Huge 30% fall in buy to let purchases in just three years

[Dorkins]

Quote

Countrywide says landlords spent £12.1 billion buying rental properties in the first half of this year - a full 30 per cent less than three years ago.

In H1 2018 landlords purchased 64,260 homes in Great Britain; landlords bought 12 per cent of all homes sold in H1 2018, down from 17 per cent in H1 2015. 

https://www.lettingagenttoday.co.uk/breaking-news/2018/10/huge-30-collapse-on-buy-to-let-purchases-in-just-three-years

Unfortunately this only gives half of the story, you would need to know the landlord sales figures to be able to calculate whether the proportion of stock held by landlords is increasing or decreasing.

[winkie]

People can't afford the rents the landlords need to make it worthwhile (or expect), the benefits system certainly won't be covering it.....at the moment people want quick, cheap and easy access to their money.....tying up the wrong percentage of wealth into property is far too much of a high debt deflation risk..... diversification is key.?

[dugsbody]

I'm surprised it hasn't fallen further, BTL in London makes almost no financial sense. I believe zero interest rates did their magic  and yields are so compressed now (prices so high), combined with the S24 changes you might as well stick your money in an index tracker.  

Perhaps the demand has shifted up north.

[spyguy]

6 minutes ago, dugsbody said:

I'm surprised it hasn't fallen further, BTL in London makes almost no financial sense. I believe zero interest rates did their magic  and yields are so compressed now (prices so high), combined with the S24 changes you might as well stick your money in an index tracker.  

Perhaps the demand has shifted up north.

BTL, with sub-8% yields make no sense.

BTL is IO has been killed. Good.

BTL with any form of debt is a total no go.

If there are still 70% of 2 years ago sales happeneing all I can think is that there are a lot of innumerate LLs out there.

 

[iamnumerate]

33 minutes ago, dugsbody said:

I'm surprised it hasn't fallen further, BTL in London makes almost no financial sense. I believe zero interest rates did their magic  and yields are so compressed now (prices so high), combined with the S24 changes you might as well stick your money in an index tracker.  

Perhaps the demand has shifted up north.

+1

Would it be a good idea if you have a lump sum? (I don't and I wouldn't).

[dugsbody]

3 minutes ago, iamnumerate said:

+1

Would it be a good idea if you have a lump sum? (I don't and I wouldn't).

Go on to rightmove, see what a two bedroom flat near central costs to buy and costs to rent, then work out the yield. My guess is that using a lump sum (no mortgage) and after taxes, profits will be under 2% yield. That's pathetic. It's not even keeping up with inflation. 

Of course, that isn't factoring in capital growth (HPI) but I actually believe HPI is done in central London and is reversing somewhat.

IO BTL, in London, only made sense in the last 5-10 years as a leveraged play on capital growth. Either that or flaunting housing laws and shoving as many city workers as possible into the 3 (now 5) bedroom house in Hackney. 

[spyguy]

19 minutes ago, iamnumerate said:

+1

Would it be a good idea if you have a lump sum? (I don't and I wouldn't).

Not and these yields, no.

And only if you 500K of other assets otherwise 90% of the UKPOP would have too much exposure to a single asset class- UK property.

 

[Locke]

6 hours ago, spyguy said:

all I can think is that there are a lot of innumerate LLs out there

One can only hope.

[Ah-so]

30% drop is still too high - the percentage of the housing market going into BTL will almost certainly continue to increase. 

The use of company vehicles as a way to get round parts of the rules has probably meant that the impact of tax changeshas not been greater.

The big BTL sell off is probably still to come  While some landlords have been selling I have not heard much evidence of sales other than amongst more clued up landlords. 

[Habeas Domus]

11 hours ago, Dorkins said:

https://www.lettingagenttoday.co.uk/breaking-news/2018/10/huge-30-collapse-on-buy-to-let-purchases-in-just-three-years

Unfortunately this only gives half of the story, you would need to know the landlord sales figures to be able to calculate whether the proportion of stock held by landlords is increasing or decreasing.

Exactly,

imagine a village with 1000 houses, 100 are BTL rented out

Every year another 10 houses are bought and turned into BTLs,
this year theres a 30% fall, so only 7 houses get bought and turned into BTLs
But also 50 existing BTL houses were sold and turned back into owner occupier houses.

Lesson: never trust statistics from an estate agent.

[mrtickle]

3 hours ago, Ah-so said:

30% drop is still too high - the percentage of the housing market going into BTL will almost certainly continue to increase. 

The use of company vehicles as a way to get round parts of the rules has probably meant that the impact of tax changeshas not been greater.

The big BTL sell off is probably still to come  While some landlords have been selling I have not heard much evidence of sales other than amongst more clued up landlords. 

This will change in January, if not before.

 

[adarmo]

Have total property transactions fallen by a similar amount too? If not what were they in H1 2015? If they looked at Q1 2016 numbers it'd be much worse given the distortion of the 3% SDLT surcharge. 

Just bashing a statistic like this is nonsense without context. Even with context given all the doom, gloom, 3% surcharges and S.24 a 30% reduction in total paid (note it is actually a 22% fall in the number of transactions) seems quite resilient given the head winds. I was hoping for a bigger adjustment tbh.

In other news average salaries in Valenzuela are up 100,000% YoY. 

[GreenDevil]

3 hours ago, Ah-so said:

30% drop is still too high - the percentage of the housing market going into BTL will almost certainly continue to increase. 

The use of company vehicles as a way to get round parts of the rules has probably meant that the impact of tax changeshas not been greater.

The big BTL sell off is probably still to come  While some landlords have been selling I have not heard much evidence of sales other than amongst more clued up landlords. 

