Welcome to Live View – Take the tour to learn more
Start Tour
There is currently 1 person viewing this thread.
The Times
Almost one in five home loans was to landlords in July, according to the Council of Mortgage Lenders, with banks attracted by higher profit margins and less red tape. Buy-to-let mortgages are not regulated so applicants do not have to go through as rigorous lending checks as residential borrowers.
jaw dropping it isn't regulated
Almost one in five home loans was to landlords in July, according to the Council of Mortgage Lenders, with banks attracted by higher profit margins and less red tape. Buy-to-let mortgages are not regulated so applicants do not have to go through as rigorous lending checks as residential borrowers.
jaw dropping it isn't regulated
Show More
An Englishman's home is another man's Buy To Let.
It may not be regulated but it is nowhere near as easy as it once was
Northern Rock were once offering 125% mortgages on residential homes; I sold a few myself. I have to admit I did feel for those that took this up following the crash but today's prices have seen them make a lot of profit, if they managed to hold onto it
STV News @STVNews · 4m4 minutes ago
SNP MP withdraws from whip after police open property deal probe
SNP MP withdraws from whip after police open property deal probe
Jack Hacksaw: "Regulated" means the terms of the Mortgage Market Review, according to which owner occupiers are constrained by all sorts of criteria before a bank can grant them a mortgage. They have to provide every detail of income and expenditure, right down to how often they eat out, they have to prove they can handle a mortgage if rates rose to 7%, and they are only allowed to take out repayment mortgages (i.e. ones where you pay back the money borrowed).
Borrow-to-letters on the other hand are subject to none of this. They don't even have to repay the loan, as they are allowed interest-only mortgages. Hence borrow-to-letters are able to outbid anyone wanting to buy a property actually to live in. And hence property prices rise above what an owner occupier can afford or is allowed to borrow.
But there's more ... Owner occupiers have to save up real hard cash as a deposit for their mortgage (that is another regulation to which they alone are subject). Borrow-to-letters on the other hand can use the notional increase in value of one property as a deposit on a second. And that notional increase in value has only come about precisely because they are using it to buy more properties.
Is it a pyramid scheme? A ponzi scam? Whatever, it will be all over within the next 5 years as the change announced in the budget for the way income tax is calculated for these dupes takes effect. Instead of smugly being able to deduct all the interest on their mortgages from the rents received before calculating income tax, they'll instead pay income tax on the rent received itself, and only then be able to deduct 20% of their interest payments.
At a stroke any multiply mortgaged moron will enter the 40% taxband, and in a pleasingly large number of cases will pay more tax than they receive in rent minus interest payments.
They can then reflect on the wisdom of relying on the continuation of a ridiculously generous government tax break to justify the ridiculous sizes of loans they took out.
Borrow-to-letters on the other hand are subject to none of this. They don't even have to repay the loan, as they are allowed interest-only mortgages. Hence borrow-to-letters are able to outbid anyone wanting to buy a property actually to live in. And hence property prices rise above what an owner occupier can afford or is allowed to borrow.
But there's more ... Owner occupiers have to save up real hard cash as a deposit for their mortgage (that is another regulation to which they alone are subject). Borrow-to-letters on the other hand can use the notional increase in value of one property as a deposit on a second. And that notional increase in value has only come about precisely because they are using it to buy more properties.
Is it a pyramid scheme? A ponzi scam? Whatever, it will be all over within the next 5 years as the change announced in the budget for the way income tax is calculated for these dupes takes effect. Instead of smugly being able to deduct all the interest on their mortgages from the rents received before calculating income tax, they'll instead pay income tax on the rent received itself, and only then be able to deduct 20% of their interest payments.
At a stroke any multiply mortgaged moron will enter the 40% taxband, and in a pleasingly large number of cases will pay more tax than they receive in rent minus interest payments.
They can then reflect on the wisdom of relying on the continuation of a ridiculously generous government tax break to justify the ridiculous sizes of loans they took out.
Post Your Reply
Please login to post a reply.
Wonder
Instance ID: 13539