It seems that several UK and Ireland banks are so keen to move on some of their mortgage customers that they are offering startling deals to certain landlords to encourage them to take their custom elsewhere.
When the bank crisis first unfolded it appeared that the majority of bad loans the UK banks had on their books were from business bought from the USA. It now appears that much of the bad debt was in fact on this side of the Atlantic and furthermore, that some banks over here are still struggling to manage them. The situation has brought about some remarkable offers from banks to clients with Mortgages.
It is emerging that banks bailed out by the British and Irish governments are offering “golden goodbyes” to some clients, mainly professional landlords and property developers. Banks are reputedly offering to write off up to a quarter of their debts if they take their custom elsewhere.
Industry insiders say that the Anglo Irish Bank, the Royal Bank of Scotland and the Bank of Scotland are all offering similar deals even though they say it is not their policy to do so. The finance brokers in the sector say that landlords offered the deals are usually clients that the bank have recognised as possible bad debtors and are keen to get off their books. Simon Gammon, of Knight Frank Finance, said “We have seen a number of clients coming to us having negotiated discounts with lenders and these discounts have been as high as 25 per cent.”
Of course the landlords involved will be delighted with the deal and to some it may make the difference in survival or going under. Others will see it as an incentive to go out and add to their portfolios and see the cut in their debt as providing them with free extras such as landlord insurance.