Tag Archives: BTL

I Am A Property Developer – Ask Me Anything! Ask Me Anything, Latest Articles, Property Development, Property Investment Strategies, UK Property Forum for Buy to Let Landlords

I run a small property development business in the Reading, Wokingham and South Oxon and Bucks areas.

The company organises planning applications on small sites of up to 4 flats or houses, then secures the financing, oversees the design and specification, and commissions and project-manages sub-contractors to do the actual construction. I also undertake whole-house property renovations and act as landlord when I rent out existing detached houses on sites where I am assembling additional land or sorting out access and planning issues. 

My tenancies are usually graduate houseshares/HMOs as I find these give a more reliable income stream than renting to a family.  I Am A Property Developer - Ask Me Anything

I moved into property development from being a BTL landlord as I felt the returns would be better – perhaps not the wisest of careers moves in 2007!

I am inviting Property118 contributors to “ask me anything” as regards small-scale property development if they are considering this as an additional aspect or future evolution of their rental business.

I don’t claim to be able to answer everything as property development is a very wide-ranging field and can be highly specific as regards local valuations and planning rules, but I will endeavour to help.


Venture Capital for Buy to Let Landlords Latest Articles

Until now it has not been possible for private landlords to access venture capital but times are changing.

Historically the only form of funding for buy to let investors has been mortgages, i.e. debt based finance where the returns for the provider comprise of fees and interest.

In the world of corporate finance it is common for business funding to comprise a mixture of both debt and equity finance.

Equity finance is different in that the provider makes a return by sharing profits, often when the business or asset is sold or refinanced. This form of capital is also know as mezzanine finance, private equity and venture capital amongst professional corporate advisers. Venture Capital for Buy to Let Landlords

A respected mortgage lender has now entered the  provide equity finance market and will be offering it’s products to private landlords. The lender will take a legal charge over rental property to protect their interests in much the same way as a traditional mortgage lender does, however, their charge will rank second to that of a traditional mortgage lender, thus enabling a mixture of debt and equity funding. A typical structure based will be:-

  • 65% debt on a traditional buy to let mortgage secured by first charge
  • 20% buy to let equity loan secured by second charge
  • 15% owners own funds

No interest or monthly repayments are made on the buy to let equity loan. The return for the lender comes when the property is sold or refinanced. The equity loan is repaid and the lender takes a 40% share of any capital gains. For example, if the property had increased in value by £100,000 the lender would take £40,000 of the profit plus return of capital. If the property had decreased in value the equity lender would still get their capital returned but would take 40% of zero profit, i.e. a zero return on investment.

For most buy to let landlords this very radical alternative to traditional mortgage financing alone will take some thinking through. There are pros and cons which I have thought through in quite some detail. For further details please CLICK HERE


BTL Second Charge Mortgages / No Monthly Payments Advice, Buy to Let News, Commercial Finance Broker Blog, Financial Advice, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property Investment Strategies, Property News, UK Property Forum for Buy to Let Landlords

No this is NOT a wind up, it’s 100% genuine and is important that you know how it works so that at the very least you can make an informed decision about new financing choices which until now have been unavailable to buy to let landlords.

It really is a fantastic way to improve cashflow and rental profits or increase gearing without the need to remortgage.

A very credible mortgage lender (Castle Trust) is offering second charge buy to let mortgages with no interest charges and no monthly payments based on 20% of value subject to both the first and second mortgage combined not exceeding 85% LTV on BTL deals and 80% on your own home.

You can use the money in whatever way you wish, for example:-

  1. You can use it to pay down existing mortgages
  2. You can save the money for a rainy day
  3. You can use the money to buy more property
  4. In fact, you can blow it all at the local casino if your daft enough too!

So what’s the catch?

With no monthly payments or monthly interest charged, the lender must get paid somehow. This product works with a profit share basis, in that you borrow 20% of the value of your property the lender will take 40% of any increase in value – on sale or refinance.

You will also need to obtain permission from your existing mortgage lender for a second charge to be added.

Given that your equity in the property may represent as little as 15% of the value of the property and you will receive 60% of the capital appreciation you don’t need to be Einstein to work out that it’s better to use their money than yours, especially if you use the extra money raised to purchase more properties. Remember, you will not be making any payment or incurring any interest whatsoever until you sell or refinance.

Imagine if somebody put this deal to you …. I want to buy a property, you put 20% of the money and I will put in 15% and borrow the remaining 65%. I take all the rental profit/losses and when we eventually sell the property I will get 60% of the capital appreciation and you will get 40%. Oh and by the way, I will decide when we sell, OK? You would probably say no wouldn’t you? Well if you put that deal to Castle Trust, chances are they will say yes providing you have a good credit rating. It really is that good.

