Musings of a London Property Finder

The media coverage of the government nationalisation of the mortgage arm of the Bradford and Bingley has been surprisingly on the button, as far as we have heard today.

So why is this thought to be a relatively good deal for the government and ultimately the tax-payer? 

Firstly the government have sold off the retail arm of Bradford & Bingley for £612 million for c. £20 billion of deposits and the government has in effect become the mortgage lender for mortgagees.  Long-term this isn’t a bad strategy, as long-term, any properties repossessed should be able to be sold to cover any mortgage arears and some will make money.  This means that when the financial system stabilises, the government should be able to sell on this part of the business.

Unlike the US, in the UK we have limited supply and high demand.  The credit crunch has had an effect on house price less because of a lack of demand but because people can’t get mortgages at the rates to which we have become accustomed, particularly first-time buyers, at the bottom of the food-chain.  But I digress.

We read that 60% of Bradford & Bingley lending was to buy-to-let landlords.  Profit to the taxpayer will depend to an extent on the canniness of B& Bs mortgagees.  One would hope that buy-to-let landlords will have purchased with a tight grip on the purse-strings.  If not, at least there should be a good 15% margin of error in most cases, unlike the Northern Rock, renowned for the 125% mortgage. 

And the other benefit of lending to buy-to-let landlords?  At least there should be rent coming in every month!  Call this London Property Finder for help in buying the right house at the right price.

Technorati Tags: Building Societies, Buy-to-let, First time buyers, government bail-out, House Prices, house supply and demand, landlords, London Propeerty Finder, mortgages

Tags: Building Societies, Buy-to-let, First time buyers, government bail-out, House Prices, house supply and demand, landlords, London Propeerty Finder, mortgages

Musings of a London property Finder

The Daily Telegraph published a story this morning highlighting a drive by the government to crack down on buy-to-let landlords who could be liable to  pay extra tax.  Phil Espin of Accountants Grant Thornton warned:

“Landlords need to be aware that HMRC has new inspection powers for visiting business premises to look at records and these powers are expected to take effect from next April.” 

Currently interest on a mortgage can be offset against profits for tax purposes but any capital repaid on the loan cannot which is why many buy-to-let landlords opt for 15 year interest only loans to maximise immediate returns, gambling that appreciation will pay for the loan in the longer-term. London Property Finder has a good insight into suitable buy to let properties.

Technorati Tags: buy to let mortgages, Interest only mortgages, landlords, London Property Finder

Tags: buy to let mortgages, Interest only mortgages, landlords, London Property Finder