How does Buy to Let END!

[Rare Bear]

On 08/01/2023 at 15:12, MightyTharg said:

I don’t know what HPE stands for, but here are the figures:

https://www.thisismoney.co.uk/money/mortgageshome/article-10893633/How-high-house-prices-theyd-matched-inflation-1952.html

With inflation houses would cost £63,300 instead of £275,000. So your long-term landlord has made more than £200,000 plus whatever he’s made from negative rates, negative taxation and whatever the tenant has paid him.

 

 

Edited February 20, 2023 by Rare Bear
Wrong assumption.

[Formerly]

On 15/02/2023 at 15:08, MrXxxx said:

Just thought I would leave this here for those BTL landlords whose answer to rising interest rates is "I just put up my tenants rent as they don't have any choice!" :-)

 

How does buy to let end?   With a 20% price increase taking the gross yield to 4.2%. That'll do the trick :)

https://www.rightmove.co.uk/properties/128811041#/?channel=RES_BUY

[Wight Flight]

54 minutes ago, Formerly said:

How does buy to let end?   With a 20% price increase taking the gross yield to 4.2%. That'll do the trick

https://www.rightmove.co.uk/properties/128811041#/?channel=RES_BUY

That is 108m sq.

You could always pay £500k for 92m sq in Surrey.

https://www.rightmove.co.uk/properties/124928291?

[Formerly]

25 minutes ago, Wight Flight said:

That is 108m sq.

You could always pay £500k for 92m sq in Surrey.

https://www.rightmove.co.uk/properties/124928291?

https://www.ilivehere.co.uk/wishaw-pishy-wishy.html

Do Surrey residents like it as much as the reviewer in the link above. At least the tenants in the house I linked to wash occasionally, proven by the scum around the bath.

[MrXxxx]

1 hour ago, Wight Flight said:

That is 108m sq.

You could always pay £500k for 92m sq in Surrey.

https://www.rightmove.co.uk/properties/124928291?

I wouldn't mind, but it's not even Guildford!

[eek]

24 minutes ago, MrXxxx said:

I wouldn't mind, but it's not even Guildford!

Yep but you are paying to be in the safe catchment area of a school while hoping it remains hat way well beyond you children leaving that school.

[Wight Flight]

20 minutes ago, eek said:

Yep but you are paying to be in the safe catchment area of a school while hoping it remains hat way well beyond you children leaving that school.

550m is too far away to be safe.

 

 

 

[leonardratso]

that bath looks familiar

Edited February 20, 2023 by leonardratso

[spygirl]

Dpectstir - Desth of the LL

Spring is property auction season, when a motley collection of semi-derelict houses, flats with leases in the single figures and the homes of mortgage defaulters get sold off. This year, though, a scan of the catalogues of some of the UK’s leading property auction houses reveals a new class of property under the hammer: rental flats.

Under pressure from rising interest rates and increasing regulation, many landlords are opting for an exit strategy. According to recent research from estate agent Hamptons, Britain’s rental sector is losing homes at a rate of 66 per day. Agents across the country report an influx of instructions from small-time landlords who’ve decided to invest elsewhere.

The great rental exodus has been triggered by a complex mixture of government policy and wider economic conditions. But one thing is clear. Owning a buy-to-let (BTL), once seen as a copper-bottomed way to earn an easy, passive income, is rapidly becoming a financial albatross.

The first hint of lean times for landlords came in 2016, when buyers of ‘additional properties’ to their main home were hit with a 3 per cent stamp duty surcharge. A year later, in 2017, HMRC began stripping landlords of the right to claim tax relief on their mortgage interest payments. Meanwhile local councils began introducing registration schemes for landlords, adding to their administrative burdens. 

More recently, a combination of rising interest rates and increasing maintenance have trimmed even more fat off BTL profitability. The average rental yield in the UK now sits at 3.63 per cent, according to Seven Capital – barely more than interest rates on the high street. 