Basic criteria

The loan term can be up to 30 years if the equity loan is secured against your own home, 10 years if it’s a rental property.

Your total LTV must not exceed 85% on a rental property, 80% if the loan is secured on your own home..

There are no limits on the number of properties the lender will consider lending on per borrower and their maximum loan exposure to any one client is £1 million.

The minimum advance is £10,000.

For rental properties there is no requirement to have a first mortgage.

You must be able to prove that you have been a landlord for at least six months to qualify and you also need a decent credit score.

Pros and cons?

I can see several reasons why this will be attractive to landlords and I will be using this product myself for the following reasons …

  1. Deals may not stack up on rent to ordinarily qualify for an 85% LTV mortgage but may do so on this basis
  2. It’s a relatively easy way to raise capital against the security of your existing rental portfolio or your own home
  3. Improved cashflow when compared to a conventional mortgage for a higher amount
  4. Raise money without paying off an amazing tracker or fixed rate deal arranged pre-credit crunch
  5. Avoid potentially extortionate fees associated with refinancing
  6. Increase borrowing without affecting cashflow
  7. Use of other peoples money to increase leverage and returns on capital invested
  8. Castle Trust do not legal or valuation fees to arrange finance on your own home and their arrangement fees are only 1% of the advance. Valuations on rental properties cost £195+ VAT and conveyancing costs £216. This means that total fees are likely to be significantly less than arranging a conventional remortgage.
  9. Some landlords will wish to borrow 20% LTV via Castle Trust to partially redeem their mortgage with another lender and thus benefit from improved cashflow.
  10. Some landlords will wish to utilise this product to borrow more money
  11. Some landlords will wish to mix and match, i.e. reduce existing interest bearing debt and increase overall gearing to 85% LTV

Downsides

  1. Your risk is higher than that of Castle Trust because they get paid back before you do on the basis they have second charge over the property. Therefore, if the property decreases in value then you carry the majority of the risk. However, unless you’ve come to the end of the loan term it’s up to you to decide when you sell, they have no say in it.
  2. Future remortgaging may prove more difficult
  3. No new build property, i.e. properties built in the last two years
  4. The product is only available on properties located in England and Wales (not Scotland or Northern Ireland)
  5. 40% reduction in any future capital appreciation but you do need to consider that you may well be able to use the money to make a better return elsewhere
  6. The improved cashflow, in comparison to an higher traditional mortgage, will increase taxable income. However, many will see that it’s better to pay tax on profit than to have no profit at all
  7. Early repayment charge of 5% in year one
  8. If you wish to repay the loan without selling the property then you are committed to proving Castle Trust a return equal to the greater of 2% per year for the period which the loan has run or 40% of the rise in property price
  9. You will need to contact your existing mortgage lender before progressing matters to establish whether they will allow a second charge to be taken

We have no idea how long this funding will be available for so if this is of interest we recommend you to get in quickly. BTL Further Advances No Monthly Payments

We will be arranging introductions to brokers on a panel of specialist advisers which I have personally hand picked. The role of the adviser will be to review your portfolio and provide you with bespoke advice and quotations based upon your personal circumstances.

We are also considering the demand for free of charge introductions to a non-advised mortgage packager service. However, unless you consider yourself to be a sophisticated investor and in need of no advice and associated protection we strongly recommend you to obtain professional advice from our carefully selected panel of advisers.

Obviously we want to make some money out of this too so we are charging a fee of for introductions to our panel of professional advisers. By charging for the introductions we, and the advisers we are referring to, recognise that only serious enquirers will progress matters. This is a good way to ensure that our advisers are not bogged down answering questions from time wasters and also provides a very a good reason for our recommended advisers to prioritise our referrals.

Our fee for arranging an introduction to a professional adviser, who will visit you to provide face to face advice if that is required, is £200, payable to Innovative Landlord Solutions LLP (the legal owner of Property118.com) either by credit/debit card or via PayPal. You will then be contacted within 7 days.

Professional Adviser Introduction Request Form

  • Price: £ 200.00
    Fees are non-refundable


Shared Appreciation Mortgages for Buy to Let Landlords Advice, Buy to Let News, Commercial Finance, Commercial Finance Broker Blog, Financial Advice, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property Investment Strategies, Property News

A radical shared appreciation mortgage product for buy to let landlords is soon to be launched.

