How does Buy to Let END!

[UmBongo]

Well I've played my small part in ending Buy To Let. I bought a from a landlord disposing of the final property in his portfolio.  

I thing his other properties were also 2 bedroomed flats so hopefully they have gone to owner occupiers as well.

[Wight Flight]

2 hours ago, UmBongo said:

Well I've played my small part in ending Buy To Let. I bought a from a landlord disposing of the final property in his portfolio.  

I thing his other properties were also 2 bedroomed flats so hopefully they have gone to owner occupiers as well.

I hope you made sure he gave it away.

[sancho panza]

7 hours ago, Wight Flight said:

This place was £2,000 2 years ago, £2,250 last year and now £1,995.

Never seems to get a long term tenant.

Who says rents are only going up?

https://www.rightmove.co.uk/properties/137328206#/?channel=RES_LET

It's the competition thats the problem.not their pricing,youget a nice pad and view for your moeny for £2k on the Isle it seems and that bugnalow would only pick up someone taking it for 6/12 mo ths to find something better/buy.

 

[Wight Flight]

29 minutes ago, sancho panza said:

It's the competition thats the problem.not their pricing,youget a nice pad and view for your moeny for £2k on the Isle it seems and that bugnalow would only pick up someone taking it for 6/12 mo ths to find something better/buy.

 

Sort of.

They have a home office so were able to appeal to the WFH bunch for a while.T

it is also in Bembridge so has bragging rights.

But Island wages don't support those rents. Hence every one you posted above crops up year after year. Nobody stays long.

 

 

[UmBongo]

2 hours ago, Wight Flight said:

I hope you made sure he gave it away.

I got a sizeable discount on the initial asking price. Plus and extra £2800 to upgrade the windows. 

[sancho panza]

 

'With around 35,000 landlords coming off fixed rate mortgages each month, the upward pressure on landlords’ costs marches on'

https://propertyindustryeye.com/investor-landlord-capital-returns-falling-hamptons/

nvestor-landlord capital returns falling – Hamptons

August 14, 2023 | Eye Reporter

 

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As house price growth grinds to a halt, investors are now making smaller gains when selling their buy-to-let, compared to those who sold last year according to the Hamptons Monthly Lettings Index for July 2023.

So far this year the average landlord in England & Wales sold their buy-to-let for £94,800 more than they initially paid for the property, having owned for an average of 11 years. This gain is down 10.1% from a record £105,300 last year, and is almost identical to what landlords selling in 2016 achieved.

Average gains on the sale of a property by a landlord fell year-on-year in every region for the first time since 2020.

In percentage terms, northern regions recorded the largest year-on-year falls. This reflects both slowing price growth and a shift in the type of home being sold. Smaller terraced houses and flats, which have seen weaker price growth in recent years, made up a higher share of all buy-to-let sales so far this year.

Gap between average landlord purchase and sale price (England & Wales)

 

 

However, in comparison to 2016, investor profits have risen fastest and furthest in the north of the country (chart 2). Investors in the North East recorded a 176% increase in the average capital gain on the sale of a buy-to-let between 2016 and 2023, with all three northern regions boasting a 50%+ increase in gains since 2016.  House prices in Northern England have risen the most over the last seven years, while in parts of London and the South East prices have remained static.

Even , higher average prices mean that in cash terms London landlords who sold up still saw the largest gross capital gains. So far this year this figure stood at £308,500. However, this number is down 3.4% from £319,300 last year and 15% down from a peak of £365,000 in 2016 due to slower price growth.

There are just three regions where the average investor profit is still at six figures (London, South East and East). The South West fell off that list this year when the average capital gain shrank from £105,000 in 2022 to £95,700 today.

It is likely that the amount made by landlords selling up will fall further on the back of both lower prices being achieved and a rising proportion of sellers having bought later in the house price cycle.

The average landlord selling in 2023 bought 11 years ago. This means 65% of landlord sales this year were homes that had been bought since 2009, after the point where prices bottomed out. This figure rises to 70% for flat sellers, who typically have shorter holding periods and therefore tend to see lower capital growth.