Figures show Britain’s rental sector is losing homes at a rate of 66 per day, and agents across the country report an influx of instructions from small-time landlords who’ve decided to invest elsewhere

And this year will bring more pain for landlords. Their capital gains tax allowances will be cut in April, followed later in the year by an overhaul of rental rules, featuring indefinite tenancies and the end of ‘no fault’ section 21 evictions. 

Also looming on the horizon is another potentially costly set of regulations. In 2020 the government unveiled plans for new energy standards for rented homes. By 2025, it announced, all newly rented properties would need an EPC rating of C or above. All rented properties would need to comply by 2028. Energy efficient rental stock is, of course, a good thing. But the average EPC rating for a UK property is D, and bringing a period house up to scratch can be extortionately expensive. 

Since the announcement was made three years ago there has been a deafening silence on the matter; a spokesman would only say that the government remains ‘committed to improving energy performance standards’ and would make a further announcement ‘in due course’.

This uncertainty is doing little to calm landlord nerves, and the results are clear. Existing landlords are selling up, and the number of BTL purchases is slowing. In 2015, 117,500 rental homes were bought across the UK. according to data from UK Finance. In the first 11 months of 2022, the most recent figures available, there were just over 97,000 – a drop of more than a fifth.

‘Landlords have been hit with a double whammy of higher borrowing costs and less generous tax treatment which has made it much harder for them to justify expanding their portfolio or buying into the residential sector,’ says Lucian Cook, head of residential research at Savills. ‘At the same time, many landlords who have been active since buy-to-let took off in the early 2000s are now nearing or in retirement and looking to liquidate assets.’

In Richmond, south-west London, Xavier Marqués-Wicks, director of Chestertons estate agents, says BTL demand peaked in 2014. It has been all downhill since then, since the only buyers who can turn a profit on a BTL nowadays are cash buyers. Marqués-Wicks calculates that anyone buying a two-bedroom flat to rent out in the area, with a 20 per cent deposit to put down, would probably make a loss. ‘Your net yield would be -1.5 per cent and this is largely because of the increase in the cost of the mortgage wiping out all of the rent,’ he says.

The problem is not confined to England. ‘Demand for buy-to-let properties fell dramatically in Wales as soon as the Welsh government began introducing longer “no fault” notice periods, giving tenants more protection from eviction, and compulsory electrical safety testing in December 2022,’ said Carol Peett, managing director of West Wales Property Finders. ‘This puts such a burden on the landlord that frankly many people feel it is not worth their while owning buy-to-lets and many sold or are selling those they had. Therefore, the demand for rentals, which has always been high, is now totally out of hand. Rents have increased dramatically so the whole thing is incredibly short-sighted and ridiculous.’

Peett is right to point out that the current scenario doesn’t only hurt affluent investors. The one in five households who live in a privately rented home are facing rapid rent hikes as landlords try to keep themselves in the black. 

In 2019 the median rent was £700pcm in England, rising to £1,450pcm in London, according to the Valuation Office Agency. The pandemic triggered an initial dramatic dip in rents as many tenants fled back to their parental homes, followed in 2021 and 2022 by a rapid increase as they flooded back. Median rents in England hit a record £800 last year, while London’s median monthly rent rose to £1,475, another record.

A potential solution to the problem is the burgeoning build-to-rent (BTR) sector. Rather than individual landlords buying and renting property the old-fashioned way, BTR involves institutional investors, routinely from overseas, building entire blocks and developments aimed at renters. According to the British Property Federation there are almost 80,000 such homes built, another 72,000 on their way, and well over 100,000 more going through the planning process.

Aside from the simple fact that they are being built while traditional privately rented homes are being sold, BTR does have some selling points. The properties are modern, often come with extras such as on-site gyms and social events, bills tend to be inclusive and tenants usually don’t pay a deposit.