The detailed criteria is yet to be released but we do have details of a product launched a few years ago by the same mortgage lender into the residential mortgage market. If we assume that the key features for the buy to let version will be similar, then landlords will be able to borrow 20% of the value of the property with no monthly payments or interest charges whatsoever against the security of a second charge. Up to a further 60% LTV would be able to be borrowed from a different mortgage lender which would take first charge.

In other words, you have to put down 20% deposit in cash on a purchase yourself and if you are refinancing, your total mortgage exposure (including the Shared Appreciation Mortgage), cannot be more than 80% of the value of the property.

Shared Appreciation Mortgages for Buy to Let Landlords

The mortgage lender offering this product (Castle Trust) is well funded via venture capital and is a credible and trusted lender. They only operate via an exclusive panel of mortgage packagers and their network partners.

The way Castle Trust will make their money is by sharing in any capital growth when the property is sold, or in 25 years, or when the borrower reaches age 75, whichever is the sooner.

The product for residential borrowers is based on the lender taking a 40% share in the growth in the value of the property whilst the owner takes 60%. Not bad considering each party is only putting in 20% is it? In fairness though, the property owner does carry the lions share of the risk as the shared appreciation mortgage provider is secured with a second charge.

As an example, based on a property value of £100,000 the figures would work as follows:-

  • Traditional mortgage £60,000
  • Shared Appreciation Mortgage £20,000
  • Owners equity £20,000

Now let’s assume the property is eventually sold for £200,000 – the following is what each party would get back …

  • £60,000 to the traditional mortgage lender (assuming it was an interest only loan and no fees were added)
  • £60,000 to the shared  appreciation mortgage lender (i.e. £20,000 original capital plus 40% of £100,000 growth)
  • £80,000 to the property owner being the balance.

In this example the property owner would quadruple his capital invested and only be paying interest on 75% of his total mortgage liability.

I can see several reasons why this may be attractive to landlords if the BTL product is similar to the version available to residential mortgage borrowers:-

  1. Deals may not stack up on rent to ordinarily qualify for an 80% LTV mortgage but may do so on this basis
  2. Improved cashflow due to only having to service interest on a maximum of 75% of the debt
  3. At 60% LTV many BTL mortgages are significantly more competitive
  4. Landlords will be able to increase their borrowing without affecting their cashflow
  5. Use of other peoples money to increase leverage and returns on capital invested
  6. Castle Trust will rely upon the mortgage valuation of the traditional mortgage lender. Therefore you only have to pay for one valuation.
  7. Castle Trust do not legal or valuation fees and their arrangement fees are only 1% of the advance. This means that total fees could be less than if you arrange a traditional mortgage for a higher Loan to Value.
  8. Castle Trust do not require the consent of a lender providing the first charge. Therefore, the product is technically available to any landlord with borrowings of 80% LTV
  9. Some landlords will wish to borrow 20% LTV via Castle Trust to partially redeem their mortgage with another lender and thus benefit from improved cashflow.

Downsides

  1. The property owner gives away a substantial share of any capital gain
  2. The improved cashflow, in comparison to an higher traditional mortgage, will increase taxable income
  3. Remortgaging may prove difficult
  4. The product is only available on properties located in England and Wales (not Scotland or Northen Ireland)

Questions I can’t answer yet

  • In the example above, has the property owner made a £60,000 capital gain or a £100,000 capital gain?
  • Which buy to let lenders will allow a second charge to be taken over the property for a new purchase?
  • Whether the BTL product will be a mirror of the residential mortgage conditions
  • There are also rumours of 85% overall exposure being offered

We are expecting to receive full details within the next few weeks and funds are expected to be limited. Therefore, if this is of interest we recommend you to get in quickly.

We will be arranging introductions to brokers on our panel of specialist advisers which I have personally hand picked. The role of the adviser will be to review your portfolio and provide you with bespoke advice and quotations based upon your personal circumstances.

The fee for arranging an introduction is £200, payable to Innovative Landlord Solutions LLP (the legal owner of Property118.com) either by credit/debit card or via PayPal. You will then be contacted within 7 days of the product being launched with a view to arranging a priority appointment.

To register please complete the form below.

