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1/3 of Landlords with 1 BTL considering selling up - but bigger Landlords want to buy more


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11 minutes ago, TJHooker said:

Exactly they've known for decades that landlords dont declare and have done very little about it.

 

Pre section 24 there wasn’t that much tax to collect so wasn’t worth putting the resources into it. Section 24 means that a lot of LLs will owe more tax so it is now worth HMRC putting the effort in to collect it.  They now also have Connect which I understand will easily be able to reconcile land registry data with electoral roll data etc making it easier to spot anomalies.

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38 minutes ago, Mancunian284 said:

Pre section 24 there wasn’t that much tax to collect so wasn’t worth putting the resources into it. Section 24 means that a lot of LLs will owe more tax so it is now worth HMRC putting the effort in to collect it.  They now also have Connect which I understand will easily be able to reconcile land registry data with electoral roll data etc making it easier to spot anomalies.

When I say bigger picture I mean the bigger picture, which means the whole UK economy. OK millions, maybe a few Billion can be collected from s24, but the exploitation of the UK housing market in the last few decades has propped up a £ trillion illusionary economy

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8 minutes ago, TonyJ said:

The bulk of the UK economy is supported by a credit bubble, which in turn mostly involves a property credit bubble, which in recent years has been inflated by BTL mortgages. Whoever thought it was a good idea for the health of the economy to be dependent on BTL mortgages really needs their head examining.

Yes.  At least section 24 and the measures that HMRC are putting in place to make sure it is enforced, such as the letting agency regulations, are a start.  Not perfect and not enough, IMHO, but they are a start.

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3 hours ago, Hullabaloo82 said:

Policy working as intended isn't It? 

Shift the amateurs out of the game, encourage larger, "professional" landlords who will now need to increase volume as margin decreases. 

This was always going to happen. 

I think these ideas bout '"professional" landlords who will now need to increase volume as margin decreases' are really important, but I think that your analysis can be expanded to show why this is great news for most people.

Really there are three distinct groups of people investing in the private rented sector

  • Single property buy-to-let investors
  • Portfolio buy-to-let landlords with about 20 properties
  • Institutional investor including build-to-rent investors

Two important ways in which you can understand how the three different groups are likely to behave are leverage and how they decide what they are prepared to pay for housing (or land).

If we accept the premise that part of Osborne's policy goal was to bring professionalism to the private rented sector then the nature of these professional landlords needs to be understood; they are not the portfolio buy-to-let landlords. These were the people most catastrophically affected by section 24 (because it's a tax on leverage).

Regarding what an investor is prepared to pay (and what for), professionalisation of the private rented sector is a huge win for the man in the street who has never taken any interest in any of this stuff and just wants a house. The institutional investors are going to build massive great blocks of flats an not snap up bits of the existing stock and they are going to pay prices which reflect their expectations about yields and not pie in the sky hopes for bubble capital gains.

Section 24 is going to eliminate the daft muppets with a buy-to-let mortgage and prevent them buying up the existing stock and reduce the extent to which they are running up prices for the existing stock. Fundamentally, section 24 is irrelevant to the institutional investors unless it results in lower house prices. If section 24 contributes to a secular decline in house prices then then land prices go down. If rents hold steady, then lower land prices mean better yields for institutional investors, calling forth more supply,

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https://www.telegraph.co.uk/property/uk/sellers-forced-cut-asking-prices-25k-housing-market-cools/

Sellers forced to cut asking prices by £25k as housing market cools. Where are the biggest falls occurring? 19th April 2018

You have to register to read the whole article but the price falls are across the country not just London.