But the downsides are significant. BTR homes tend towards hotel-style ensuite bedrooms with kitchenettes – fine for a student or twenty-something, not so great for an older renter or a family. And then there is the cost. At Vonder Wembley, half a mile from the stadium in north London, for example, a compact studio room starts at £1,450pcm (inclusive), and a three-bedroom flat starts at £3,000pcm. 

Probably the best solution for renters is a hybrid model. Landlords need to be given a reason to carry on – adjustments to their tax burden would help while interest rates are high, as would clarity on EPCs. And the planning system could be used to encourage BTR developers to offer more cost-effective, and family friendly, options.

But, as always, attempts to manipulate the property market require a deft, light touch – and not the kind of hammer blows that landlords have become accustomed to.

[Guest]

11 hours ago, spygirl said:

But, as always, attempts to manipulate the property market require a deft, light touch – and not the kind of hammer blows that landlords have become accustomed to.

The ability of BTLers to whinge after being handed 25 almost seamless years of win is unparalleled. House prices up 15-20% during 2 years of rona, rents up too and they still see themselves as victims being beaten with hammers.

Edited February 23, 2023 by Guest

[spygirl]

13 minutes ago, Darude said:

The ability of BTLers to whinge after being handed 25 almost seamless years of win is unparalleled. House prices up 15-20% during 2 years of rona, rents up too and they still see themselves as victims being beaten with hammers.

TOS thread - 

https://www.housepricecrash.co.uk/forum/index.php?/topic/229792-countdown-to-leveraged-btl-going-bust-thread/#comment-1103223898

April 2017.

S24 changes have been counted down for 6 years.

This is nothing more than over late normalisation - UKGOV has never let you claim for costs (IR) for an invesmtent.

Quote from above - 

The great rental exodus has been triggered by a complex mixture of government policy and wider economic conditions. But one thing is clear. Owning a buy-to-let (BTL), once seen as a copper-bottomed way to earn an easy, passive income, is rapidly becoming a financial albatross.

On IR, well they were always going to go higher.

Taking an mind bendingly leveraged position on a investment yield sub 4% is fucking nuts.

 

 

 

 

[lid]

https://www.property118.com/landlords-are-selling-up-because-of-ridiculous-tax-policies-that-are-bleeding-us-dry/

😆

[Ash4781b]

On 23/02/2023 at 09:23, Darude said:

The ability of BTLers to whinge after being handed 25 almost seamless years of win is unparalleled. House prices up 15-20% during 2 years of rona, rents up too and they still see themselves as victims being beaten with hammers.

Dunno assume it’s the coming realisation been herded into a pen for banks and Hmrc to feast over.

[spygirl]

1 hour ago, lid said:

https://www.property118.com/landlords-are-selling-up-because-of-ridiculous-tax-policies-that-are-bleeding-us-dry/

😆

See my previous post -

Hello, How long does the government think this situation is sustainable for? Squeezing landlords dry with increased taxes and high BTL mortgage interest rates!

I have personally, for the past 4 years, accepted that I was only just breaking even with my 2 rental properties… then with the change in tax rules meaning I paid 40% tax on my total rental income (instead of 20%) regardless of my monthly mortgage expenditure, I ended up topping up my tenants’ rent by £100-£200 per month after paying my tax bill!

And even then, I accepted the situation… believing that long term I would still be better off keeping the investment.

Then the Bank of England base rates started to climb… and then a shift in UK Prime Minster from Boris to Liz, sky rocketed mortgage interest rates into seriously unsettling figures!

My interest only fixed rate is ending in October and my circa £1,000 per month mortgage payment will be turning into circa £4,000 per month!!!

Fuckwit.

Ukgov doesn't care ffs.

Unsettling figures??? 6%??

Hasn't got started you fuckwit.