Professional Adviser Introduction Request Form

  • Price: £ 200.00
    Fees are non-refundable


Landlords lose the Zero Tariff with the energy companies Latest Articles, UK Property Forum for Buy to Let Landlords

Most savvy landlords will have negotiated with their energy providers, so that in between tenants the tariff automatically reverts to a zero tariff. This was not advertised widely for obvious reasons. It avoids annoying bills for 46p (or even £2.46!) to cover standing charges for a couple of days. It also means that if you are renovating for a couple of weeks you pay just for the energy that you use whilst you are doing that. Some companies overlook small amounts anyway – but not all and in any event it can take an extra ten minutes on the phone whilst organising the changeover of tenants. Landlords lose the Zero Tariff with the energy companies

I have just discovered that two of the providers that I use SWALEC and British Gas are abandoning this tariff, even for landlords, even for short periods, because of the new legislation. If I can find one provider who will continue with this then I will transfer all of my accounts across my whole portfolio, as it is just such a pain. It is not just the money, as the smaller the amount the more irritating it becomes, wasting paper, postage and time etc

I recently put up a BTL property for sale and if this had been in place it would have cost for every week that it was on the market. The other option would have been to cut off all the supplies, leaving the new owner (or tenant if applying it to void periods) to pay a huge re-connection fee.

I think it is disgusting that over the last few years the rules have changed so that we now have to pay for Water Rates, Council Tax and the latest – energy bills – when the place is unoccupied and even, in some cases, uninhabitable. I can’t see that this battle has been fought and it cannot be right. Can it?

Has anyone found a company that will continue to overlook small amounts between tenancies or who will continue with the zero tariff?

If one of them chooses to do this then I think it will be a winner.

Regards

Gilly


Buy to Let Mortgage products and market update – essential reading Buy to Let News, Landlord News, Latest Articles

Having just updated the Buy to Let mortgage products on our own in house Buy to Let Mortgage sourcing system and calculator I thought I would give you a summary of what’s Hot or Not in the current market.

Virgin Money have been added to the system because of their helpful attitude and criteria which includes:

  • Day one remortgages – So no need to wait 6 months to remortgage for cash purchases, refurbs, Auction purchases etc
  • First Time Buyers
  • Regulated Buy to Let

However Maximum LTV is 70%. Stand out different product is a 5 year fixed at 4.09% with £750 Cash Back and 2.5% product fee (better for smaller loan sizes where looking to fix costs long term is important.

The Mortgage Works (TMW) always been and old favorite of mine going back to 2003 have a selection of 80% LTV products and no income requirement for existing landlords.

Interestingly they have no longer term products currently above an initial 2 year deal. This will either be because they have purchased no long term funds or are uncertain of market direction at the moment. Example products range from:

  • 2.49% two year fixed with 2.5% arrangement fee at 60% LTV (really only a headline grabber) to
  • 4.14% 2 year fixed 2.5% fee at 80% LTV (one of the lower interest rate high LTV products)

BM Solutions were the old industry go to lender until introducing a maximum exposure of 3 mortgages, but still have one of the most comprehensive range of products up to 75% LTV.  They are also often helpful for flats above or adjacent to commercial premises.

  • 3.19% 2 year tracker £1295 fee 60% LTV
  • 3.89% 2 year tracker 0.5% fee 75% LTV
  • 4.34% 3 year fixed 1% fee 75% LTV
  • 4.99% 5 year fixed 1.25% fee 75% LTV

BM Solutions have NO customer service staff so any mortgages or further advances even must be done by a broker.

Kent Reliance are really mostly famous for being THE 85% LTV lender.

However minimum property value £75,000, proof of £25,000 income required stress tested at 192 times monthly rental income.

  • 4.99% 2 year fixed 2.5% fee 85% LTV reversion rate 6.58%
  • 4.89% 2 year discount 2.5% fee 85% LTV reversion rate 6.58%

Aldermore have a good range of 80% LTV products at 4.98% including 2, 3 and 5 year fixed and a varibale rate for the term. They will do day 1 remortgages for properties bought with a bridging loan on a like for like basis and inherited properties.

They will also consider customer with light adverse credit which very few lenders will allow including:

  • 1 or 2 missed mortgage payments over 12 months
  • CCJs and Defaults registered over 3 years ago
  • Missed unsecured credit payments such as credit cards, mobile phone, loans et

Principality have a penalty free no tie in 2 year discount product at 3.39% with only a 1% + £99 fee at 60% LTV.

Also interestingly they will consider Holiday Homes on their BTL range!

Godiva owned by the Coventry building society are the “Does what it says on the tin lender” I liken them to the Yorkshire tea, or a sliced white loaf of a the buy to let product market. Nothing spectacular just a good solid no frills value for money products.

  • 3.49% variable penalty free for the term of the loan, £999 fee max 65% LTV (very good value with flexibility)
  • 3.79% 2 year fixed, £500 fee max 65% LTV
  • 4.74% Standard variable penalty free no fee max 65% LTV

Cost and product wise the market has been reasonably stable with small improvements adding up each month giving a healthier range of options available especially in niche areas such as:

Terms beyond retirement age, Bridge to Let, Remortgages inside 6 months, Ltd company applications, Higher LTV, Lower fees, Light adverse, Holiday let and more.