 

3 hours ago, Habeas Domus said:

Exactly,

imagine a village with 1000 houses, 100 are BTL rented out

Every year another 10 houses are bought and turned into BTLs,
this year theres a 30% fall, so only 7 houses get bought and turned into BTLs
But also 50 existing BTL houses were sold and turned back into owner occupier houses.

Lesson: never trust statistics from an estate agent.

Are they? Or are the 50 properties being sold by leveraged BTL investors being sold to 45 cash/boomer BTL investors and 5 OOs?

Everybody wants a BTL. Its money for nothing (or seems to be, apart from the voids, maintenance, taxes etc)

[user not found]

9 hours ago, Habeas Domus said:

Exactly,

imagine a village with 1000 houses, 100 are BTL rented out

Every year another 10 houses are bought and turned into BTLs,
this year theres a 30% fall, so only 7 houses get bought and turned into BTLs
But also 50 existing BTL houses were sold and turned back into owner occupier houses.

Lesson: never trust statistics from an estate agent.

I wonder why an EA is putting an anti BTL spin... I.e. saying it's less popular than previously. Even if the stats don't actually paint such a bad picture, what are they trying to achieve? Promote FTB sales by hinting prices might come down?

[spyguy]

6 hours ago, adarmo said:

Have total property transactions fallen by a similar amount too? If not what were they in H1 2015? If they looked at Q1 2016 numbers it'd be much worse given the distortion of the 3% SDLT surcharge. 

Just bashing a statistic like this is nonsense without context. Even with context given all the doom, gloom, 3% surcharges and S.24 a 30% reduction in total paid (note it is actually a 22% fall in the number of transactions) seems quite resilient given the head winds. I was hoping for a bigger adjustment tbh.

In other news average salaries in Valenzuela are up 100,000% YoY. 

Well, their figures could be laggy - 1 or 2 years out of date.

 

 

[adarmo]

1 hour ago, spyguy said:

Well, their figures could be laggy - 1 or 2 years out of date.

 

 

Still no context though. 

[winkie]

2 hours ago, Sausage said:

I wonder why an EA is putting an anti BTL spin... I.e. saying it's less popular than previously. Even if the stats don't actually paint such a bad picture, what are they trying to achieve? Promote FTB sales by hinting prices might come down?

Clear to see why EA see BTL as a threat......less turnover of homes for sale commission to be made, homes staying in the same hands for longer.....there is no ladder.?

[adarmo]

9 minutes ago, winkie said:

Clear to see why EA see BTL as a threat......less turnover of homes for sale commission to be made, homes staying in the same hands for longer.....there is no ladder.?

 Very true. BTL has slowly screwed over selling agents. FTBs might buy and then sell again in a few years in the old days but now many flats have been hoarded and the BTL influence makes typical ftb properties too expensive. 

It's an insidious little infection. 

[spyguy]

7 minutes ago, adarmo said:

Still no context though. 

Theres lies, damnned lies and housing numbers.

My local area is total BS.

Despite the claims, a quick look at RM market info shows most houses are trading in the same narrow price as they have for they last 15 years.

The most interesting figures are the No sales. I tried tracking these but gave up. No easy way to do it - other than scrapping RM.

 

 

[adarmo]

4 minutes ago, spyguy said:

Theres lies, damnned lies and housing numbers.

My local area is total BS.

Despite the claims, a quick look at RM market info shows most houses are trading in the same narrow price as they have for they last 15 years.

The most interesting figures are the No sales. I tried tracking these but gave up. No easy way to do it - other than scrapping 

I guess another statistic is the number of 'accidental landlord' properties. Apparently the total number of renting households is increasing by 164k a year so that gives a proxy for net buy to let

https://www.lettingagenttoday.co.uk/breaking-news/2018/5/huge-surge-in-buy-to-let-forecast-for-next-seven-years?source=related_articles

[winkie]

5 minutes ago, adarmo said:

 Very true. BTL has slowly screwed over selling agents. FTBs might buy and then sell again in a few years in the old days but now many flats have been hoarded and the BTL influence makes typical ftb properties too expensive. 

It's an insidious little infection. 

Relevant point......is there stats to show how many bought homes a person of different ages has lived in over ten year periods of time say age 20s to 30s, 30s to 40s etc Now and in previous decades.........same for numbers of different rental properties......a story to be told.?

[crazypabs]

5 hours ago, Sausage said:

I wonder why an EA is putting an anti BTL spin... I.e. saying it's less popular than previously. Even if the stats don't actually paint such a bad picture, what are they trying to achieve? Promote FTB sales by hinting prices might come down?

If they scare the landlord they might convince them that they should sell their house now before the tax man takes the btl house and their own home. When they sell, more commission for them. Everyone's a winner, champagne and hair gel all around.

[Neverwhere]

On 15/10/2018 at 08:00, Dorkins said:

Unfortunately this only gives half of the story, you would need to know the landlord sales figures to be able to calculate whether the proportion of stock held by landlords is increasing or decreasing.

We'll have to wait until May next year to get the 2018 figures, but for now:

Quote

Dwelling Stock Estimates: 2017, England

Between March 2016 and March 2017, the owner occupied dwelling stock increased by 262,000 and the private rented stock decreased by 46,000.

h/t Bland Unsight

 

[Simhadri]

On Monday, October 15, 2018 at 09:26, dugsbody said:

Perhaps the demand has shifted up north.

+1 London is parking zone for overseas investors not BTL. North will see moreinvestment in private sector in future.

[EnglishinWales]

Wake me up when it's 100%.

 

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