Azad Peshderi

13:24 PM, 24th February 2023, About 7 hours ago

You are not alone in this mess as I have three properties and facing exactly the same scenario as you. I also know three other landlords having the same issues.
The unfair heavy taxation caused lots of landlords like me and you to sell up and move on. I think is the government trying to kill the buy-to-let market for whatever reason, leaving potential tenants homeless as they can't rent properties due shortfall of housing supply.
The solution out there is mostly for larger landlords and big corporations, not for smaller landlords like you and me. Maybe that's precisely what the government is trying to achieve, which is eliminating small competitors from the market leaving the larger corporations only.
Well done Tories for your so-called “housing solution”.

[spygirl]

Oh look. One of those special names...

 

[JohnnyB]

12 hours ago, spygirl said:

Oh look. One of those special names...

 

With the feeling that a disproportionate amount of landlords tend to be  Chinese/Singapore/Korean foreign investors, mini-Rishis who are believers in the caste-system and think they are on top, or our homegrown peaceful demographic, I don't think there is much public sympathy.

[Guest]

1 hour ago, JohnnyB said:

With the feeling that a disproportionate amount of landlords tend to be  Chinese/Singapore/Korean foreign investors, mini-Rishis who are believers in the caste-system and think they are on top, or our homegrown peaceful demographic, I don't think there is much public sympathy.

All 6 of the landlords I have rented from have been white British, 4 of the 6 were over 50. This was in London, Hertfordshire and Edinburgh.

[reformed nice guy]

7 minutes ago, Darude said:

All 6 of the landlords I have rented from have been white British, 4 of the 6 were over 50. This was in London, Hertfordshire and Edinburgh.

I think it depends on where and what type of property.

If its a new build city apartment that was bought direct from the developer as an investment then its more likely to be what JohnnyB suggested. Some London apartments are mainly advertised in Asia!

[MrXxxx]

On 22/02/2023 at 22:18, spygirl said:

More recently, a combination of rising interest rates and increasing maintenance have trimmed even more fat off BTL carcass profitability.

 

[One percent]

1 hour ago, reformed nice guy said:

I think it depends on where and what type of property.

If its a new build city apartment that was bought direct from the developer as an investment then its more likely to be what JohnnyB suggested. Some London apartments are mainly advertised in Asia!

And left empty…

[No One]

On 22/02/2023 at 22:18, spygirl said:

 

Also looming on the horizon is another potentially costly set of regulations. In 2020 the government unveiled plans for new energy standards for rented homes. By 2025, it announced, all newly rented properties would need an EPC rating of C or above. All rented properties would need to comply by 2028. Energy efficient rental stock is, of course, a good thing. But the average EPC rating for a UK property is D, and bringing a period house up to scratch can be extortionately expensive. 

My counter argument is that all businesses have to follow some regulation or other, take the commercial aero businesses, they have to deal with new regulation all the time that makes flights safer, automotive with tighter emission standards etc.

BTL LL like to say they are businessmen, and they can't cover all the costs of taking a house from EPC D to EPC C and that they will make a loss if they don't bang up the rents innit because of mortgage rates, well real businesses can incur losses on some years and make profit on others. That's fucking life.

And real  businesses have incurred much larger losses than what these fuck wits are claiming the will ( like the one form London that said we will be loosing £100 per month). 

A real businessman would understand that his business is dependent on several factors, if borrowing money he will know the interest can change in an inflationary environment, or that the government can make tenancy arrangements more advantageous to tenants if there is enough public outcry over the state of some rentals. A real businessman would have factored that into the yield they want to get from a rental house and set a limit of what they would want to spend on buying a house.

But these retards think that they are special and at the first sign of trouble they should be helped by the goverment.

 

 

 

[No One]

On 24/02/2023 at 20:37, spygirl said:

See my previous post -

Hello, How long does the government think this situation is sustainable for? Squeezing landlords dry with increased taxes and high BTL mortgage interest rates!

I have personally, for the past 4 years, accepted that I was only just breaking even with my 2 rental properties… then with the change in tax rules meaning I paid 40% tax on my total rental income (instead of 20%) regardless of my monthly mortgage expenditure, I ended up topping up my tenants’ rent by £100-£200 per month after paying my tax bill!

