Buy-to-Let DOOM

[RetSet]

Why would bank allow existing mortgage given under old cheap conditions to new people who should be paying/stress tested at much higher levels?

The mortgage isn't transferred. As a BTL it comes with ready made Consent to Let.

It would, however, need to be redemmed at Completion. This is why LOs, EDCs and ICs are useful tools.

[AtW]

The mortgage isn't transferred. As a BTL it comes with ready made Consent to Let. It would, however, need to be redemmed at Completion. This is why LOs, EDCs and ICs are useful tools.

Yeah, banks going to love it when everybody starts doing it en masse.

And what would happen if new buyer needs to sell it? How CGT would work? No stamp duty on purchase then?

[RetSet]

Yeah, banks going to love it when everybody starts doing it en masse.

And what would happen if new buyer needs to sell it? How CGT would work? No stamp duty on purchase then?

Easy.

LO: If the Option was never exercised, the new buyer just walks, and the original seller is free to rinse & repeat, charging a new Option Fee. No Stamp Duty involved.

EDC/ IC: Stamp Duty already paid (Liability arises at Exchange, payment within 30 days). CGT follows the usual rules.

With EDC/ IC, the new buyer is free to walk and forgo all money paid in to date if he so chooses. Original seller is then free to rinse & repeat. Alternatively new buyer sells as normal and completes back-to-back.

[AtW]

Easy.

LO: If the Option was never exercised, the new buyer just walks, and the original seller is free to rinse & repeat, charging a new Option Fee. No Stamp Duty involved.

EDC/ IC: Stamp Duty already paid (Liability arises at Exchange, payment within 30 days). CGT follows the usual rules.

With EDC/ IC, the new buyer is free to walk and forgo all money paid in to date if he so chooses. Original seller is then free to rinse & repeat. Alternatively new buyer sells as normal and completes back-to-back.

No, I call BS on all this - if this was attractive and workable option it would have worked by now long time, would save loads on stamp duty.

You either own the property or you don't, either your name on the title or not. Buying some Tripple Tulip derivative isn't the same.

[RetSet]

No, I call BS on all this - if this was attractive and workable option it would have worked by now long time, would save loads on stamp duty.

You either own the property or you don't, either your name on the title or not. Buying some Tripple Tulip derivative isn't the same.

You're not paying attention are you?

The liability for Stamp Duty falls due on Exchange of Contracts. It is not avoided by any of the things I have mentioned.

Beneficial Title passes at Exchange. Legal Title passes at Completion, so it's not as binary as you seem to believe.

None of the things I have mentioned are derivatives.

I've given you enough free education this evening.

Lead a horse to water etc. I'm off to bed now, Google Is Your Friend.

[AtW]

Thanks for free education, we will see soon if these methods become a factor in lending

[lukemg]

To make the 'real' money BTL relies on a 'bigger fool' to purchase at a higher price later, similar to gold. Take the steam out of the market by 10% (25% in London) and the market will sort itself out as the demand falls closer to supply.
A crash is not required or desired, house prices just edging up at the inflation rate will do nicely for virtually everyone and the speculators will be off elsewhere.

[vetran]

To make the 'real' money BTL relies on a 'bigger fool' to purchase at a higher price later, similar to gold. Take the steam out of the market by 10% (25% in London) and the market will sort itself out as the demand falls closer to supply.
A crash is not required or desired, house prices just edging up at the inflation rate will do nicely for virtually everyone and the speculators will be off elsewhere.

unfortunately the bigger fools are abroad and even if the price fluctuates its part of a basket of investments abroad that their government can't easily get to.

[AtW]

unfortunately the bigger fools are abroad

Those "bigger fools" abroad take a long term view and 10-15 years property will increase in value.

[GB9]

I think some posters are confused over Labour and Tory policies.

BTL is a Labour policy, resulting in (supposedly) more rental accommodation becoming available.

Home ownership is a Tory policy. BTL isn't.

When the Tories were kicked out in 97 there were approx. 28,000 BTL mortgages being used as funding. When Labour were kicked out it was over 1,000,000.

All Osborn is doing is levelling the playing field between BTL and home ownership by removing the tax breaks BTL gets. He hasn't stopped BTL, just said use your own money or pay nearer the true cost of borrowing.