How does Buy to Let END!

[Ash4781b]

https://www.bbc.co.uk/news/business-65890391
 

“"Following a boom period for buy-to-let landlords, 2023 marks a turning point for Britain's private rented sector," said Lucian Cook, head of residential research at Savills.

"There is a very real risk that landlords will exit the sector, particularly those with high levels of borrowing, putting increased pressure on a sector where demand significantly outweighs supply in many locations." 

 

Things all seem to be moving rapidly. I’m not sure what their model shows - mass BTL exit? Not sure how they exit? The physical house doesn’t disappear but im not sure how the lenders behave. The lenders may not have thought that far and will they go after all the assets if lending not in limited company.

[eek]

57 minutes ago, Ash4781b said:

https://www.bbc.co.uk/news/business-65890391
 

“"Following a boom period for buy-to-let landlords, 2023 marks a turning point for Britain's private rented sector," said Lucian Cook, head of residential research at Savills.

"There is a very real risk that landlords will exit the sector, particularly those with high levels of borrowing, putting increased pressure on a sector where demand significantly outweighs supply in many locations." 

 

Things all seem to be moving rapidly. I’m not sure what their model shows - mass BTL exit? Not sure how they exit? The physical house doesn’t disappear but im not sure how the lenders behave. The lenders may not have thought that far and will they go after all the assets if lending not in limited company.

Not surprising with the cheapest BTL mortgage now being 7%...

[Wight Flight]

6 hours ago, eek said:

Not surprising with the cheapest BTL mortgage now being 7%...

And the best yield you will achieve in the SE being 5%.

Very kind of them to subsidise us.

[BoSon]

22 hours ago, Boon said:

Starting to see repos now in more 'premium' properties, like :

https://www.rightmove.co.uk/properties/86147814#/?channel=RES_BUY
Been on for sale for 10 months on the regular market with no takers.

It would just need a tidy and it would rent out the next day. This seems a deferred problem I can imagine lots of people who tried to shift their London flats but couldn't find a buyer just chose to rent it out instead, and while their mortgage was low it was free money. I even know someone who chose to rent her flat and the profit paid for a whole new place in a much cheaper bit of the country.

The problem is, this auction sale wouldn't be profitable at current rates at even quite low rates of leverage. The service charge is c.£6k.

You can see from the previous sold prices that these things actually sold regularly a few years  ago. But higher rates and service charges have killed all liquidity in developments like this. Lots for sale, but none selling.

If the numbers of these things get high enough wouldn't it be easier for the owner (the bank) to set up its own rental management business? One thing that is likely on the auction sale is that then it makes downvaluations of subsequent properties more likely.

Why are services charges so high?

Is there room for a government clampdown on them if they're being used to profiteer by the freeholder passing them on to the leaseholder?

Presume the worst are those with all the poncy services like a security guard on the door (aka 'concierge' ) that could be stripped away so it's just insurance and basic maintenance that needs covering.

[GTM]

Can we sell it?

https://www.rightmove.co.uk/properties/135061526#/?channel=RES_BUY

No. Better rent it out then.

https://www.rightmove.co.uk/properties/136054589#/?channel=RES_LET

Maximum yield, before costs. 4.05%. 

Edited June 14, 2023 by GTM
Forgot to put the yield in

[spygirl]

On 12/06/2023 at 22:06, spygirl said:

Paragon btl svr is 8.85%

 

Cheaper btl loans are available...

 

https://www.bmsolutions.co.uk/products/buytolet/

4.5%

4k fees mind....

[PETR4]

https://houseprices.io/?q=Pan+peninsula

My favourite London property car crash. I almost feel sorry for them. It will be interesting to see if the rest of London suffers a similar price destruction.

[Boon]

 

1 hour ago, PETR4 said:

https://houseprices.io/?q=Pan+peninsula

My favourite London property car crash. I almost feel sorry for them. It will be interesting to see if the rest of London suffers a similar price destruction.

That's pretty good - at least they are selling. Something like this I think is gonna be worse (change the last letter to x, y for more)

https://houseprices.io/?q=cr0+1fw

There are loads of these for sale but all desperately trying not to lose money so sit on the market for ages. But you would need someone exceptionally stupid to buy it with interest rates where they are. It's crap and has service charge, is not near a station and in a shit area.