Despite the slowing pace of price growth, the number of landlords selling for less than they paid is limited. Just 6% of landlords sold at a loss so far in 2023, slightly up from 5% last year but down from 10% in 2020.

Almost one in five (19%) investors who sold a flat did so for less than they paid, alongside slightly more than one in five (22%) of investors who sold a buy-to-let in the North East.

There are few signs that the pace of rental growth is slackening, with the cost of a new tenancy up 9.9% year-on-year across Great Britain to an average of £1,282 pcm. On an annual basis, rents have risen more than 5% for 27 consecutive months and above 7% for the last 10 months. This prolonged period of growth leaves the average rent 28% higher than in February 2020, on the eve of the pandemic.

Over the last year rents in London have continued to rise faster than anywhere else in the country, with the average price of a new let up 13.9% (table 2). Annually, rents here have been growing at a double-digit pace for 15 of the last 17 months. However, the rate of Inner London rental growth has slowed as rents surpassed pre-Covid levels, with growth now broadly on par with Outer London.

Looking back to the onset of Covid, rents have grown faster in the North than in the South. While average rents in London and the South East are up 26% and 24% respectively since February 2020. In the Midlands they are up 31% and in Northern England they are up 33%. Here, rents have risen on the back of higher house price growth as yields have held steady.

Rental growth on newly let properties in July 2023

Commenting Aneisha Beveridge, Head of Research at Hamptons, said:

“As house prices start to slip back, there are signs that the landlords looking to sell today may have missed the top of the market. Rather, some investors are consoling themselves with record-breaking rental growth which is slowly ironing out the arithmetic for landlords.

“Lower house prices and higher rents will combine to shore up the rental market as more landlords hold off on the decision to sell. On the flip side, this will also weigh down on the government’s capital gains receipts handed over by landlords selling up over the next few years.

“New homes coming onto the market continue to achieve record rents and in the short term it’s hard to see what would put concerted downward pressure on the pace of growth. With around 35,000 landlords coming off fixed rate mortgages each month, the upward pressure on landlords’ costs marches on. In the runup to remortgaging landlords are fighting to balance the books by paying down debt and hiking rents that have dropped below market rate.”

[sancho panza]

video posted by @XswampyX

 

the stills are lifted off by me.SHows how returns have deteriorated.The BTLers her refers to were making money on a 2% IO BTL 50% LTV mortgage.At the end he discusses how screwed they'd be if they were 75% LTV.

The maths is awful.Nationwides BTL mrotgage book at 91% IO looks enoguh to tkae them under  even without the other dog poo sandwich laons they written in Londinium and SE

video

at 1.49 a long lsit of warning signs that UK govt was raising costs of BTL.

at 5.47

at 6.26

at 7.04

at 9.55 Yer man works out that when they switch to a 'new normal' IR,they'll be losing money.He seems shocked by this.

at 10.25,he outlines that they're 50% LTV, and that at 75% LTV theyd be lsoing moeny big time

At 12 minutes he points out that the LL can't sell to anotehr investor because they'll be in exactly the same position of losing moeny every month.

 

Edited August 16, 2023 by sancho panza

[Wight Flight]

1 hour ago, sancho panza said:

video posted by @XswampyX

 

the stills are lifted off by me.SHows how returns have deteriorated.The BTLers her refers to were making money on a 2% IO BTL 50% LTV mortgage.At the end he discusses how screwed they'd be if they were 75% LTV.

The maths is awful.Nationwides BTL mrotgage book at 91% IO looks enoguh to tkae them under  even without the other dog poo sandwich laons they written in Londinium and SE

video

at 1.49 a long lsit of warning signs that UK govt was raising costs of BTL.

at 5.47

at 6.26

at 7.04

at 9.55 Yer man works out that when they switch to a 'new normal' IR,they'll be losing money.He seems shocked by this.

at 10.25,he outlines that they're 50% LTV, and that at 75% LTV theyd be lsoing moeny big time

At 12 minutes he points out that the LL can't sell to anotehr investor because they'll be in exactly the same position of losing moeny every month.