All of the above products, lenders and many more can be found by using our Buy to Let calculator and quote engine Please Click Here

If you need any assistance with a Buy to Let mortgage you can also:

Email: info@property118.com or

Telephone: 01603 489 1182013


West Bromwich Tracker Rate Mortgages Legal Action Group Legal, UK Property Forum for Buy to Let Landlords

West Brom Tracker MortgagesNearly 1,000 people have registered an interest in the Class Action groups challenging the legality of the increases to tracker mortgage interest rate margins proposed/implemented by West Bromwich and Bank of Ireland. Many of the people who have registered are not affected at this time but are sufficiently concerned about the potential knock on effects to the attitudes of other lenders to make a donation to the Class Action Marketing Fund. We must spread the word to ensure that we win these cases in order to to discourage other mortgage lenders from following suit. Tracker Rate Class Actions Updates

Funds raised towards the legal fighting fund are being held in a solicitors client account which complies fully with The Law Society rules and is protected by client money protection insurance and the solicitors compensation fund until they are billed.  The objective is to raise sufficient money to be in a position to fund group action court cases and associated legal expenses insurance. No court cases will begin until such time as sufficient funds are raised to protect and limit the liabilities of all participants to the amount of funds pledged up front. If Court cases are not required or are not affordable then any surplus funds held on account will be returned pro-rata to the members of each group.

The reasons we started this campaign are very simple:-

1) We believe the actions of West Brom are immoral

2) We believe the actions of West Brom are unlawful, i.e. they have no legal grounds to increase their tracker rate margins

3) We have no wish to subsidise other areas of the West Bromwich Building Society business model

4) We are fearful of other lenders following suit if West Brom are allowed to get away with this

On these grounds we have raised more than enough money to cover the initial legal work and the costs of obtaining Counsels opinion. In fact, even after taking these costs which amount to £15,000 out of the funds raised to date we are 25% towards our minimum target fund raising to commence litigation.

We will NOT settle on any basis.

In our opinion we are more likely to raise the required funds on this basis.

We have a moral duty to do what is right for those who support the values upon which this campaign was started. Our promise to all who support these values is that we will not sell out on you at any price. We will continue to fight this injustice and we will fight any other lender who tries to follow suit.

Are you with us?

To Do List

  • Complete the Class Action Expression of Interest Form – Link here You will then receive emails advising you what to do next.
  • Please make a donation to the marketing fund to help spread the word – link here
  • If your are directly affected then complain to your mortgage lender and copy in the Financial Ombudsman Service using this letter template

Latest media coverage in which our campaigns are named/linked

BBC Website

BBC TV News Channel “Your Money” (10 minutes and 18 seconds into the programme)

The Telegraph

iDoStuff

Guild of Residential Landlords

What Sam Saw Today – part One

What Sam Saw Today – part Two

House Selling Advice

Chesterfield Post

Also see our forums …

West Bromwich Building Society

Bank of Ireland

If you haven’t already signed up please complete the form below.

Tracker Rate Class Actions Updates


Tracker Rate Class Actions Updates Buy to Let News, Commercial Finance Broker Blog, Landlord News, Latest Articles, Mortgage News, Property Investment News, Property News, UK Property Forum for Buy to Let Landlords

Over 1,000 people have registered an interest in the Class Action groups challenging the legality of the increases to tracker mortgage interest rate margins proposed/implemented by West Bromwich and Bank of Ireland. Many of the people who have registered are not affected at this time but are sufficiently concerned about the potential knock on effects to the attitudes of other lenders to make a donation to the Class Action Marketing Fund. We must spread the word to ensure that we win these cases in order to to discourage other mortgage lenders from following suit. Tracker Rate Class Actions Updates

Funds raised towards the legal fighting fund are being held in a solicitors client account which complies fully with The Law Society rules and is protected by client money protection insurance  and the solicitors compensation fund until they are billed.  The objective is to raise sufficient money to be in a position to fund group action court cases and associated legal expenses insurance. No court cases will begin until such time as sufficient funds are raised to protect and limit the liabilities of all participants to the amount of funds contributed up front. If Court cases are not required or are not affordable then any surplus funds held on account will be returned pro-rata to the members of each group.

Latest media coverage in which our campaigns are named/linked

BBC Website

BBC TV News Channel “Your Money” (10 minutes and 18 seconds into the programme)

The Telegraph

iDoStuff

Guild of Residential Landlords

What Sam Saw Today – part One

What Sam Saw Today – part Two

House Selling Advice

Chesterfield Post

Tracker Rate Class Actions Updates

Existing supporters of the Class Action campaign are to be congratulated for their efforts to date.