In the 5 years that it has been built it looks like there only have been 2 standard resales in the entire block. Most end up being rented or being removed. Even now it seems they are still selling flats which never have been lived in. 

The only one that did sell took almost a £100k loss to get out. But I think for anyone buying one of the shitboxes where HTB helped set the marginal price, those kind of losses are also gonna be quite common.

[JoeDavola]

Just seen my first example in many years of what I reckon is a BTL-er exiting the market by auctioning their flat.

There's no reason the flat isn't mortgageable, it's in great condition looks fairly recently renovated but it's in a council estate so the kind of thing that would have been mostly of interest to other BTL-ers, and I'd guess they want/need a quick sale. £650 a month to rent and they're looking £110K+ .... I'll let others do the sums as to what the return is after letting agent fees and BTL mortgage interest and mainteanance and council tax (which owners pay in NI, not renters).  Not the worst yield by a long shot but must be far less attractive than it was say 2 years ago given lending costs.

I do wonder if we'll see a notable increase of smaller BTL places coming on in the next year or so - especially the kind that only house up to two people so have a definate cap on rent, whilst also being in places where owner occupiers generally dont want to buy.

Edited June 15, 2023 by JoeDavola

[Guest]

Fungus is on maneuvers again:
 

 

[eek]

18 minutes ago, Darude said:

Fungus is on maneuvers again:
 

 

Great last line of the report

 

the claimants’ £170,000 costs bill reflected the manner in which he conducted the litigation.

[HousePriceMania]

On 13/06/2023 at 11:36, Wight Flight said:

My understanding was that the prices of repo sales aren't published - purely to protect banks I guess.

My understanding was that the prices of repo sales aren't published - because the housing market is a scam.

[spygirl]

From TOS.

Another gem from Neal Hudson

 

[spygirl]

1 hour ago, Darude said:

Fungus is on maneuvers again:
 

 

I think  thats ManOKent from TOS.

I bought him a £10 coffee after his run in with the fat cunt.

If I dont post it, someoen remidn me to do the Fergus Cunt story from FT ~1-y ago.

 

 

[spygirl]

 

[leonardratso]

hey do the fergus cunt story from FT

 

[Wight Flight]

Lots of our Holiday lets still available in July and August.

Price cutting all over the place.

Ho hum.

https://www.cottages.com/search?adult=2&child=0&infant=0&pets=0&range=3&nights=7&accommodationType=cottages&regionName=Isle+of+Wight&regionId=21730&destinationURL=%2Fengland%2Fisle-of-wight&start=01-07-2023&page=1&sort=priceasc

[spygirl]

17 hours ago, leonardratso said:

hey do the fergus cunt story from FT

 

 

‘Anyone with half a brain’ could do buy-to-let

Property tycoons Fergus and Judith Wilson to sell portfolio

 

 

Britain’s most renowned landlord never intended to own a thousand properties and plans to spend his retirement tending his lawn and writing more children’s books.

 

Fergus Wilson and his wife Judith announced this week that they were looking to sell their entire portfolio of homes in and around Kent, having previously tried to do so during the financial crisis.

 

The former maths teachers became the public faces of the buy-to-let revolution, but Mr Wilson, 65, told FT Money this week that they did not start with designs on such a grand portfolio. If anything, they were the ultimate accidental landlords.

 

“We had a house to sell and another to buy, and so I thought with a fair wind, I could keep both at the time and rent one out,” says Mr Wilson. “But it wasn’t until the 1990s that I really started to grow the portfolio, attending property auctions. With the recession, prices started coming down.”

 

What really transformed things was the advent of buy-to-let mortgages in the mid-1990s. These provided cheap leverage for the Wilsons, who were easily able to acquire high loan-to-value, interest-only mortgages.

 

“In early 2000, the main requirement for gaining a mortgage was the ability to sign your name – occasionally we ran out of ink,” Mr Wilson quipped. “It became a joke that mortgage providers gave you an upmarket pen. We had hundreds of them.”

 

As their properties started to appreciate in value, the Wilsons remortgaged again and again, drawing out equity and using it to buy more properties, mostly two and three-bed houses rather than flats.

 

“We used to collect them [houses] like stamp collectors,” Mr Wilson adds

 

But in an era of tighter mortgage lending and suppressed yields, as rising capital values outstrip rental growth, would it even be possible for a landlord to build a similar empire today?