And even then, I accepted the situation… believing that long term I would still be better off keeping the investment.

Then the Bank of England base rates started to climb… and then a shift in UK Prime Minster from Boris to Liz, sky rocketed mortgage interest rates into seriously unsettling figures!

My interest only fixed rate is ending in October and my circa £1,000 per month mortgage payment will be turning into circa £4,000 per month!!!

Fuckwit.

Ukgov doesn't care ffs.

Unsettling figures??? 6%??

Hasn't got started you fuckwit.

Azad Peshderi

13:24 PM, 24th February 2023, About 7 hours ago

You are not alone in this mess as I have three properties and facing exactly the same scenario as you. I also know three other landlords having the same issues.
The unfair heavy taxation caused lots of landlords like me and you to sell up and move on. I think is the government trying to kill the buy-to-let market for whatever reason, leaving potential tenants homeless as they can't rent properties due shortfall of housing supply.
The solution out there is mostly for larger landlords and big corporations, not for smaller landlords like you and me. Maybe that's precisely what the government is trying to achieve, which is eliminating small competitors from the market leaving the larger corporations only.
Well done Tories for your so-called “housing solution”.

Landlords are not squeezed compared to Oil majors for example, nor are they anywhere near as squeezed as PAYE higher rate. 

My previous to last Landlord bought a house from the 90s, the furniture and carpets have remained unchanged since the house was built, and I was paying him 695 per month for 5 years for a tiny house.

These people are not businessmen they are people farmers. 

The least they could have done is spent a bit of fucking money on the house to bring it to standard.

[spygirl]

On 24/09/2022 at 06:45, spygirl said:

How does it end?

Buying on sub 4% when IO BTL SVR head rapidly towards 10%

The cheapest resi, repayment resi mortgage SVRs are rapidly heading towards 5%.

https://tradingeconomics.com/united-kingdom/mortgage-rate

Sadly, IO BTL being a specialist products, there arent easy go to sites showing the real SVRs.

However .. being specialist, that means the SVR will be far far far higher - 4% spread over resi soon.

And just in time for the first batch of IO BTL to fail to pay back the loan, causing banks to mark down the loans and icnrease capital.

IO BTL will rapidly be priced at what it is - a non amortising commercial bridging loan. ~3%/month, compounding.

 

 

Ive bolded + underlined a sentence in my post.

One in three landlords could be forced to sell up after failing their lender's affordability test to remortgage

• Letting agents report rise in number of private landlords selling properties
• Rates for homeowners have dipped but buy-to-let rates remain stubbornly high 
• A third of buy-to-let mortgage applications are now being rejected 
• Some buy-to-let investors being forced to accept variable rates as high as 9.5% 

https://www.thisismoney.co.uk/money/mortgageshome/article-11803073/One-three-landlords-struggling-remortgage.html?ico=mol_desktop_money-newtab&molReferrerUrl=https%3A%2F%2Fwww.dailymail.co.uk%2Fmoney%2Findex.html

 

 

 

[spygirl]

6 months from that post.

The sunny lowlands of very high IO BTL SVR has arrived.

Why in fuck cant they take the message?

The banks dont want to lend to them FFS.

IM sure the Boe have done a model goign - Well,, as soon as SVR hit 7% we'll see BTL leaving the market ... surely noone can  be that stupdi to keep in that market ...

 

[spygirl]

GlanACC, Derby, United Kingdom, 5 hours ago

Dont delay, sell up today. Take it from me , a BTL of 20+ years, the new regulations proposed will kill the small landlord (I had 18 properties once), combined with the abolition of section 21 it will be impossible to get rid of a non paying tenant as the current court process takes at least 6 months then you have to wait for a bailiff. Yes, some people will still buy properties but the only ones with a hope of making money will be those that have no mortgage and have an EPC rating of C. As soone as any of my tenants give notice I will sell

Small????