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Wednesday, November 23, 2011

Saving the buy-to-let mortgage

In a little over 5 days over 500 people have already signed my petition to save the buy-to-let mortgage. I think this is testament to a general feeling that we are all a little bit fed up of 'fitting into' the euro straight jacket.

Let me clarify that I am not an anti European, anything but. I must have visited practically every country in Europe with possibly the exception of Albania. It's exactly the diversity in Europe that I love.

What I do object to is the enforced undemocratic way that through stealth the Eurocrats are all trying to force us into being little Europeans. Lets face it Margaret Thatcher was right in that Europe was socialism through "the back door."

I think anybody that understands post industrial revolution british history will realise that the British Empire gave us a unique global perspective. Using this to reach out to the growing regions in the world could be the thing that saves us. Unfortunately, anybody reading the petition against the buy-to-let mortgage regulation will realise that it is just too late to save my spelling..."access" not "assess" you fool. Sorry!

The repellant / repentant editor

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Paul Barrett said...

I wouldn't be too concerned about the spelling.
Does it or has it confused the importance of the message you are seeking to get across?
No it doesn't.
Consequently the importance of what you are saying cannot and has not been compromised in any way.
The urgency of addressing this fundamental threat to the BTL industry in the UK is so important that it warrants a debate in the H o P.
Does your petition action this possibility.
I would have thought all sections of the BTL industry should feel threatened by this piece of unecessary and irrelevant regulation as far as the UK is concerned.
We don't tell the Germans how to run their lettings industry; why should they via the euro system tell us how to manage our chosen system.
It may be on consideration that it is determined by the UK govenment to be a good regulation which would be fine.
However we can ALL see that this is a fundamentally flawed regulation as it affects the UK letting industry.
Parliament MUST reject implementation of this regulation as a matter of urgency and I mean like yesterday.
This as landlords WILL need to plan their response to such a regulation being enforced on lenders, now.
Effectively such a regulation will take us back to the stone age where only high income individuals and companies could attain the finance to purchase property to let out.
The Govt needs as many BTL landlords as it can obtain with the ongoing housing crisis in this country.
The last thing it needs is a situation where a vital part of the lettings industry is effectively excluded form rental property provision.

Anonymous said...

I'm not sure what you mean on the high income point. Do you mean that without BTL you would have to own the property outright in order to let it? Rather than a 75% LTV mortgage?

Landlord said...

Somebody with enough weight/clout in the political sphere must lobby or influence the politicians handling this area. I am only a small landlord with 5 properties, and run it as a part-time business, but surely there will be others with big portfolios who are full-time landlords and have a lot more at stake. A petition is a step in the right direction, but we need some heavyweights lobbying the government about this all-important fundamental aspect of the British BTL industry. Once EU get a grip of this, there is no turning back... and our BTL business as we know it will be at an end.
Also the new proposed legislation will cause chaos in the British property market, sending property prices down dramatically as landlords will be forced to sell because there are no more BTL products available to go forward with. There seems to be no good coming from this legislation.

Paul Barrett said...

No you have misunderstod the lending criteria.
At present a prospective landlord may purchase a property with a BTL mortgage generally at 75% LTV based on 125% of the rental income .
The lending criteria is essentiallly based on what rental income would be received for the property and NOT what the BTL purchaser earnt in other income.
The proposed EU regulation would REMOVE the rental income ctiteria and therefore potential purchasers would have to prove that they could service the mortgage for their residential and other possible unsecured debts and the investment property.
So if for example you had £50000.00 of capital to invest and you only earn't £30000.00 per year your income would be potentially insufficient to meet all those commitments based on only your income.
This is NOT the case presently but will be come 2013 if the EU get their way.
So if you want to get into the BTL game you have about 1 year to do so unless you earn a lot of money.
You need to be aware that if you scrape in now to BTL make sure that you will not need to remortgage for the next 25 years.
This as if the EU regulation comes in you will be unable to remortgage under the new EU criteria unless your income is sufficient to meet all your outgoings including a BTL mortgage previously obtained under the 'old' rental income criteria.
Therefore ANY landlord in this position must ensure they have a mortgage product that they do not need to renew in 2013 or any time after that.
Otherwise they will have to sell the property as the SVR will probably be too much for the LL.

Power Point Presentations said...

I still don't know how mortgage and loans work and I am afraid to be into it also. I still have to learn some of it.