Here are the cut & paste of the tables:

National excluding London:

Town Average price reduction Reduced properties on the market
Isle of Man £41,212 29.91%
Bradford £11,768 32.14%
Doncaster £12,894 30.15%
Blackburn £10,059 36.65%
Hull £9,932 28.10%
Mitcham £41,797 41.57%
Liverpool £12,112 26.41%
Newcastle upon Tyne £12,166 35.01%
London £62,581 34.61%
Swansea £15,607 31.85%

 

London:

Town Average price reduction Reduced properties on the market (%)
Twickenham £41,832 (6.16%) 41.82%
Mitcham £41,797 (6.77%) 41.57%
South Croydon £23,965 (5.91%) 37.12%
Croydon £23,503 (5.88%) 37.09%
Reading £22,912 (5.47%) 37.03%
Blackburn £10,059 (7.06%) 36.65%
Harrow £29,722 (5.58%) 35.65%
Chorley £11,597 (5.57%) 35.63%
Norwich £17,255 (6.26%) 35.38%
Swindon £15,154 (5.08%) 35.33%

 

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1 minute ago, WinstonF said:

https://www.telegraph.co.uk/property/uk/sellers-forced-cut-asking-prices-25k-housing-market-cools/

Sellers forced to cut asking prices by £25k as housing market cools. Where are the biggest falls occurring? 19th April 2018

You have to register to read the whole article but the price falls are across the country not just London.

Here are the cut & paste of the tables:

National excluding London:

Town Average price reduction Reduced properties on the market
Isle of Man £41,212 29.91%
Bradford £11,768 32.14%
Doncaster £12,894 30.15%
Blackburn £10,059 36.65%
Hull £9,932 28.10%
Mitcham £41,797 41.57%
Liverpool £12,112 26.41%
Newcastle upon Tyne £12,166 35.01%
London £62,581 34.61%
Swansea £15,607 31.85%

 

Top 10 areas with the highest proportion of asking price reductions

Town Average price reduction Reduced properties on the market (%)
Twickenham £41,832 (6.16%) 41.82%
Mitcham £41,797 (6.77%) 41.57%
South Croydon £23,965 (5.91%) 37.12%
Croydon £23,503 (5.88%) 37.09%
Reading £22,912 (5.47%) 37.03%
Blackburn £10,059 (7.06%) 36.65%
Harrow £29,722 (5.58%) 35.65%
Chorley £11,597 (5.57%) 35.63%
Norwich £17,255 (6.26%) 35.38%
Swindon £15,154 (5.08%) 35.33%

 

London:

Borough Average price reduction
Kensington & Chelsea £113,491
Westminster £117,430
Hammersmith & Fulham £71,282
Camden £76,145
Lambeth £61,288
Ealing £60,880
Wandsworth £66,732
Richmond upon Thames £52,202
Brent £51,871
Merton £41,842
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15 minutes ago, WinstonF said:

https://www.telegraph.co.uk/property/uk/sellers-forced-cut-asking-prices-25k-housing-market-cools/

Sellers forced to cut asking prices by £25k as housing market cools. Where are the biggest falls occurring? 19th April 2018

You have to register to read the whole article but the price falls are across the country not just London.

Here are the cut & paste of the tables:

National excluding London:

Town Average price reduction Reduced properties on the market
Isle of Man £41,212 29.91%
Bradford £11,768 32.14%
Doncaster £12,894 30.15%
Blackburn £10,059 36.65%
Hull £9,932 28.10%
Mitcham £41,797 41.57%
Liverpool £12,112 26.41%
Newcastle upon Tyne £12,166 35.01%
London £62,581 34.61%
Swansea £15,607 31.85%

 

London:

Town Average price reduction Reduced properties on the market (%)
Twickenham £41,832 (6.16%) 41.82%
Mitcham £41,797 (6.77%) 41.57%
South Croydon £23,965 (5.91%) 37.12%
Croydon £23,503 (5.88%) 37.09%
Reading £22,912 (5.47%) 37.03%
Blackburn £10,059 (7.06%) 36.65%
Harrow £29,722 (5.58%) 35.65%
Chorley £11,597 (5.57%) 35.63%
Norwich £17,255 (6.26%) 35.38%
Swindon £15,154 (5.08%) 35.33%

 

Good find.  I’m going out now but will read and digest later.