If you wish to get involved please see the To-Do list below.

  • Complete the Class Action Expression of Interest Form – Link here You will then receive emails advising you what to do next.
  • Please make a donation to the marketing fund to help spread the word – Link here
  • Complain to your lenders and copy in the Financial Ombudsman Service – letter template here
  • email watchdog@bbc.co.uk
  • Write to your local MP – find your local MP via this link several MP’s have already referred this matter to the chancellor of the exchequer or the chairman of the treasury select committee. The more support the better so we need everybody to write.
  • Contact your local newspapers – use this Press Release as a base and add your personal story as the media love case studies with local interest
  • Post articles linking back to Property118 on websites/blogs and post links in Facebook Groups and other online forums

West Bromwich BS Class Action Update

The reasons we started this campaign are very simple:-

1) We believe the actions of West Brom are immoral

2) We believe the actions of West Brom are unlawful, i.e. they have no legal grounds to increase their tracker rate margins

3) We have no wish to subsidise other areas of the West Bromwich Building Society business model

4) We are fearful of other lenders following suit if West Brom are allowed to get away with this

On these grounds we have raised more than enough money to cover the initial legal work and the costs of obtaining Counsels opinion. In fact, after taking these costs out of the funds raised to date we are 27% towards our minimum target fund raising to commence litigation. Now I don’t know about you but if Counsels opinion is that we have a VERY strong case I would definitely consider paying a lot more than I’ve paid already to take this all the way. £240 a case is a tiny fraction of what we all stand to lose, not just in terms of this lender but possibly others too.

In a months time we will have Counsels opinion. These are the scenario’s I have considered.

1) Worst case scenario is that we will be advised that we do not have a case. If that happens, costs to date will be taken from the funds raised and we will all get a refund pro-rata.

2) We are advised that we have a good case but we do not have enough money in the pot to fight it. We will then have to set a closing date for the fund and have a vote amongst members on how much they are prepared to pay if necessary. I suggest a pledge of up to one years worth of savings because if we start trying to set amounts we could be going back and forth forever more if people decide they are are in at one level and out at another. If we still don’t have enough money pledged at the end of such an exercise then it’s possibly game over, i.e. contributions are refunded net of expenses to all named borrowers.

3) We have enough money in the pot and counsels opinion is that we should fight.

We will NOT settle on any basis.

In our opinion, we are more likely to raise the required funds on this basis.

We have a moral duty to do what is right for those who support the values upon which we started this campaign in the first place. Our promise to all who support these values is that we will not sell out on you at any price. We will continue to fight this injustice and we will fight any other lender who tries to follow suit.

Who’s with me?

West Bromwich Legal Action So Far

Tracker Rate Mortgage Class Actions UpdatesWe appointed solicitors to consider the actions of the West Bromwich BS tracker mortgage hike in interest rate margins at the beginning of October. Well over 100 affected borrowers have sent their papers and fees to the solicitor representing the group.

The solicitor acting for the group has been asked NOT to commit chargeable time to respond to individual telephone calls and emails from affected borrowers, this is to preserve funds. All questions should be raised via the Property118 forums to prevent duplication of efforts.

Around £15,000 of the funds raised to date will be used to complete the following steps. The balance will be held towards a Court action fighting fund, the target for which is £100,000 plus.

  1. To seek counsels opinion on the legality of the actions of West Bromwich and to seek advice on the most direct legal options to pursue. The solicitor acting for the group has appointed one of the UK’s leading banking barristers at Stone Buildings London
  2. The solicitor acting will provide template letters for all paid up members to send to the solicitors who acted in the transaction. This letter will advise the solicitors to put their PI insurers on notice and also ask the solicitors to comment on why they did not offer advice on the clauses now being used by West Bromwich BS.
  3. A further template letter for affected borrowers to submit as a follow up to initial complaints to the Financial Ombudsman service will also be prepared by the solicitors acting for the group and will be based on counsels opinion. There is no rush to do this, we have up to six months, hence the decision to await Counsels opinion in respect of the best possible legal arguments to present.
  4. The solicitor acting on behalf of the group has already sent  a letter to Andrew Tyrie MP, Chairman of the Treasury Select Committee. A response is awaited.
  5. The solicitor acting on behalf of the group will submit formal complaints to the Financial Conduct Authority and the Financial Ombudsman Service once Counsels opinion has been received. A further complaint may be submitted to the Advertising Standards Authority dependent upon counsels advice.

