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Fairyland

Buy-To-Let Returns 'will Fall By 60Pc In A Year'

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That return, which would be the lowest in at least four years, would be before mortgages, maintenance and tax are factored in, all of which could push landlords’ investments into the red.
Edited by Fairyland

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are those figures for rental income - gross before tax and mortgage interest?

thank you fairyland - looking even less rosy then unless they are all cash buyers (but still have to pay tax and maintenance)

Edited by olliegog

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I will try quoting the post again.

Buy-to-let returns will plunge 62pc in the next 12 months, according to Britain’s biggest network of letting agents and property valuers.

LSL Property Services predicts that by April 2016 total returns on buy-to-let, taking into account a combination of both rental income and capital growth, will be just 3.4pc, down from almost 9pc today.

That return, which would be the lowest in at least four years, would be before mortgages, maintenance and tax are factored in, all of which could push landlords’ investments into the red.

LSL owns 500 estate agent outlets under brands including Your Move, Reeds Rains and Marsh & Parsons. It is also Britain’s biggest surveyor through its e.surv division. Its warning comes as enthusiasm for buy-to-let surges on the back of relaxed pension rules and a rising confidence in the housing market following the election.

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LSL’s pessimistic outlook is buried in the latest of the monthly updates to its buy-to-let house price index, an authoritative database of landlord returns stretching back to mid-2008.

The firm declined to explain its methodology to Telegraph Money, but bases its data and predictions on price and rental data of approximately 20,000 properties on its books.

The general trend it depicted was of sharply slowing property price growth turning into actual falls in value, with rental income thus becoming a more significant part of investors’ total returns.

It said: “Total returns on an average rental property stand at 8.9pc over the 12 months to April 2015, compared to 11.5pc a year ago.

“Looking ahead is particularly difficult but less upbeat. If trends continue, then over the next 12 months, to April 2016, the average landlord would see a total return of 3.4pc.” This is because while rental incomes are rising, “capital growth would be negative”.

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At the moment, it says landlords’ total returns average £15,503. “Within this figure, rental income makes up £8,247 while the average capital gain amounts to £7,256.” In 12 months’ time it predicts total returns averaging £6,256, a drop of well over 50pc. “Of this, rental income would be £9,292 while capital growth would be negative, amounting to an average drop of £3,036.”

LSL director Adrian Gill, who oversees the estate agency division, said rising prices “should be seen as a bonus” by landlords, who should focus on “the improving prospect of a steady rental income”.

He said: "Price dips in recent months are unlikely to continue for a long time - which makes predictions for the next year more difficult than usual."

The company’s downbeat message comes as other data shows a surge of interest in the sector. It emerged this week that the proportion of property purchasers paying with cash, rather than using a mortgage, was at an all-time high, reflecting increased buy-to-let investing.

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I'm baffled. They didn't disclose their method but normally ea's spin the story of highrr prices. I suppose they have access to a lot of data. Maybe they have spotted something in their data or their sureveor business?

Edited by Ash4781

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I'm baffled. They didn't disclose their method but normally ea's spin the story of highrr prices. I suppose they have access to a lot of data. Maybe they have spotted something in their data or their sureveor business?

Yes, the country is ******ed and most people are up to their eyeballs in debt.

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Christ this site is getting desperate if it is posting Anna White nonsense, educate yourself.

At least we can read; it's a Richard Dyson piece. Or do you intend to start reading the linked articles only once you get past 100 posts?

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I'm baffled. They didn't disclose their method but normally ea's spin the story of highrr prices. I suppose they have access to a lot of data. Maybe they have spotted something in their data or their sureveor business?

Indeed. Decidedly odd. Though as it is EAs they are probably holding the graph the wrong way round, or something like that.

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Indeed. Decidedly odd. Though as it is EAs they are probably holding the graph the wrong way round, or something like that.

Or desperate for some transactions to go through? Doesn`t matter to them if it is a downsizer, FTB`er or a scared BTL`er, they still need to eat.

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At least we can read; it's a Richard Dyson piece. Or do you intend to start reading the linked articles only once you get past 100 posts?

I read it earlier this afternoon and it had Anna Whites name as the author, i swear it did.

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I read it earlier this afternoon and it had Anna Whites name as the author, i swear it did.

Not impossible, but your post was still a little dismissive. Threads don't start themselves. It's hardly a Herculean effort to start a thread, but it is not nothing. Whilst it's unlikely that a weird bit of PR from LSL will in and of itself move the market, it's still of passing interest and worth a thread, regardless of the particular DT journalist badged as the mouthpiece.

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Or desperate for some transactions to go through? Doesn`t matter to them if it is a downsizer, FTB`er or a scared BTL`er, they still need to eat.