Wasn’t Blackburn a high growth area last month?

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51 minutes ago, WinstonF said:

https://www.telegraph.co.uk/property/uk/sellers-forced-cut-asking-prices-25k-housing-market-cools/

Sellers forced to cut asking prices by £25k as housing market cools. Where are the biggest falls occurring? 19th April 2018

You have to register to read the whole article but the price falls are across the country not just London.

Here are the cut & paste of the tables:

National excluding London:

Town Average price reduction Reduced properties on the market
Isle of Man £41,212 29.91%
Bradford £11,768 32.14%
Doncaster £12,894 30.15%
Blackburn £10,059 36.65%
Hull £9,932 28.10%
Mitcham £41,797 41.57%
Liverpool £12,112 26.41%
Newcastle upon Tyne £12,166 35.01%
London £62,581 34.61%
Swansea £15,607 31.85%

 

London:

Town Average price reduction Reduced properties on the market (%)
Twickenham £41,832 (6.16%) 41.82%
Mitcham £41,797 (6.77%) 41.57%
South Croydon £23,965 (5.91%) 37.12%
Croydon £23,503 (5.88%) 37.09%
Reading £22,912 (5.47%) 37.03%
Blackburn £10,059 (7.06%) 36.65%
Harrow £29,722 (5.58%) 35.65%
Chorley £11,597 (5.57%) 35.63%
Norwich £17,255 (6.26%) 35.38%
Swindon £15,154 (5.08%) 35.33%

 

 No. Reading only goes up...

So, youve pkaces where there was never much of a bubble - Donnie, Ull, Newc.

And pkaces that were near the London bubble - Stabbing, Swindon, etc.

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1 hour ago, Beary McBearface said:

I think these ideas bout '"professional" landlords who will now need to increase volume as margin decreases' are really important, but I think that your analysis can be expanded to show why this is great news for most people.

Really there are three distinct groups of people investing in the private rented sector

  • Single property buy-to-let investors
  • Portfolio buy-to-let landlords with about 20 properties
  • Institutional investor including build-to-rent investors

Two important ways in which you can understand how the three different groups are likely to behave are leverage and how they decide what they are prepared to pay for housing (or land).

If we accept the premise that part of Osborne's policy goal was to bring professionalism to the private rented sector then the nature of these professional landlords needs to be understood; they are not the portfolio buy-to-let landlords. These were the people most catastrophically affected by section 24 (because it's a tax on leverage).

Regarding what an investor is prepared to pay (and what for), professionalisation of the private rented sector is a huge win for the man in the street who has never taken any interest in any of this stuff and just wants a house. The institutional investors are going to build massive great blocks of flats an not snap up bits of the existing stock and they are going to pay prices which reflect their expectations about yields and not pie in the sky hopes for bubble capital gains.

Section 24 is going to eliminate the daft muppets with a buy-to-let mortgage and prevent them buying up the existing stock and reduce the extent to which they are running up prices for the existing stock. Fundamentally, section 24 is irrelevant to the institutional investors unless it results in lower house prices. If section 24 contributes to a secular decline in house prices then then land prices go down. If rents hold steady, then lower land prices mean better yields for institutional investors, calling forth more supply,

+1 to all of this.

Though imperfect institutional investors would be a significant improvement on the current situation, (not that they're captured by this survey at all), as they're unlikely to be competing with first time buyers for ownership of the existing housing stock.

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Worth remembering also that, with finance costs no longer tax deductible once changes to their tax treatment are completely phased in, total rental income for tax purposes will increase substantially, so there will be buy-to-let landlords who currently think themselves unaffected because they've previously been basic rate taxpayers (though I doubt that there are many given the need for initial deposits, and lenders' requirements for other income as additional security) but who will find in reality that they've been pushed into a higher tax bracket and are directly affected in more ways than one.