 

“It will be far more difficult,” admits Mr Wilson. “But not impossible. Anyone with half a brain could do it.” However, he adds that his mathematical background certainly helped give him an edge; this is a man who used to lie in bed running through his 17 times tables.

 

He also draws on maths and science to explain why he isn’t calling the top of the market, comparing the interplay between London and regional property markets to Archimedes’ principle. London is the proverbial overflowing bathtub, with displaced tenants and prospective homeowners spilling out all over the home counties. Satellite towns such as Ashford have benefited, especially because the town is on the high-speed HS1 rail link into the capital.

 

“The market has not peaked, it will continue to rise,” he says. “Although Carney’s efforts will slow it down, I don’t expect it to fall.”

 

So why sell now? Mr Wilson says he and his wife have wanted to exit the business for some time, but were unable to do so after the 2008 financial crisis caused a brief drop in house prices and a much bigger dip in transaction levels. “We battened down hatches,” Mr Wilson said. “From 2008 we didn’t sell any properties, and now we are looking to sell the whole portfolio.”

 

The couple are halfway through a six-month process to sell the entire portfolio. So far, professional football players, overseas investors and British pension funds have expressed interest. While Mr Wilson is keen to sell to the highest bidder, he hopes the portfolio will be sold to an onshore investor.

 

He aims to sell the whole portfolio complete with the tenants, many of whom have resided in the two and three-bedroom houses for ten years or more.

 

In terms of how the portfolio is positioned for sale, Mr Wilson said the loans amount to just under 60 per cent of the value of the properties. While he could not provide a specific yield, he noted his rental income for this year is around £12m. On sale of the portfolio, Mr Wilson expects to gain £200m before tax.

 

It has not all been plain sailing. The financial crisis didn’t just stop the couple selling the portfolio; it also caused cash flow problems for them and their tenants.

 

By late 2008, the couple were left needing to finance around £350,000 a month in mortgage repayments at a time when many of their tenants were themselves getting into difficulties. The Wilsons had factored in a maximum of 10 per cent of late payments in their cash flow planning, but in October 2008, nearly 40 per cent of tenants could not pay their rent.

 

The couple’s disputes with tenants have been well documented. This year, Mr Wilson sent 200 eviction notices to tenants on benefits.

 

He has previously opined that eastern European migrants in work made better tenants than British citizens on benefits.

 

“What is the fix for those on benefits? Perhaps it is to get a job and come off benefits, and that will ensure a passport to being housed,” he wrote in an open letter this year.

 

The Wilsons were thrown a lifeline in 2009, when the Bank of England cut its base rate to a 300-year low and their mortgage repayments fell with it. But that wasn’t the end of the mortgage issues.

 

About half of their empire is mortgaged with Mortgage Express, once the buy-to-let arm of the Bradford & Bingley building society and now part of UK Asset Resolution, the state-owned vehicle set up to house the legacy business of B&B and Northern Rock.

 

There has been speculation that the Wilsons are being pressured to pay back the loans in the view the rising market makes the portfolio ripe for sale, especially ahead of any increase in interest rates.

 

Mr Wilson says Mortgage Express came to be so dominant through the firm acquiring the loan books of other lenders – the couple are exposed to 14 lenders in total – and maintains that it “can’t call in” his loans.

 

However, he acknowledged that the aim of UKAR is to wind down the company and repay taxpayers by “helping” borrowers repay their loans or remortgage with alternative providers.

 

Since nationalisation, the lender has “been unable to extend mortgage terms” for interest-only customers, which could lead to repossession if landlords do not repay the full amount by the agreed date.

 

But Mr Wilson maintains that it is the meteoric capital gains over the past five years that have enabled the couple to exit at this opportune point in the market.

 

“We’ve never made money like we’ve made in the last five years,” he said. “God knows how much we’ve made daily on capital value.” So what next for the former maths teachers?

 

Mr Wilson says he will tend to the lawn in his large house south of Maidstone, which he has “neglected” for a good few decades, and will also continue to write children’s books; he is the co-author of a series of books about Larry the Liger, a cross between a lion and a tiger created by a mad professor at a private zoo. Although he’ll be sad to retire, he concedes now is an opportune time, even if the market has further to run.

[spygirl]

The above is from 2014.

Hes still selling his portfolio, 10y down the line.

The issue seems to be - he cant.

Hes full of BS, so we dont know how many houses he has and how many hes sold.

I would guess that hes just about to pay the mortgage to stay outside of  his lenders  repo criteria.