I suppose getting bailing BTL LL is one way to get some more "affordable" properties onto their books

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On reflection it could be that BTL ramping is now so universal that the only way to get a paper to pick up your press release is to suggest that BTL returns are going to fall, ;) .

Dyson is the Telegraph Media Group's personal finance editor so if it ran, it ran on his say so, regardless of whose name was on it. He is an equal opportunities journo. He'll run ramping but he'll also actually think and poor cold water on ramping.

I'd hesitate to read too much into it, but BTL churn is great for a business like this. If they were confident that there were lots of wannabe buy-to-let investors out there who were doing precious little research, LSL could see an upside in a scare story PR piece. Scare the old hands who are already working out that late entrant BTL on thin 'gross yields' is a money pit into cashing out before it gets any worse. They sell to the new losers. For LSL, tenant churn is good, transactions are good.

Could be the kind of play you'd favour if you thought that the bubble was running out of steam. A last little churn of fees before winter comes?

(I still favour an EA based explanation - maybe they did the data-entry with the keyboard the wrong way round.)

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Not impossible, but your post was still a little dismissive. Threads don't start themselves. It's hardly a Herculean effort to start a thread, but it is not nothing. Whilst it's unlikely that a weird bit of PR from LSL will in and of itself move the market, it's still of passing interest and worth a thread, regardless of the particular DT journalist badged as the mouthpiece.

Maybe i put 2 and 2 together and got 5 i apologise if this is the case, i was as sure as could be it was her porn. Anna White is the worst excuse for a journalist in the history of journalism, she is the most disgusting property ramper in Britain, at least that fat woman on Channel 4 makes an effort, this dumb thing just cuts and pastes ... if her stories are ever to be taken serious we are in trouble.

, as her name only ever goes to HPI articles i wonder if its possible they changed it.

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I'm pretty sure I've seen DT articles in the past where the journalist has "changed" during the day.

Whatever, it's given me a bit of a smile on a Friday afternoon, and I'm sure it's given a few BTL something to frown about. What can be bad about that?

Edited by Fully Detached

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Maybe i put 2 and 2 together and got 5 i apologise if this is the case, i was as sure as could be it was her porn. Anna White is the worst excuse for a journalist in the history of journalism, she is the most disgusting property ramper in Britain, at least that fat woman on Channel 4 makes an effort, this dumb thing just cuts and pastes ... if her stories are ever to be taken serious we are in trouble.

, as her name only ever goes to HPI articles i wonder if its possible they changed it.

I'd discourage you from getting too vexed by personal finance journalists. They are just a low status arm of a larger marketing machine. A personal finance journalist is someone who is paid to cut and paste marketing material into articles.

Faisal Islam draws attention to the idiotic way that personal finance journalists cheered UK savers into the desperate arms of the dying Icelandic banks long after the wholesale markets had shut out those same banks.

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I'd discourage you from getting too vexed by personal finance journalists. They are just a low status arm of a larger marketing machine. A personal finance journalist is someone who is paid to cut and paste marketing material into articles.

Faisal Islam draws attention to the idiotic way that personal finance journalists cheered UK savers into the desperate arms of the dying Icelandic banks long after the wholesale markets had shut out those same banks.

They did well out of it too, thanks to Brown/Darling :(.

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They did well out of it too, thanks to Brown/Darling :(.

Good point. Moral hazard writ large, again. However, to get back on topic, any buy-to-let investors thinking somebody is coming to their rescue underestimates both the extent to which these past calls were influenced by a desire to prevent a flight of cash from banks to mattresses and the extent to which buy-to-let investors are regarded by regulators as investors, big enough and ugly enough to look after themselves (h/t Exiled Canadian) Investors are not consumers; investors are expected to man the f**k up and take their losses.

The savings accounts of the Icelandic banks sat, via EU agreements, within the range of products offered as regulated products. Buy-to-let lending is unregulated. If you're game, you can take your chances, but don't think that they crap bank you've snuggled up to has your back. On the contrary by ponying up your juicy deposit, you've got theirs.

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Published late this afternoon by the Financial Times, but unrelated to the LSL press release:

Benefit cuts threaten buy-to-let landlords’ income

FT, that article is a delight, this is just two sentences so should be acceptable as a quote from the article

Despite this, some buy-to-let lenders have yet to consider the impact of the welfare reforms on their business. Asked whether the cuts were of concern, one senior banker said: “I haven’t really thought about it. But I will now.”

You couldn't make it up.

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FT, that article is a delight, this is just two sentences so should be acceptable as a quote from the article

You couldn't make it up.

Classic. Some funny comments on the article too.

This one from /B highlighted the same quote as you..

“I haven’t really thought about it. But I will now.”

Well done Mr Senior banker! Any kids watching: that's how you earn the big bucks.

Its not what you know, its who you know. :P

Edited by renting til I die

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