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  • Section 24 HQ

    Lender apathy will be the death of us

    With my apologies for plagiarising the title used by Vanessa in another thread, I have been wondering quite why BTL lenders, especially those who lend mainly to individual landlords, don't seem to have been more active in countering the s24 issue.

    It doesn't seem too much of a stretch to assert that, once the full efects of s24 are implemented, lenders might be faced with an increase in defaults and repossessions. These repossessions would likley leave the lenders with heavy losses because they will relate to the properties that the landlords couldn't sell (or otherwise they would have sold and got out!).

    I was pleased to see Shawbrook Bank were actively involved in the Tenant Tax Summit, and that they contributed to the fighting fund, but why the deafening silence from other lenders (and indeed their trade associations).

    Should we be trying to prompt them into action?

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    Tony,

    I am thoroughly delighted that you plagarised my title. Smile

    In fact, I think my latest thread about lettings agents' lack of awareness should have taken the same format!!

    Shawbrook Bank have been great supporters of the Judicial Review, as you mentioned.

    Other lenders, such as Paragon, have reported on the issue, but not got behind the campaign.

    I think mortgage brokers could play an important role in engaging lenders, but interested to hear what others think ....

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    Lenders have a part to play in this ????

    is quite astounding how quite they are

    If I had a tenant who salarywho was going to be taxed 4 times higher than the start of there Tenancy I would be worried would I get my rent

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Quite so - exactly my point.

    It may only affect the lenders indirectly, but affect them it will. Aren't they all fed up with managing arrears? Aren't lenders keen not to have wobbles in the BTL market, as the Bank of England is then more likely to intervene and foist yet more regulation on the sector?

    I am puzzled by lenders' apparent lack of interest.

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    Most lenders of all shapes, sizes and persuasions just don't get involved in what they perceive to be external legal and / or political debate.

    S24 is a massive topic that will affect (directly or indirectly) many parties, but banks are big enough (and strong enough nowadays, certainly following the credit crunch time when they all restructured and became far more robust) to watch from the sidelines and simply act when they need to.

    It's a similar thing to the EU referendum debate.  Across UK industry, there have been many major business leaders who have come out and nailed their flag to one side or another.  However, I have endeavoured to carry out research of what the mortgage industry leaders think will be the repercussions of either remain or leave and none of them are committal in their answers.

    So, whether the important subject of S24 or the huger issue of EU membership, they just don't get involved.

    We won't be able to change that - apathy is intrinsic and usually unmoveable.

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    Given how unpopular bankers are do we really want them campaigning on our behalf?

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    Hi Peter

    I think we do want them, because of their political clout.

    The UK is the world's 5th largest economy predominantly because of The City, and I think there is plenty of evidence that it has the power to influence the government. Sure, Mark Carney and the BoE are independent*, and are keen to curb excessive BTL lending - so why can the govenment leave the regulation of the BTL mortgage market to the experts (i.e. the BoE), rather than what can only be described as aggressive tax interventionist policy?

    *One must question how truly independent the BoE can be. If the government gave the BoE independence, then it could easily be taken back, I guess!

    I see your point about the popularity of the banks, but in my view this could be a marriage of convenience.

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    The BoE agreed with the government about the growth in BTL being a risk to the banking sector, i.e they were partly behind section 24.
    See https://www.bankofengland.co.uk/financial...021014.pdf

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    Indeed, but one must hope the lenders themselves see it differently, as s24 will curb their businesses somewhat (unless all the slack gets taken up with resi mortgages, which seems unlikely).

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    Surely lenders remain in business by err!!..........lending money!!!!

    If your customer base is substantially reduced by the  many tax changes how may those lenders maintain their business volumes and consequent profitability!?

    Are lenders content with their existing mortgage book and aren't that bothered with the effective demise of the sole trader LL!?

    I would imagine that many lenders will be carrying out reviews of their sole trader LL to establish whether income levels and ability to service the existing mortgages will be sustainable

    If Steve Cooper would be reduced to £1000 profit for his portfolio at existing IR it is easy to see how a small IR increase will cause him to be operating at an unsustainable loss!!

    Surely lenders should have woken up to the moral hazard facing LL whose businesses before C24 was perfectly viable!?

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