Hmmm, BTL.

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Hi Ian – it’s painful being pilloried, even gently!

As a group of ex-marketing blokes we got into BTL through a couple of sons in 2000, and decided to offer fairly-priced, well-furnished and maintained property in good locations to rising young professionals. Also to treat our tenants as clients. We’ve never had a vacancy in our several flats since! Good, honest, sensible business..well rewarded.

The point we make is that those extended period of low rates enabled us to do this and make a contribution to young people’s wellbeing, albeit at a fair personal profit – so it wasn’t all bad! Today’s further (in our view unnecessary) cut is yet more good financial news for those of us on trackers but, like other mortgagees, we suffered when rates quickly rose 5 times in 06/07 and rents remained constant.

Putting personal interests aside we cannot see why interest rates should not be set for the 12 months ahead to enable would-be buyers – particularly 1st timers – to plan with confidence. Politicians and central bankers seem not to understand the havoc they wreak on ordinary folks’ budgets when they make such drastic changes of direction over a short period. If the direction had been changed here and in the US (13 rises over 18 months wasn’t it?) gradually and not suddenly (don’t they ALL rather enjoy donning the hairshirt and making the pips squeak!) we may well have avoided the complete mess in which the housing market finds itself – and housing and construction is the driving consumer force in both countries.

We wonder why the young feel so disenfranchised, I doubt the Conservatives can do anything as I expect the BTL crowd are a key constituent.

Yes, they do. Look what has just happened to German bond offer. (behind subscription)

http://www.ft.com/cms/s/16c7ceba-dcbe-11dd-a2a9-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F16c7ceba-dcbe-11dd-a2a9-000077b07658.html

Personally it’s in our group’s personal interests to see a further cut in interest rate but already we are paying less than 3% on our BTL trackers; with no reduction in rental income the profits are now generous to say the least. However, objectively we agree that a further cut will have little or no positive effect.

Individually we are also being bombarded with 0% balance transfer promotional offers and unsolicited increases in our credit limits by several credit card companies. Is this merely reward for maintaining excellent credit records over the years, or an indication that lending is not as tight as we are led to believe?

On a different note Conservative Home’s blog yesterday on the projected Cameron reshuffle was reassuring in that the Conservatives have several ‘Big Beasts’ on hand to add their experience – inc Clarke, Davis, Redwood, Rifkind – as well as ‘Beasts in the making’ like Brady, Hands, Crabb and Mercer.
Compare this talent, and their experience of the real world beyond Westminster, with the ‘no-hopers’ in the Labour cabinet and their really is a story to be told of the potent blend of old and new if we are bold and take the spotlight off the leader while he pauses for breath!

The extra £22 billion stimulus would protect the retail sector & reduce the number of people going broke by giving 22 million people more scope to repay debts while spending a bit more money. The failed VAT cut should end with basic rate tax cut by 3p to 17p instead. That would add money to all taxpayers pay packets thus helping to achieve what my £1,000 cheque for basic rate payers should do.

As the Tax Payers Alliance has proved that £100 billion p/a of public sector spending is not needed one could talk to The Center For Policy Studies & Adam Smith Institute about what reforms could stop this happening within say six years. This would release monies for defense & balancing the budget.Unlike the VAT cut the basic rate reduction would be permanent and cuts in public spending would stop it being a net addition to the budget deficit over & above present levels from 2010-11 onwards. Major reductions in the PSBR should obviate the need for higher NI & Labours tax hikes on top rate payers – both will compound the damage done by Brown’s anti-enterprise tax system. George Osborne is right on NI and Dominic Grieve is right on cutting taxes for the wealthy. A bigger defense budget would make sense as the under-funding is doing so much harm that it defies belief.

Britain can get out of this mess – common-sense prevailing that is! A short -term rise in public debt to counter deflation is fine as long as you can reassure the markets & boost confidence with a pro-stability plan to balance the budget.

Reply: I called for them to halve them. Now they have more than halved them so I call for them to stop.

Someone should be shouting the question WHY were interest rates held high for so long following the collapse of Northern Rock?

Is the government or anyone else for that matter is taking steps to address or mitigate this problem? Is it even seen as a problem? I note that local authorities have now taken to bankrupting people who can’t pay their council tax…

That’s a very interesting statement. Does it imply that the state has no business in setting market rates of interest? That state rate, is purley the lender of last resort rate? Furthermore does it imply a decoupling between what rate the state would have to pay for money as to what it will charge to lend it? That is, what rate will investors demand from the UK to hold it’s sovereign debt?

If people lack confidence and want to horde their cash, then surely businesses will continue to lack the vim they need to get going.

Why on earth does the government not see a direct correlation exists between confidence – available finance coupled with lower taxes – and the resultant jobs they could preserve and even create, by getting a grip on these things. Plainly even a child could tell them that without demand there will be no sale and no need to hire staff to either make or sell them.

Are they just thick or are they purposefully wanting to break the country?

Isn’t this gross interference in the market?

We let exchange rates find their own level.

We all know what happens when the Government tries to control exchange rates; the market has them for breakfast.

Why don’t we let interest rates find their own level?

We appear to be in the process of finding out what happens when the State tries to control interest rates.

Reply: It’s not a conversion, and No I have not been asked to change my view by DC or GO. When I called for lower rates they would have helped stave off recession. Today, at these levels, they will not help.