Should Buy to Let Landlords be worried about Scottish Independence?

by Neil Patterson

16:16 PM, 11th June 2014
About 5 years ago

Should Buy to Let Landlords be worried about Scottish Independence?

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Should Buy to Let Landlords be worried about Scottish Independence?

Scotland’s big three banks RBS, Bank of Scotland and Clydesdale are over 12 times in value the size of the total Scottish economy, where as currently UK banks are just over 4 times the size of the economy.

In practical terms that would mean if Scotland were to vote for independence they would not be able to guarantee or bail their banks out if we had another banking crisis.

Does that mean if banks could no longer count on the Bank of England as the lender of last resort they would leave the country?

I don’t honestly know, but would you deposit your savings knowing they would not be guaranteed in the event of something similar happening. I suspect not and this is only where the problems start. Their cost of borrowing could also increase as it is likely their credit rating would be down graded, because of the smaller economy.

Reuters have reported from several banking sources that RBS, and part nationalised Lloyds Banking group which owns Bank of Scotland based in Edinburgh, have started drawing up contingency plans in the event of a Yes for independence vote on the 18th of September.

Vince Cable the UKs business secretary has already stated that he believes RBS would move its HQ from Edinburgh to London.

Scottish Nationalists have said they would like to keep the pound in a currency union along with British backing for its banks if the Bank of England were to retain monetary control. However David Cameron has already said that this would be extremely difficult – meaning unlikely.

Reuters figures also suggest that the British tax payer bail out of RBS in 2008 would have cost every member of Scotland’s population £8,800.

So the question is what would happen to the BTL industry in Scotland. Would you be able to remortgage a BTL property, would there be any new BTL loans to make purchases and is it possible Banks south of the boarded would try to call in existing loans.

These questions may all be at the worst case scenario end of the spectrum, but I don’t see much evidence at the moment of anyone asking them.

I am a concerned half Scot (family from Aberdeen) that is not allowed to vote.Scottish Independence



Comments

Mark Alexander

16:28 PM, 11th June 2014
About 5 years ago

Hi Neil

You and your family must also be worried that just because you live in England you can't vote but some 16 year old EU National who happens to be living in Scotland can vote!

Scary times indeed for any landlords with property and mortgages in Scotland.
.

Neil Patterson

16:43 PM, 11th June 2014
About 5 years ago

I am mostly worried that the Press and Politicians are not brave enough to lay out the economic facts for fear of being seen as anti Scottish some how.

When I first discussed this over 3 months ago with anonymous but well placed sources independence was dismissed as an economic impossibility. Now they think it might just happen because a percentage of people just don't care if they are worse off.

Mike W

16:45 PM, 11th June 2014
About 5 years ago

Neil,
You have only touched on the matter very lightly. Alex Salmond's referendum is a worse disaster for Scotland than the ill fated Darien Venture which bankrupted the country in 1700. Whatever the outcome in September there will be a large dissatisfied minority.
Of course the banks would move. There will be no shared £. So will Scottish mortgages be in Scottish currency or UK currency? Of course shipbuilding would move, and the call centers and the UK government centers. England would not support Scottish business. Frankly, if I were the English PM post a Scottish independence vote I would put tolls on the M6 at Carlisle and the A1 at Berwick. And a few other connecting roads too. Can you imagine England allowing Scotland into the EU when it intends to continue to discriminate against English students, but not other EU students?
A simple example: What will happen to all the car registration plates, registered in Swansea? Anyone in Scotland with a special number plate? NES51E?
Salmond has made one big mistake. He is holding the vote in Scotland. He should have held it in England. Then he would be sure to win. The English are fed up with Scots who winge all the time!
Please don't wind me up any more!!

Neil Patterson

16:51 PM, 11th June 2014
About 5 years ago

Reply to the comment left by "Mike W" at "11/06/2014 - 16:45":

Excellent History knowledge Mike.

I doubt Scotland will be Sieged by Spain again though !

