Paul Bonner opted to buy in familiar areas when starting out as a landlord – Paul Cooper/Paul Cooper
Thank you for reading this post, don't forget to subscribe!Landlords are leaving the market in large numbers. The past few years have seen little in the way of incentives for property owners to buy-to-let and instead the group has faced a number of regulatory and tax changes which cut into profits.
As a result many people are selling and getting out. Still, the government seems to be softening its stance. Michael Gove, the Secretary of State for Leveling Up, Housing and Communities, has said that he will not end no-fault evictions under section 21 of the Housing Act 1988 unless the courts are reformed.
And Prime Minister Rishi Sunak has halted any plans to introduce mandatory EPC ratings in the private rented sector as part of his wider net zero row. However, the government has not amended the law that requires Britain to reduce its greenhouse gas emissions by 100 percent below 1990 levels by 2050.
But for many that is enough. According to Simply Business’s recent Landlord Report, a quarter of landlords are planning to sell an investment property in the next 12 months.
In contrast, only 3 percent of those surveyed said they planned to buy more properties in the coming year.
And although not all of them are looking to grow their portfolio, 50 percent of landlords surveyed still think rental property is a good investment.
According to the National Residential Landlord Association, from 2020 to 2021, 2.74 million unincorporated landlords in the UK declared income. This shows that more than 82,000 people are looking to grow their portfolio in the next year.
One landlord is Ella Kemp, a 40-year-old who lives in the North East of England and currently owns five properties, four flats and a house in the area.
“The asset I have got is my retirement. They are in a limited company and every 12-18 months I will try to find something new to invest in,” she says.
Housing demand is helping, although it hasn’t raised its prices.
Ms Kemp works closely with the local council to find housing where it is needed.
“There are a lot of properties whose rents have increased in recent years. “We keep our housing costs in line with local housing costs because otherwise you’re left with tenants who can’t afford to pay rent and that makes it difficult for everyone.”
Since his property portfolio is his pension, he is willing to ignore the current environment in favor of a long-term view. In total she makes around £37,000 from her properties.
She is not alone. The longevity of the investment is one of the reasons stay-at-home homeowners decide it’s still worth it.
Viv Bridges, who has been a landlord for eight years, owns four properties in south-west London and makes sure she never buys more than five miles from her home so she can easily reach out if any problems arise. Can be available from.
“I’m definitely looking at investing over the next year to 18 months, no question about it,” he says. His property portfolio currently gives him an average annual yield of 4.87 per cent.
“For landlords who want to get involved, rents have gone up and mortgage rates won’t stay high forever, so there will come a time when it will be more profitable.
“The number of people needing housing is increasing and councils are trying to cope.”
The statistics testify to that. Local councils spent at least £1.74 billion in 2022/23 to support 104,000 families in temporary accommodation, according to analysis from the Local Government Association, which represents councils across England.
However, Mr Bridge is cautious about what the future scenario will look like for owners buying rental homes. With a Labor government unlikely – YouGov’s latest poll puts the party 24 points clear of the Conservatives – uncertainty around regulation is causing nervousness in the community.
“Most landlords are looking forward to further clarification on the Renters Reform Bill and to hear what Angela Rayner has to say on the private rental sector as the next general election approaches.
“They are not clear about what their policies are and that is why people will hold back from investing until they get more clarity. There is a lot to play for in 2024.”
Fears over rent reform and potential no-fault evictions were the most common reasons cited in the report for leaving the market.
If Section 21 is removed, landlords will not be able to serve notice to their tenants without any reason. However, landlords will still be able to evict unruly tenants under Section 8 with only two weeks’ notice.
Lauren Turner, who lives in Birmingham, owns a rental property and is currently living on rent herself. Her partner is also a landlord, and the couple are planning to buy the next rental property together as a way to reduce the risk of any unknown regulation in the future.
“As a homeowner I find it stressful. “I don’t find my job stressful, I find being a landlord stressful,” she says.
“Landlords have a bad reputation and I don’t know why. We need to find a way to make the system work for landlords and tenants. The government does not help at all. It is very disappointing.”
Like others, she too is taking a long-term view. This is despite it currently incurring losses on its buy-to-lets. The rent covers his mortgage and service charges (£2,400 per year) but repairs and maintenance leave him in the lurch.
She earns £9,600 per year through rental income.
However, once the market picks up, she plans to sell her rental flat, buy a house up north and rent it out to take advantage of more affordable house prices. Yet the demand she sees in her local area is significant, in one instance she was viewed 15 times in 24 hours.
Lauren Turner plans to sell and buy property on the North Side where housing is cheaper – Andrew Fox
At the moment Ms Turner believes it is a buyers’ market and a good time to buy. Higher mortgage rates are putting pressure on some buyers, slowing the market and driving down home prices.
As Paul Bonner, a Warrington-based landlord, raised funds to purchase his first properties by selling shares. He bought the two properties in early 2020 at the same time as he was moving into the family home.
“I enjoy chasing around solicitors and estate agents,” he jokes. “I like being busy.”
His first two rental purchases were on the same family-friendly new-build property he knows well.
He bought the first flat from his sister, who had climbed the property ladder using the government’s Help to Buy scheme and had reached the end of the five-year period. They chose to sell instead of paying the government’s contribution.
Mr Bonner’s yield is 5.8 per cent per annum. He attributes his success to first-hand experience of the local residential property market.
“I’m always in and around that area. “We have moved four or five times since we bought our first house,” he says.
“We now have a good amount of equity in the first two properties because we bought them at a good time. That’s one of the reasons I feel like buying more.”
Mr Bridge believes the same – that taking a local approach is the way to go.
He is able to invest because his guiding principle over the last eight years has been to pay off debts on his existing assets. Despite high interest rates, this approach has left them well positioned to invest further.
“I am a local investor. I have no interest in Hartlepool, I don’t know it. But there are a lot of people who will do that because the yields are higher up north. But for me it’s likely to be around Surbiton.
Taking a broader approach, Ms Turner hopes that as there is more clarity about the future of the sector and regulation, an effort can be made to bring both sides together so that neither landlords or tenants feel targeted .
“Both sides need support, not just one or the other. If you keep putting pressure on landlords, you will have no properties left to rent out.”
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Source: uk.finance.yahoo.com