 

One of the interesting, but probably unintended consequences, is the no man's land between 2025 and 2028.

You can rent to your current tenants with a high EPC, but if you replace them you need to get the EPC down to a C.

That's three years where tenants really do hold the whip hand on less efficient homes. Good luck putting the rent up.

[Wight Flight]

I did wonder if this would happen ...

https://www.wightbay.com/totland-bay/for-rent/4-bedroom-character-home-with-sea-views-and-6730441/

Quote

I am considering rental of my 4 bed room, 2 double and 2 single beds, 2 large receptions, great fitted country kitchen and 2 lovely bathrooms, a real home with character.

Storage rooms in sperate building, also option to add in a 1bed granny annex at 850 pcm

Furnished /part furnished

Beautiful grounds and garden, lots of off road parking

Sea views over the Needles

Currently considering rental, so if you are interested give me a call. look to possibly rent from Jan 24 onwards due to move abroad

Had hoped to sell but market not really good and so considering this as an option and sell few years when stabilised .

 

[One percent]

https://www.bbc.co.uk/news/uk-england-wiltshire-66524739
 

Families on low incomes can no longer cover their rent with the housing benefit they are paid, according to a charity.

Housing advisors at Wiltshire Citizens Advice found "barely any" homes to rent that were covered by the benefit.

Claire Waltham-Smith, from Citizens Advice, said people were cutting out essentials to pay their rent, with some facing eviction.

The Government said it will spend £30bn on housing support this year.

Describing the situation, Ms Waltham-Smith said: "People go without energy or food, they are falling into rent arrears, they face eviction."

People living on low incomes often qualify for Universal Credit, which includes a housing element. This is based on the cost of housing where they live, called the Local Housing Allowance (LHA).

Since April 2020, the LHA has been frozen.

[Wight Flight]

38 minutes ago, One percent said:

https://www.bbc.co.uk/news/uk-england-wiltshire-66524739
 

Families on low incomes can no longer cover their rent with the housing benefit they are paid, according to a charity.

Housing advisors at Wiltshire Citizens Advice found "barely any" homes to rent that were covered by the benefit.

Claire Waltham-Smith, from Citizens Advice, said people were cutting out essentials to pay their rent, with some facing eviction.

The Government said it will spend £30bn on housing support this year.

Describing the situation, Ms Waltham-Smith said: "People go without energy or food, they are falling into rent arrears, they face eviction."

People living on low incomes often qualify for Universal Credit, which includes a housing element. This is based on the cost of housing where they live, called the Local Housing Allowance (LHA).

Since April 2020, the LHA has been frozen.

Paid...

2. to give over (money) in exchange for something.

3. to transfer money to (a person or organization) as compensation for work done or services rendered.

 

I think given would be the right word.

[One percent]

3 minutes ago, Wight Flight said:

Paid...

2. to give over (money) in exchange for something.

3. to transfer money to (a person or organization) as compensation for work done or services rendered.

 

I think given would be the right word.

Tbf, it is the bbc. 

[onlyme]

22 hours ago, sancho panza said:

video posted by @XswampyX

 

the stills are lifted off by me.SHows how returns have deteriorated.The BTLers her refers to were making money on a 2% IO BTL 50% LTV mortgage.At the end he discusses how screwed they'd be if they were 75% LTV.

The maths is awful.Nationwides BTL mrotgage book at 91% IO looks enoguh to tkae them under  even without the other dog poo sandwich laons they written in Londinium and SE

 

Interesting case analysis. I'm not so sure on his supply / demand side though, specifically in the case of student lets educational establishments can and do build student blocks, one obvious way escalating rents would be affected is reducing this demand from further building of those or reduction in student numbers if the economics of doing a degree turned south.

Also in the general market you cannot get blood out of a stone, there is a limit to which working people are able / willing to stump up ever larger rents, at some point they will individuall break and decide to lower their standard of living and go back to shring in numbers that they would not otherwise entertain.

[Boon]

https://forums.moneysavingexpert.com/discussion/6467213/accidental-landlord-trying-to-sell

I am sure this will become mainstream, in London at least. Anecdotally I know of several people who have done the same.

