What do landlords think of the new buy to let landscape? Do they intend to keep on landlording? Is that even a word? Chris Longhurst, expert buy to let mortgage broker, shares a few thoughts and opinions of some of his landlord clients.
It’s been an “interesting” few years in the buy to let world, which I’m sure hasn’t passed you by! So, I certainly won’t be mentioning George Osborne, Brexit or the Prudential Regulation Authority and their latest robust affordability requirements.
I’ve been speaking with a several landlord clients recently to get a feel of what’s happening out there. After the initial surge from personal ownership/borrowing to incorporation ahead of unwelcome tax changes, things have settled down somewhat. For the time being most have decided to leave be properties owned personally and acquire new ones via a corporate structure. The cost of capital gains and stamp duty has proved not worth the cost of change for the ones they already own.
But as you probably know, there is such a wide variety of investors in the private rented sector that this really is a case of one size doesn’t fit all.
Some of our longer standing clients are saying enough is enough. Understandably they are fed up with:
• Seemingly never-ending changes to BTL lending regulation
• Taxation changes
• The onus of checking tenants’ rights to reside in the UK
• New EPC rules coming to effect next spring
• HMO minimum room sizes
I could go on but the point is that some landlords have decided to sell up, slip away and enjoy a stress-free retirement. Whilst there are some landlords with largish portfolios taking this approach, in my experience, this is more true of landlords with just a few properties who have calculated that to stay in the game they need to expand – and they find they just don’t want to.
But as they say, one man’s trash is another man’s treasure and other landlords are seeing this as a great opportunity to:
• Review their existing portfolio and discard any underperforming, low-yielding properties
• Buy up whole portfolios from those landlords who have decided to throw in the towel
From a wider perspective, I’ve seen a trend emerging where landlords are moving away from London and the South East and instead they are focusing north of the Watford Gap where lower headline costs are supplemented by higher yields.
In the short-term there could be a reduction in the number of properties available for rent and this will keep yields in a positive position. But going forward, the steady trickle of buy to let properties being released back to the market should create bargains for those in acquisition mode. It may be a bumpy ride but there are still long-term benefits to be had for those ready to meet the numerous changes head-on.
As always, I can help with your buy to let funding requirements - for both personal and Ltd company borrowing. We've also got some rates that work well for portfolio acquisitions, so do get in touch to talk through the options. My direct line is: 01732 471607
12th December 2017