This is tough and I have every simplify for these.

If rents raise then theyll either push for higher wages or leave expensive areas and crash somewhere.

The old working HMOs/house shares can be very elastic.

 

2) A smaller number of working renting families.

Every sympathy here. Hopefully courts will block evictions, flipping the cost to LL n banks.

 

3) 15m-20m migrants whove poured in since 2000.

They can fuck off to where they came from.

 

4) Shazza 10 kids whove used the expansion of PRS to move away from home town. Courtneeey, Tysn fancy living in Scabby/Whitby/Bmouth/seaside/IOW ....

She can fuck off and get a job and go back to LHAs.

 

 

You highlight the key reason BTL is such a disaster.It enables bennies to move around the country,not for work,just so they have more bennies left.I doubt we would have many migrants up here without BTL.We used to have £35k terraces here,and almost anyone who worked could buy one,the bennies had to take LA housing on shit estates.BTL has enabled scummy families to move into nice area for free.A big part of this is public sector workers as well,they recycle inflation linked increases on their pensions into BTL,double smack in the mouth for young working.There are dozens of reasons the government should of changed bennie policy,the fact they didnt is why rates will keep going up,but as i told the BOE (Catherine Mann) its not monetary policy driving inflation from rates,its QE monetising the UK welfare budget.Their answer was they dont control government fiscal policy,but i said thats a complete lie,by QE you are allowing massive welfare spending.I think around 70% of UK inflation is from bennies and retired public sector pensions.Rates would need to be around 9.2% to counter that,and then more for the roughly 2.8% inflation from the private sector.

[Boglet]

On 06/07/2023 at 11:31, spygirl said:

From TOS

Cant be arsed to fight twitter

https://www.housepricecrash.co.uk/forum/index.php?/topic/250074-btl-property-investor-goes-into-meltdown/

Leverage is great - til IR go up.

 

 

https://www.youtube.com/@SamuelLeeds/videos

So this Samuel Leeds is an oil driller. Just when I thought I couldn't hate him more.

Christ TOS is fucking pathetic - by page 3 they're squabbling over whether one of them might have said something racist.

 

[spygirl]

https://www.property118.com/local-authority-tells-tenants-not-to-leave-the-property/

My tenant sublet my property illegally. Newham, the local council threatened to revoke my Landlord's Licence, because the property was overcrowded.
I started eviction proceedings against the tenant.
However Newham Council, the same Council who threatened to punish me for something that was not my fault, advised the tenant to remain in the house until I evicted him.
I lost over £27000 and nearly lost the house for something which was not my fault.
Landlord haters who would rejoice should look at high rents in Newham.

Don't let expensive property to low/no paid migrants.

[spygirl]

Reply to the comment left by Golfman at 07/07/2023 - 18:00i agree with Judith totally.
The whole system looks after the tenant as this looks after the state.
it is only going to get worse as LL realise this and sell up
like i am. currently running the gaunlet of our great unjust justice system
the system looks after the system, not the plebs who fund it all

PRS should nit be letting to renters on benefits esp those with kids.

 

[Transistor Man]

On 07/07/2023 at 14:16, spygirl said:

IO BTL are commercial loans.

If a bank does not liek the pattern of your socks they can call in the loan in in a month.

This is why SME *HATE* borrowing from banks. Its great - until it isnt.

In down turns banks are notiorous for pulling in commercial loans when a few goes bad.

Do you remember posts from Serpico on ToS, telling the story of loans being pulled on car dealers in the early 80s?

Amazing, detailed story he wrote down. 

Edited July 8, 2023 by Transistor Man

[spygirl]

50 minutes ago, Transistor Man said:

Do you remember posts from Serpico on ToS, telling the story of loans being pulled on car dealers in the early 80s?

Amazing, detailed story he wrote down. 

https://www.housepricecrash.co.uk/forum/index.php?/topic/35126-remember-1992-–-1995/&do=findComment&comment=444946

Yeah.

Basically he had a massive business that relied on the Bank for continued funding.

When the banks withdrew funding he found he suddenly had nothing.

Again, when you speak to orgs that have been tnru one credit cycle you understand why they hate bank debt.

Commercial loan TnCs will fuck you over.

 

[spygirl]

The owner of the biggest and oldest very famous department store in Liverpool, over 600 staff sat in my office one morning, always bought a bike of me to get through the tunnel without queing, bikes go free. Head in hands the bank want £6M off me in six weeks to reduce the O/D, shut it down some months later 600 on the dole.

There were a thousand stories like that, houses being repo'd big boys as well as small Gerald Ronsons Heron petrol group went down for £50M still a very rich man though, in 1983 our sales from our big outlet had dropped from aqround £1.5M to £175K on the first of Aug we sold two 50cc mopeds and a 125, the unpaid borrowing interest was compounding at £150K a year.

[JoeDavola]

Had a conversation there with a chap who, until recently, lived in my block.

Like me, he was paying £650 a month rent.

Until the LL gave him 10 weeks notice as he wanted to either sell the place or put the rent up. Rent was put up to £850 and someone took it. Bloke who used to live there has moved in with a relative.

But that's not even the interesting bit. Apparently the LL is an investor from the Republic of Ireland (as is my landlord), who bought the flat right at the peak of the '07 boom. He reckons he paid close to £300K for it.

Which means that £650 a month, when you take off the building maintenance fee and council tax and other costs that a LL bears.....I reckon all these years he's not actually made much of a dent in repaying the mortgage. And the flat's only worth about £140K now, £150K max so even if he did sell it, he'd probably not be clearing his mortage or anything close to it.

I wonder how much of the rental market is basically made up of properties that have just sat servicing IO mortgages but have huge debts still needing to be paid on them that aren't being paid off.

I'm not saying most are like that, but there might be quite a few.

Edited July 9, 2023 by JoeDavola

[spygirl]

1 hour ago, JoeDavola said:

Had a conversation there with a chap who, until recently, lived in my block.

Like me, he was paying £650 a month rent.

Until the LL gave him 10 weeks notice as he wanted to either sell the place or put the rent up. Rent was put up to £850 and someone took it. Bloke who used to live there has moved in with a relative.

But that's not even the interesting bit. Apparently the LL is an investor from the Republic of Ireland (as is my landlord), who bought the flat right at the peak of the '07 boom. He reckons he paid close to £300K for it.

Which means that £650 a month, when you take off the building maintenance fee and council tax and other costs that a LL bears.....I reckon all these years he's not actually made much of a dent in repaying the mortgage. And the flat's only worth about £140K now, £150K max so even if he did sell it, he'd probably not be clearing his mortage or anything close to it.

I wonder how much of the rental market is basically made up of properties that have just sat servicing IO mortgages but have huge debts still needing to be paid on them that aren't being paid off.

I'm not saying most are like that, but there might be quite a few.

About 60%

[JoeDavola]

58 minutes ago, spygirl said:

About 60%

How do you come to that figure?

I mean I can well believe it, but would be interested to see what evidence is out there.

[spygirl]

3 minutes ago, JoeDavola said:

How do you come to that figure?

I mean I can well believe it, but would be interested to see what evidence is out there.

PRS has tripled since 2000.

All the extra stock is io btl.

[JoeDavola]

2 minutes ago, spygirl said:

PRS has tripled since 2000.

All the extra stock is io btl.

 

I don't get how you can infer with that how many of these have been cash, repayment mortgage, and IO mortgage?

[spygirl]

22 minutes ago, JoeDavola said:

 

I don't get how you can infer with that how many of these have been cash, repayment mortgage, and IO mortgage?

99.999% are IO btl.