Bank of Ireland Class Action Update

More pressure needs to be put on the Financial Conduct Authority to obtain their own independent advice as to the legality of the actions already implemented by the Bank of Ireland.  They received our barristers opinion, sent it to BoI who obtained comment from their QC and then decided to do nothing further. Our solicitor is of the opinion that the FCA response was a “whitewash” as they did not seek their own independent advice prior to making a decision. The more noise we can make about this the better as we need them to reconsider their position. Pressure is intensifying from the Treasury Select committee to lean on the FCA as more MP’s get embroiled in the debate following complaints from their constituents. Fundraising will recommence in due course, in the meantime, a QC working at the same chambers as the barrister we instructed has volunteered to review the opinion of our barrister and the responses from the FCA and the Bank of Ireland.

Fees applicable to the Bank of Ireland Class action are likely to be £240 per property, less any fees paid to date. We will advise you when the fundraising re-commences. Our objective is to significantly increase the numbers of interested parties before fund raising recommences. We are quietly confident that the promotional activities described in this update article will increase the numbers of interested participants.

The Financial Ombudsman Service are yet to make a decision based on the formal complaint regarding the actions of Bank of Ireland. It has been 7 months now since the FOS opened this case and their are still pontificating how to deal with it. If you believe this is an unacceptable delay the address to write to is The Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR.

In both cases

Preference remains to persuade a regulator to take the cases to Court as this will significantly reduce costs to affected borrowers.

Disclosure – in group legal action cases it is normal for both sides to be aware of each others legal arguments before a Court case commences. Therefore, there is no risk to debating legal points in open forum. There is, however, a positive upside in that it continues to provide media with new stories and people to contact for case studies. Exposure is what we need to build the group.

The Marketing Fund

The purpose of the marketing fund is to increase awareness of the campaign. This fund is held separately to the Class Action legal fighting fund which is held in a solicitors client account protected by client money protection insurance. The marketing fund is administered by Innovative Landlord Solutions LLP which is the owner of Property118.com.

Initiatives funded so far include sending letters to a database of mortgage brokers and financial advisers. The database was rented from Equifax and we chose to send letters as opposed to emails in order to guarantee delivery. We have also completed significant Search Engine Optimisation to make it easier for people surfing the internet to learn about our campaigns.

A Press Conference, open to paid up members of the Class action Group, and those who have contributed to the marketing fund, will be organised shortly after we have receive Counsels opinion on the West Brom case and the QC’s opinion in respect of our submission of the BoI case to the FCA, their response and the BoI’s QC’s response to the FCA. All responses are anticipated to be received towards the end of November with the Press Conference being held in London shortly thereafter. Surplus funds in the marketing fund, which are still continuing to flow in nicely, are being held towards this event. Funds raised since our first call for donations to a Marketing Fund on 3rd October are now approaching £4,000 of which £3,375 has been utilised to date.

Facebook Marketing

We have done some research and we are able to contact in the region of 230,000 to 420,000 people via Facebook for a budget of £800. These will be friends of friends of people who have “Liked” the Property118 Facebook page. On the basis that people socialise with like minded people this could be an excellent target audience.

Details via this link >>> http://www.property118.com/wp-content/uploads/2013/10/Facebook-Promo.png

The beauty of this type of advertising is that we can add credit to reach more people as and when we receive donations.

If you wish to donate to the the fund please see >>> http://www.property118.com/much-appreciated/ and send us an email to let us know that you wish the funds you have donated to be used to fund Facebook marketing. The email address to write to is mark@property118.com

All comments via the main discussion threads please.

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Expat couple looking for advice investing in London Latest Articles

First off, great site! As a wannabe investor/landlord for several years, I’ve been a keen follower of this and similar landlord online resources, which have been a great source of inspiration and learning about the landlord business. Many thanks!

My wife and I are now planning to take our first steps into residential property investment in the UK and would be really grateful for any advice and tips to help us in this journey. I have detailed our rough plan and somewhat non-standard situation below and would welcome any advice, thoughts and expert insight from the community.

My wife and I are both British expat who have been living/working overseas (currently Singapore) for close to 4 years now. We are both in our early thirties and are in employment; I do contract consultancy work and my wife has a permanent role with a large multinational.

We are now set on settling back in the UK in the next 1 to 2 years. Living abroad has been a great experience but we would now like to settle down and be closer to family. We plan to continue our careers and, at the same time, build/manage an investment property portfolio.

We are both Londoners and want to invest in London as we feel we know the area and view this as a long-term investment to benefit from capital gains. We are of course aiming for positive cash flow on rental income but do not anticipate huge month-to-month profit given the areas we are considering buying in.

