Monday, 27 February 2012

BTL landords: "We own land! Give us money!"

From The Daily Mail*:

The emergency ‘bank’ set up by Government to oversee the mortgages originally lent by Northern Rock and Bradford & Bingley is treating landlord borrowers unfairly, it is claimed.

A number of large borrowers allege that heavy-handed actions by UK Asset Resolution is leading to widespread tenant evictions, business failures and the sale of thousands of properties at depressed prices...(1)

But landlords claim taxpayers are losing out,(2) along with everyone else, as UKAR puts thousands of properties into receivership, fails to maintain them and ultimately sells them for less than their market value.

The allegations are difficult to prove, but growing numbers of landlords are voicing similar complaints and using popular websites such as Consumer Action Group to air them. What is not disputed is that these borrowers are stuck.

Most have little or no equity in their portfolios of property, and so cannot find another lender. On the other hand, UKAR’s objective is to get their loans off its books.

1) To whom? It strikes me that if tenants could afford to pay the rent, they could more than afford the mortgage were they to buy the home they were renting. This all helps deflate the debt bubble and increases the spread of owner-occupation. Win-win!

2) Most tenants are taxpayers, are they not? However much they lose qua taxpayer (and it will be pennies), they will be compensated ten times over if they can now buy the home they are currently renting.

* Via Taffee at HPC


Bayard said...

Reading the article, I think the landlords have a legitimate beef, which is that UKAR, when acting as receivers, have put in much effort to manage the properties properly. Contrary to the title of this post, the landlords are not asking for money, they are asking for UKAR, when they take the management of their properties off them, to manage them well, not just to asset strip them. I can quit easily believe that UKAR don't give a toss; after all, it's not their money, is it, it's either the landlords' or the taxpayers'.

Mark Wadsworth said...

B: "I think the landlords have a legitimate beef"

No they don't.

They were gambling with other people's money, they must have realised that some of them might make losses. Don't gamble if you're not prepared to lose. Whether UKAR are acting in the taxpayers' bestest of interests is a secondary and minor issue.

Bayard said...

They are not complaining about making losses, they are complaining about making much bigger losses due to their affairs being taken out of their hands by a not-giving-a-toss UKAR and UKAR charging them extortionate fees, bout which they can do very little. There is not a single mention in the whole article about landlords asking the taxpayer formore money,or even asking the nationalised B&B for lower interest rates or repayments. Not so much "we own land, give us money", but "we owe money, don't rip us off".

Steven_L said...

Baynard, mate, it's a risk they had to consider. These are the same folk that were justifying their bets on the basis:

The government won't let it crash.

I remember 2001 - 2007 well. They knew there was a risk that the government would 'step in' to 'help' them. They should have realised they might screw it up.

There's no good reason to be howling on like this just because you lost a bet.

Bayard said...

SL, are you and Mark reading the same article as me? I can't see anyone whingeing about the fact that B&B crashed, or that they are facing losses, only that B&B's replacement is making those losses worse by rapaciousness and mismanagement.

Mark Wadsworth said...

SL, ta for back up.

B, that's the law, apparently a lender who repo's owes little or no duty of care to the borrower. And I'm sure that the self-dame whiney moany landlords would have no scruples about chucking out their tenants if they weren't paying their rent on the dot every month.

Bayard said...

"B, that's the law, apparently a lender who repo's owes little or no duty of care to the borrower."

Maybe not, but UKAR aren't repossessing the properties, they are putting the property companies into receivership and acting as receivers.

Mark Wadsworth said...

B, I see no mention of companies being put into receivership. What UKAR are doing is being appointed 'receivers' of individual homes, a slightly different concept, a receiver can then either rent the place out or sell it to try and get his money back. Those are the rules.