However Id guess the lenders are sat watching and dragging him in for meeting.

Id also guess they are grabbing the the rental to pay down the loans.

Both Fat cunt and lenders are stuck in mutually assured destruction. Both are putting off the day.

 

Sep 2016-

Britain’s biggest landlord sells half his buy-to-let property empire

Fergus Wilson says era of amateur landlords is at an end

 

Britain’s biggest landlord has sold almost half his property empire in the past year, declaring the era of successful amateur buy-to-let investors to be nearing its end.

Fergus Wilson and his wife Judith, both former maths teachers, have offloaded about 400 of their 900 houses in Kent, with most sold to overseas buyers and about 50 to tenants. The launch of the buy-to-let mortgage in the mid-1990s enabled the Wilsons to expand as high loan-to-value interest-only mortgages were easy to acquire at that time.

Again I call BS on all that.

2014 was the start of 'Ive sold my porfolio' stories.

Hes till coming out with them.

He might think hes sold them but theyll still be there.

Fat cunt is a class case of levering equity, which creates a massive tax problem if hes been claiming tax relief from mortgage income.

Fat cunt - and all other IO BTL loons have survived due to ZIRP and no S24.

Letting them create pretence - money comes in, money goes.

 

S24 and higher rate - much higer in terms on IO BTL burst the bubble. Totally.

UK IO BTL ends when Fat Cunt is bankrupted.

 

 

 

[One percent]

15 hours ago, Wight Flight said:

Lots of our Holiday lets still available in July and August.

Price cutting all over the place.

Ho hum.

https://www.cottages.com/search?adult=2&child=0&infant=0&pets=0&range=3&nights=7&accommodationType=cottages&regionName=Isle+of+Wight&regionId=21730&destinationURL=%2Fengland%2Fisle-of-wight&start=01-07-2023&page=1&sort=priceasc

😂😂😂😂😂😂😂

it’s not busy here with staying tourists. Day trippers yes but not ones staying.  

[leonardratso]

36 minutes ago, One percent said:

😂😂😂😂😂😂😂

it’s not busy here with staying tourists. Day trippers yes but not ones staying.  

maybe they read this forum and know of someone local that theyd rather not run into eh?

Edited June 16, 2023 by leonardratso

[BurntBread]

2 hours ago, spygirl said:

UK IO BTL ends when Fat Cunt is bankrupted.

Sixty-five in 2014. Seventy-four or -five today. He may never see bankruptcy.

He started with "just the one rental" sometime before the 1990's (which is when he started playing the equity-release-to-buy game). Thus he started when he was 40, and entered the Ponzi scam at 45. That's getting on for half a lifetime of an irrational market in his favour and against the tenants.

The day of reckoning has been a long time coming, and I guess he'll never see it. Not a life I would wish to have lived (and he has had a fair few deserved knocks, legally), but I'm guessing he'll be satisfied with it, looking back.

[spygirl]

25 minutes ago, BurntBread said:

Sixty-five in 2014. Seventy-four or -five today. He may never see bankruptcy.

He started with "just the one rental" sometime before the 1990's (which is when he started playing the equity-release-to-buy game). Thus he started when he was 40, and entered the Ponzi scam at 45. That's getting on for half a lifetime of an irrational market in his favour and against the tenants.

The day of reckoning has been a long time coming, and I guess he'll never see it. Not a life I would wish to have lived (and he has had a fair few deserved knocks, legally), but I'm guessing he'll be satisfied with it, looking back.

Lets put that clearer -

Hes more likely to die before going bust.

IIRC its the wife who has them. All in her name too.

They have a LtdCo but there was litel on it (from memory).

 

[spygirl]

From Wil!! at TOS!

https://www.themortgageworks.co.uk/lending-criteria/income#interestcover

Interest Cover Ratio (ICR)

To reflect the different taxable income levels of applicants, we have a range of ICRs that are applicable dependant on the customer and/or application. The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:

ICR
Buy to Let and Let to Buy		HMO and  Limited Company HMO	Limited Company  Buy to Let
Lower rate tax	Higher rate tax
130%	165%	175%	130%

[spygirl]

You migth to put a few numbers into excel for this.

Any porfolio IO BTL is, by default of having a rentla incoem from the portfolio, going to be a HRT.

Its a bit like having trying to chase a £100 note hangign off a stick n your head.