If you have a flat and want to sell people would have found some quite perverse things, one is in general flats are worth less than pre-pandemic and are difficult to shift now because the economics don't add up to either investors or FTBs with high LTV. So people are staring at 10-20% losses if they were unlucky enough to buy between 2016-2019.

However when it comes to rental, flats are worth much more than pre-pandemic. I'd guess the average rent for the lower places must be up around 20-30% in the same timescale. 

Get consent to let and job is a good one. At least until you have to remortgage.

At current rates I'd estimate breakeven for a managed let to be around 50% LTV for a shitbox. The very leveraged are obviously in trouble. I don't think its an exaggeration to say that some £450k flats at 90% LTV will be losing £1k a month after everything is factored in.

At lower levels of leverage it might be different. Gonna be people breaking even and being happy about it, or even people happy to lose a couple of hundred quid a month, rationalising to themselves that it is 'investment'. 

[sancho panza]

11 hours ago, onlyme said:

Interesting case analysis. I'm not so sure on his supply / demand side though, specifically in the case of student lets educational establishments can and do build student blocks, one obvious way escalating rents would be affected is reducing this demand from further building of those or reduction in student numbers if the economics of doing a degree turned south.

Also in the general market you cannot get blood out of a stone, there is a limit to which working people are able / willing to stump up ever larger rents, at some point they will individuall break and decide to lower their standard of living and go back to shring in numbers that they would not otherwise entertain.

It made me laugh when he got to his analyis at the end and bascially one of two things should happen,either rents rise a lot or----drum roll--hosue rpices drop 50%.He said neither will happen...having jsut given us basci level supply demand equilibrium 101 and how retns couldnt rise due to affordability

That video was instructive but not for the reasons he intended.Bascially showed me how even a 2012 vintage 50% LTV IO laon was unsustainable at current rates.

And if that 2012 vintage is buggered at 6% then what of the more recent addtions? say from 2018-2022? I think the banks are up poop creek sans paddle here and this guy has effectively demonstrated that better thna I ever could.

Reality is that with 91% of nationwides BTL mortgage book being IO(a stat I resue many times because we have it in black and white as the company admitted it),then the likelihood that many lesser minnows-skipton/.cov/etc etc are deep in the hole here and do not have enough capital to amek it rhough to the other side of the BK

[onlyme]

9 minutes ago, sancho panza said:

It made me laugh when he got to his analyis at the end and bascially one of two things should happen,either rents rise a lot or----drum roll--hosue rpices drop 50%.He said neither will happen...having jsut given us basci level supply demand equilibrium 101 and how retns couldnt rise due to affordability

That video was instructive but not for the reasons he intended.Bascially showed me how even a 2012 vintage 50% LTV IO laon was unsustainable at current rates.

And if that 2012 vintage is buggered at 6% then what of the more recent addtions? say from 2018-2022? I think the banks are up poop creek sans paddle here and this guy has effectively demonstrated that better thna I ever could.

Reality is that with 91% of nationwides BTL mortgage book being IO(a stat I resue many times because we have it in black and white as the company admitted it),then the likelihood that many lesser minnows-skipton/.cov/etc etc are deep in the hole here and do not have enough capital to amek it rhough to the other side of the BK

BTL have also had a year of a (relatively) benign market to offload into, interest rates have not fully hit yet and there was an overhang of frustrated buyers from the 2020-2022 period. Once those have washed through and the more patient buers  keep their hands in their pockets then BTL defaults really begin and there would be in normal circumstances an additional risk premium on new BTL mortgage offerings over and above the existing premium.

[sancho panza]

1 hour ago, onlyme said:

BTL have also had a year of a (relatively) benign market to offload into, interest rates have not fully hit yet and there was an overhang of frustrated buyers from the 2020-2022 period. Once those have washed through and the more patient buers  keep their hands in their pockets then BTL defaults really begin and there would be in normal circumstances an additional risk premium on new BTL mortgage offerings over and above the existing premium.