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Just now, TonyJ said:

They say the bubble hasn't reached lots of out of the way places, but the kite flying asking prices are pretty obscene, even in the most off the beaten track areas, where average wages will be low. 

Yep.

Asking prices may be obscene. But so are time to sell periods....

Id guess theres a number of things happening.

One, MMR has sent a wakeup call to EAs on how much sellers can borrow - 4x household income.

Two, cheap mortgages for people outside of MMR compliant, residential Owner occupied are getting rare and v. expensive.

Three, you cannot hold a property position for long after you are dead.

Weve been in the sh1t for 10 years now. In that 10 years 50% of the people who were 65 or older in 2008 will have died. Wages have have stayed low and MMR have forces mortgages low.

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1 hour ago, Beary McBearface said:

I think these ideas bout '"professional" landlords who will now need to increase volume as margin decreases' are really important, but I think that your analysis can be expanded to show why this is great news for most people.

Really there are three distinct groups of people investing in the private rented sector

  • Single property buy-to-let investors
  • Portfolio buy-to-let landlords with about 20 properties
  • Institutional investor including build-to-rent investors

Two important ways in which you can understand how the three different groups are likely to behave are leverage and how they decide what they are prepared to pay for housing (or land).

If we accept the premise that part of Osborne's policy goal was to bring professionalism to the private rented sector then the nature of these professional landlords needs to be understood; they are not the portfolio buy-to-let landlords. These were the people most catastrophically affected by section 24 (because it's a tax on leverage).

Regarding what an investor is prepared to pay (and what for), professionalisation of the private rented sector is a huge win for the man in the street who has never taken any interest in any of this stuff and just wants a house. The institutional investors are going to build massive great blocks of flats an not snap up bits of the existing stock and they are going to pay prices which reflect their expectations about yields and not pie in the sky hopes for bubble capital gains.

Section 24 is going to eliminate the daft muppets with a buy-to-let mortgage and prevent them buying up the existing stock and reduce the extent to which they are running up prices for the existing stock. Fundamentally, section 24 is irrelevant to the institutional investors unless it results in lower house prices. If section 24 contributes to a secular decline in house prices then then land prices go down. If rents hold steady, then lower land prices mean better yields for institutional investors, calling forth more supply,

Ill restate that slightly. And shorter.

If the UK population is to accept a higher percentage on rentals then those rentals need to be provided by larger companies with long term, stable bond funding rather than some idiot cranking up seversl 100k of io btl loans from some idiot provencial building society.

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1 hour ago, Mancunian284 said:

Good find.  I’m going out now but will read and digest later.

Wasn’t Blackburn a high growth area last month?

Blackburn and places all over the northwest (and indeed north in general) have been targetted by London/southeast based landlords who're convinced that they can still make money up north*. Blackburn is a bit of a craphole. This is just reality dawning as these landlords realise that they have overpaid and subsequent sellers start to capitulate to get a deal. It wasn't that long ago that you could get a house in neighbouring Burnley for £10,000 ...in fact, Burnley was the last town in the UK where this was the case!

* I base this on the number of posts I've seen recently on parasite118/povertytribes from such landlords, openly admitting they have no experience of property in the north but looking to invest...

 

Edited by oatbake
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34 minutes ago, TonyJ said:

The sooner these BTLers work out their tax bill for 17/18, the better. It will hopefully draw a line under this search for high yielding property, and splashing their (borrowed) money around. 

Hit a very solid brickwall.

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3 hours ago, oatbake said:

Blackburn and places all over the northwest (and indeed north in general) have been targetted by London/southeast based landlords who're convinced that they can still make money up north*. Blackburn is a bit of a craphole. This is just reality dawning as these landlords realise that they have overpaid and subsequent sellers start to capitulate to get a deal. It wasn't that long ago that you could get a house in neighbouring Burnley for £10,000 ...in fact, Burnley was the last town in the UK where this was the case!

* I base this on the number of posts I've seen recently on parasite118/povertytribes from such landlords, openly admitting they have no experience of property in the north but looking to invest...

