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Garbage In, Garbage Out: Adapting to Technology

Veteran international investor John Corey offers his thoughts

The title for this article is a rather old saying that is a common belief in the computer industry. If the inputs to the computer process are bad, the outputs will be bad. It seems obvious. At the same time we all seem to focus on the conclusions with less attention to the inputs. Worse is when you ask the wrong question so the inputs and outputs are bogus before you start.

Brexit was the focus of a panel debate the other night at an event I attended and it is the hot topic of debate for many, which is perhaps entirely reasonable. Except that it does not matter to almost all landlords who are in the business for the long term. A landlord is playing the long game or they are not really a landlord. Hence the current Brexit turbulence is something to sail through rather than react to.

One speaker at the event who voted out said he is hopeful that the MMR affordability tests bleeding into BTL mortgages will be rolled back or not applied. It was suggested that the MMR tests were an EU invention. While it might be true that the EU wrote the law that the UK then had to comply with, there is a missing element. The EU was responding to the Bank of International Settlement (BIS) directives. The BIS sets global banking standards and leaving the EU in no way removes the need to follow the BIS directives. The USA, Canada, Norway and other non-EU countries all have to fol-low the BIS directives. The USA has had affordability tests since the 1980s or earlier. So, afforda-bility will broadly be the same even without the EU. Ask the wrong question and it does not matter how bad the inputs are.

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