I had an intersting chat with an old friend the otehr day I see occasioanlly .her hubby was in teh city for years in insurance.I knew theyd a couple of BTL's nd have ahd circa ten years.

during our chat she revealed that theirs were IO .I was pretty gobsmacked as I consdeir her hubby to be relativelywell informed. Im pretty sure the pro LL's on here all use some sort of repayment vehicle.She bascially said ehr hubby had told ehr they had to leverage BTL to get the bennefit.

I suspcet theyve been spending the profits and intended to use the equity for their nest egg.Suspect they'll be trying to sell soon with all the otehr IO LL's.Good luck with that.

I came away from the covnersation and jsut couldn't beleive it tbh.This problem goes much deeper than it appears.

[Wight Flight]

15 minutes ago, sancho panza said:

Im pretty sure the pro LL's on here all use some sort of repayment vehicle

That is the last thing a professional landlord would do.

The whole game is predicated on interest only and maximum leverage.

[MightyTharg]

On 16/08/2023 at 10:02, sancho panza said:

video posted by @XswampyX

 

the stills are lifted off by me.SHows how returns have deteriorated.The BTLers her refers to were making money on a 2% IO BTL 50% LTV mortgage.At the end he discusses how screwed they'd be if they were 75% LTV.

The maths is awful.Nationwides BTL mrotgage book at 91% IO looks enoguh to tkae them under  even without the other dog poo sandwich laons they written in Londinium and SE

videoaising costs of

at 6.26

Another video that tempts me to get into BTL. What a delusional fellow! Particularly funny was the comment about “Imagine you were working…”, well you would have to imagine if you were a scum landlord who lives off the work of others…

Now look at the figures and include money you make from a depreciating mortgage through inflation.

In 2017 inflation was 2.7% so he made £3375 and in 2023 it was around 10% he made £12,500.

Making the income in 2017 £12,025 and in 2022 £22,674.

He’s getting almost double the money and since this extra is untaxed, he’s also paying a lower rate of tax overall!

Despite paying a tiny fraction of the tax a worker would pay (no employee’s national insurance, employer’s national insurance, no apprenticeship levy, 20% mortgage credit) he’s still calling for even lower taxes for BTL! This will probably happen too, since so many MPs are landlords.

If the average wage here is around £30,000, I can just pop £100,000 into a BTL and be on easy street for life.

 

 

Edited August 18, 2023 by MightyTharg

[sarahbell]

11 hours ago, Wight Flight said:

That is the last thing a professional landlord would do.

The whole game is predicated on interest only and maximum leverage.

Rich dad. Bankrupt dad.

 

[King Penda]

On 15/08/2023 at 16:50, UmBongo said:

Well I've played my small part in ending Buy To Let. I bought a from a landlord disposing of the final property in his portfolio.  

I thing his other properties were also 2 bedroomed flats so hopefully they have gone to owner occupiers as well.

Congratulations now go on tos say you bought and get banned

[Ash4781b]

13 hours ago, Wight Flight said:

That is the last thing a professional landlord would do.

The whole game is predicated on interest only and maximum leverage.

surely people haven’t been borrowing millions pounds in interest only buy to let in personal name to build portfolios. I Thought had to be in limited companies unless just one or two.  Eg. “Professional”

I am not sure I can see this ending well. Mathematics will not work without massive rent growth and HMO’s. But if increase net migration maybe we can have HMO’s everywhere. Grim. 

[Stuey]

2 hours ago, King Penda said:

Congratulations now go on tos say you bought and get banned

Who is tos? 

[Wight Flight]

23 minutes ago, Ash4781b said:

surely people haven’t been borrowing millions pounds in interest only buy to let in personal name to build portfolios. I Thought had to be in limited companies unless just one or two.  Eg. “Professional”

I am not sure I can see this ending well. Mathematics will not work without massive rent growth and HMO’s. But if increase net migration maybe we can have HMO’s everywhere. Grim. 

Yes. and Yes

[UmBongo]

3 hours ago, King Penda said:

Congratulations now go on tos say you bought and get banned

I have already posted about it.  Not banned yet. 

TBF over there they are mostly pro ownership as far as I can see.