Anon

16:58 PM, 11th June 2014
About 5 years ago

I'm hoping for a YES vote as it will severely reduce the chances of a Labour government ever being elected again!

matchmade

18:01 PM, 11th June 2014
About 5 years ago

I have no properties in Scotland but have sympathy for anyone who does, wasting their money on ineffective landlord registration and the general anti-business rhetoric coming from the SNP. The invective and bullying attitudes that SNP supporters display towards anyone who dares question that independence will be a success is deeply unpleasant and not promising for the future. If Scotland does go independent, the English will of course be blamed for anything that goes wrong.

Assuming the remainder of the UK is given a choice, I would never, ever vote for a political party that allows Scotland to share the pound: it would be an utter disaster. I don't trust Scottish Labour, let alone the SNP, to control its spending - they would always blame the English and demand ever-increasing resources to prop up their economy.

Alastair Lygate

22:19 PM, 11th June 2014
About 5 years ago

My take on Scottish Independence is that it 's a romantic fantasy which us Scots like to sing about from the terraces ,imagine and moan about from the working class pubs full of folk with little ambition, motivation and labourite dependance on state handouts either via meaningless council job creation for inspectors looking over the shoulders of those who actually produce products and services.,or those 'entitled to' hand outs to feed their kids and bad habits.

The reality is that we have a marriage with the rest of the UK that works well regardless of healthy 'family squabbles' over 'who gets more on their plate'.

Should we vote for divorce I can imagine that as like the vast majority of divorces, it will result in bitterness and separation and its the kids that suffer( generations to come) however should we not be daft enough to vote with our hearts instead of our heads ,
then a NO vote will confirm our marriage and thus result in ever closer ties of business between us as oppose to the separation that divorce will inevitably cause

I am fearful that the SNP will have their day. and if so i hope I can sell up my portfolio before it falls apart,and head to a more mature and stable economy south of the border, should I pass the immigration controls, and that the English will have me.

Richard Adams

22:43 PM, 11th June 2014
About 5 years ago

Reply to the comment left by "Alastair Lygate" at "11/06/2014 - 22:19":

As the owner of a BTL in Scotland I wish I'd never bought and can't sell without taking a big hit I struggle on with rent just about covering mortgage & other outgoings. No capital value movement for years now.
So if there is a yes vote will I - can I? - be any worse off? Might a vote either way remove the ongoing uncertainty that prevails north of the border and produce some confidence misguided or otherwise? Might Salmond following a yes vote start chucking money around (that he has not got or certainly can't afford) to stimulate the economy? Might this be good for me in short term but lousy for Scotland I completely agree in medium to long.
Can someone tell me what will happen with interest rates in Scotland if there is a yes vote and when down south rates almost certainly will rise in 2015? With all the disagreement ongoing about linking to/keeping the pound if the yes campaign wins, can Salmond set interest rates in Scotland as he sees fit?
Meanwhile my mortgage is with an English lender who will continue to wish to be paid in pounds, and of course the loan is linked to BofE base rate so I guess any different Scottish base rate is immaterial to me? .

Neil Patterson

8:38 AM, 12th June 2014
About 5 years ago

Reply to the comment left by "Richard Adams" at "11/06/2014 - 22:43":

Hi Richard,

In the extremely unlikely event that Scotland kept the pound after a Yes vote all monetary policy would have to be run by the Bank of England so rates would stay the same. However I have been told by sources that this would not happen.

Scotland's Credit rating would be downgraded and hence they would be forced to have higher interest rates to issue government stock that would be worth the risk buying. This is a pure guess but I would think their interest rates would need to be double the BofE rate at least.

It also takes years to qualify and align your economy sufficiently to be allowed into the Euro so I have no idea what currency they would use.

I can't believe that independence will happen as some of these facts must eventually get out to the population in a way that they can understand it is economic suicide.

Richard Adams

22:58 PM, 12th June 2014
About 5 years ago

Reply to the comment left by "Neil Patterson" at "12/06/2014 - 08:38":

Thanks Neil. So basically whatever happens I shall be no better or worse off in the short to medium term?

What prompted my initial post was a statement in this forum that investors in Scotland should be trembling at prospect of a yes vote. Can't see it worsening my already bad position while certainly holding out no hope of improving it for 100% sure.

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