 

The countryside around both Blackburn and Burnley is lovely, shame about the towns themselves.  I have wondered who is going to buy these cheap terraces when the LLs sell up, they are at the bottom end of the market so presumably rented to those on benefits who won’t be able to get a mortgage, other LLs are unlikely to be buying at that point.  The current LL owners may have to almost give them away.

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10 minutes ago, Mancunian284 said:

The countryside around both Blackburn and Burnley is lovely, shame about the towns themselves.  I have wondered who is going to buy these cheap terraces when the LLs sell up, they are at the bottom end of the market so presumably rented to those on benefits who won’t be able to get a mortgage, other LLs are unlikely to be buying at that point.  The current LL owners may have to almost give them away.

1

You might be closer than you think there. I remember stories of houses selling for £1 in bad towns/areas. Better than them being boarded up, I guess! You certainly would not want to owe tens of grand on a crap BTL in any of these places. I think a lot of southern BTL-types have been fleeced recently but they don't know it yet...

...and when the economy turns, these places will go downhill very quickly.

But yes, I agree that the countryside surrounding these places is amazing. The Yorkshire Dales, Peak District and Forest of Bowland are all nearby. 

Edited by oatbake
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13 minutes ago, oatbake said:

You might be closer than you think there. I remember stories of houses selling for £1 in bad towns/areas. Better than them being boarded up, I guess! You certainly would not want to owe tens of grand on a crap BTL in any of these places. I think a lot of southern BTL-types have been fleeced recently but they don't know it yet...

...and when the economy turns, these places will go downhill very quickly.

But yes, I agree that the countryside surrounding these places is amazing. The Yorkshire Dales, Peak District and Forest of Bowland are all nearby. 

Well, theyll have council tax to pay on empty housing.

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1 hour ago, spyguy said:

Well, theyll have council tax to pay on empty housing.

1 hour ago, oatbake said:

Yes, that should add to the entertainment haha.... Better start stocking up on popcorn at this rate!

A great idea too. If only similar were applicable to this stuck in the past "Land Subsidy" tax payers money given just for owning land. "I have lots of money so I haz sum moar money from people who actually work for a living."

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19 hours ago, TJHooker said:

The fact it is not directed at basic rate taxpayers suggests many of these daft muppets will be able to carry on regardless. 

Nope.. those Muppets will see thier income going up and eventually lose any handouts from the state.

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6 minutes ago, hi5lo5 said:

Nope.. those Muppets will see thier income going up and eventually lose any handouts from the state.

Hopefully, immediately.

The very notion that BTL landlords are claiming Tax Credits and Child Benefits fills me with rage.

 

Edited by mrtickle
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23 hours ago, TonyJ said:

Apparently, she needs to ask her mortgage company for permission, and they then decided whether she needs to put in more equity, and how much more interest she needs to pay, which is often considerable. They also usually charge a hefty fee for making the changes. And she needs to take out LLs' building insurance, which is more expensive than standard residential insurance. If she breaks any of these conditions, and is found out, she is also liable to be given a large fine, and the mortgage could be called in.

So lots for her to do before she takes that decision. If she does not inform the mortgage co, they will continue to send correspondence to her old address, but the tenants would probably neglect to forward it on to her, meaning she may well be found out when the mortgage company becomes suspicious.

I know, because a friend once thought about it, but when they realised the adverse consequences, they went right off the idea.

mortgage company will find out..

 

I had a lodger once and I got a letter from the mortgage company telling me it had come to their attention that I was letting the place so they moved me onto their SVR and demanded a letter from her stating she had no rights to the property

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1 minute ago, TonyJ said:

That sounds a bit severe. But it shows the mortgage companies are itching to move their borrowers on to the SVR, unlike the government and B0E. There is no being accommodating involved, they are ruthless if it means getting more money. If they can legally do it, they will.

once we sent the letter I was moved back to my tracker

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