We currently have a sum of £500k to invest and plan to take on BTL mortgages to initially purchase a few 1 to 2 bed flats. From our initial research and calculations, we anticipate that this should allow us to purchase 4 – 5 properties, assuming 75% LTV mortgages, purchase costs etc. We plan to rent these out and have these managed by a letting agent.

We do not currently own property in the UK as we sold our residential home in London before we left. While we do plan to stay abroad in the short/medium-term, we are keen to start investing asap and to start preparing the ground for our permanent move later, including me establishing contacts and looking for work etc.

As such, I am planning on taking an extended trip to London for 2-3 months to start the above process (with the possibility shuttling between London and abroad thereafter). The aim is to better understand the market/our options, start making connections, and scouting/purchasing property if possible. During this period, the wife will remain in her job in Singapore and I will not be formally employed.

A big step for us but one we feel is necessary to make our jump home smoother and to start our property investment plans. It would be great to get your thoughts/advice on this i.e. Does the plan seem sound? How would you go about investing in this situation? What should we look out for?

In particular, we would like to:
– better understand the likelihood of us being able to secure BTL mortgages. I understand that being expats and not currently owning residential property in the UK can make this more complicated.
– get your recommendations on good mortgage brokers/advisors in London (as well as other trusted professional e.g. solicitors, letting/mgt agents) who I could possibly get in contact with.
– get an understanding of the landlord/investment networks, clubs or communities that are around and that I could possibly plug into.

I have purposely put down a lot of detail but do let me know if you have any further questions.

Thanks a bunch!

PaulSingapore Expat


Development finance using Equity instead of Liquid Cash Commercial Finance, Latest Articles

I have an example of how the commercial market is changing. Some lenders are now taking a risked based view of using second charges over equity as security for development finance rather than only relying on pure cash being put up as collateral by investors.

Example of a recently completed case, as follows:

A builder/developer was looking to buy a property to renovate for a long term investment and once complete take out a Buy to Let mortgage based on its new and improved value (and if possible have additional funds returned too).

He was very limited in the cash deposit he had, as all his money is tied up in other properties which he lets out, however he had a good level of equity in his main residence, which has a value of £600,000 and an outstanding mortgage with the Halifax for £300,000

He found a property which needed heavy renovation including a full new and extended kitchen, and also a new bathroom. The purchase price was £150,000 in its current state and the cost of renovation was £40,000 (as he would be able to do it himself). Therefore, the total borrowing required was £190,000

He ideally wanted to borrow 100% of the purchase price and 100% of the renovation costs using both properties as security, including using the equity in his home as additional security.

Once renovated he required a quick solution in changing the bridging loan into a Buy to Let mortgage

He was able to borrow 75% of the new purchase – which gave him £112.5k on a bridging rate of 1.15% for 3 months. A very keen rate for refurbishment deals.

The short fall of £37.5k towards the purchase and the £40k needed for the renovation works was raised by adding in the additional security via a 2nd charge on the client’s main residence by the same Bridging company.

He was offered a 2nd charge bridge on his residential property up to 70% LTV (although he did not require as much as that) including his existing main residence mortgage at a cost of 1.4% per month. This meant he could raise up to up to a max £120k from this property, more than enough to raise the required 100% of the purchase together with 100% of the renovation costs.

The valuer was booked to attend the property within 72 hours. In the meantime the shopping list of requirements was quickly collated and submitted.

Working closely with a solicitor that understood the speed required for a bridging loan, the deal was completed within a few weeks enabling him to ‘do up’ his new property, increasing the value to £300k.

3 months later he was then able to change the bridging loan product to the lenders the same lenders Buy to Let product at 4.10%, releasing 75% of its new improved (and surveyor agreed) value. This released £225,000 back to the client, enough to clear the bridging loans and put some money back into his cash flow.

Summary of Deal:

  • Liquid Cash available £0
  • Purchase Price £150,000
  • Costs £40,000
  • Gross Development Value £300,000
  • First Charge Bridge £112,000 at 75% LTV
  • Second Charge Bridge on Main residence £77,500 at 70% LTV
  • BTL on completion of works £225,000
  • Liquid cash released £35,500

The set up costs not including interest were:

  • 1st Charge on property of £150k = valuation £330
  • 2nd Charge on residential property of £600k = valuation £540
  • Legal fees = £780
  • Total = £1,650

Buy to Let 3 months later:

  • Property now worth £300k = valuation £360
  • Legal fees = £540
  • Total = £900

Could this be of interest to you?

If so, check our my member profile, linked from my author profile at the top of this article.liquid cash


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