House price falls create opportunities for landlord investors

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Falling house prices and rising mortgage rates, coupled with a cost of living crisis, which inevitably results in higher incidences of rental arrears, are scaring off potential new investors in buy-to-let.

But new investments in the right locations could be an astute move for new investors at this time. The a dilemma that landlords are in right now is, is now the right time or is it better to wait and see if prices fall further?

The start of a house price fall

Data produced by the Land Registry show that house prices started to stall last autumn, with mortgage approvals falling by around 4 per cent since September, an annual rate of fall of around 7 per cent.

What’s different for landlords, as opposed to home buyers, is the level of rental demand and the growth in rent prices. The fact is that government policy over the last ten years or so has been so discouraging to buy-to-let landlords that many landlords are selling up, creating a major undersupply of rentals.

Frustrated landlords and buying opportunities

Adversity creates opportunities for those who are savvy and nimble investors, those who are able to pick up the right bargains in the right locations, perhaps from overstretched (over borrowed) and frustrated landlords who have had enough?

Many existing landlords are in a bind: their financial affairs are not structured optimally to avoid the high taxes the government has imposed, their properties are in need of expensive upgrades to meet the upcoming new environmental standards, which could mean many thousands needing to be spent, and they may be over borrowed to boot, just as interest rates are rising, plus they are fearful of impending new tenant friendly legislation.

The right financial structure

New investors can structure their financial affairs to avoid the worst of the tax traps, working through a limited company for example; they can budget for upgrades if they purchase a property at the right price, or even buy new, and with the right approach any changes in legislation can be dealt with – after all the Government needs good landlords more that ever at this time.

The proviso to all of this is buying the right property in the right location, one which guarantees that all important factor in property investing, tenant demand. In some locations right now, tenants are queuing to rent, in these locations properties could be let 20 times over just days after coming onto the market.

So, deep research, followed by careful selection of the location will almost guarantee you owning a property that will bring long-term sustainable profits. Interest rates will come down and house prices will stabilise, given time, and prices will start to rise again, all this in the short to medium term, perhaps 2 to 5 years.

Those with funds will benefit

If you are one of the lucky ones with funds of your own to invest, then you can take advantage of the situation right now, you’re in a strong position as a counter market-cycle investor. The higher the level of enquiry you can provide in your bricks and mortar investment, the less pressure you are under to pay high mortgage interest each month, and the easier it is to weather the storm, and see the long-term higher returns and profits.

There’s only so many potential property investors with the necessary funds funds available to invest right now. That puts anyone with a cash sale proposition (cash with loan facilities arranged) who can move fast, able to negotiate and snap up a bargain.

Capital gains tax relief

It’s perhaps late in the day in early February to catch those landlords wanting to exit the fray in time to catch the capital gains tax benefit before the change in April – when the tax fee allowance drops from £12,300 down to £6,000 per person – but it’s still theoretically possible with the will of the solicitors involved to get the deal over the line in time. That’s a great big incentive for some landlords to sell.

The end of buy-to-let?

Many are forecasting the end of buy-to-let and have been for some years, headlines like “Good Riddance to Buy to Let” in the New Statesman recently don’t help. But seriously, what’s the alternative? Can government suddenly magic up 20,000 new homes, because that’s probably the figure that’s needed now to bring supply and demand into equilibrium in the UK.

Twenty major cities

Recent research carried out by Colliers International on behalf of The Daily Telegraph analysed the rental markets in 20 cities across the UK, cities including Cambridge, Oxford, London, Glasgow and Edinburgh. The study looked at factors including house prices and rental yields, economic performance, quality of life, educational levels and the environment.

The study found that a city like Cambridge, though prices were higher than the average, offered above average earnings potential in a location where demand is high and tenants are likely to be in a position to continue to afford rising rent prices into the future. Here you can be confident about your cash-flow projections into the future.

Rental demand in Cambridge along with some of the other major cities continues to outstrip supply, especially where leading universities and high tech jobs are available. Theses locations offer landlords a steady market for new tenants and a log-term income flow where workers are taking up well-paid jobs around academic institutions, with nearby tech industries.

Alex Bloxham, of Bidwells estate agents in Cambridge, told The daily Telegraph:

“They’re not typically great yields but the capital growth is what you’re looking for, as well as the consistency of rent you’re getting. The void periods are very minimal and the demographic of tenants is very good.”

The growing populations around these popular cities means there’s a shortage of the right rentals and house building is failing to keep up. Over a ten year period landlords have seen their rental property values increase by around 70pc in today’s values says Bloxham.

Following Cambridge, Edinburgh, Glasgow, Oxford and London were seen as locations with the highest potential for landlord investors.

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Landlords warned over rogue plumber operating in NW of England

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A leading ethical repair firm has shamed a rogue plumber who charged an 85-year-old woman £1,500 to repair a water pipe.

James Anderson (pictured), who runs Depher (disability and elderly plumbing and heating emergency repair) in Burnley, posted on Twitter that the plumber, who works for private landlords and letting agents in the area, charged the exorbitant fee but still left the elderly woman with a leaking pipe.

“This one has angered me big time – a rogue plumber!” tweeted Anderson. “Absolutely disgraceful. We will deal with this and then deal with him. He has lost five customers that I have informed, all landlords and estate agents.”

Anderson repaired the pipe and after discovering that the woman is a carer for her disabled daughter, decided she needed a boiler conversion which he will fit free of charge.

Issue

Burnley Council says that its housing team is interested in looking into the issue and is keen to get details of the rogue plumber.

Anderson set up his community initiative company in 2017 to help elderly, disabled, vulnerable and low-income tenants and householders who were suffering due to poor quality heating and plumbing, that was ineffective and, in many cases, potentially life-threatening.

It relies on public donations to cover the cost of labour and materials, allowing it to provide free services during winter months and discounted services at other times including urgent emergency works such as repairing gas leaks, installing new boilers and heating systems.

It works with 67 subcontractors and thousands of volunteers across the country.

View Full Article: Landlords warned over rogue plumber operating in NW of England

Generation Rent activist now working for DLUHC as PRS advisor

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A former Generation Rent campaigner is now working as an advisor shaping private rented sector policy at the Department for Levelling Up, Housing and Communities.

Caitlin Wilkinson – policy advisor for the private rented sector – was policy and public affairs manager at the campaigning group for two years and formerly responsible for developing Generation Rent’s policy proposals around safer housing.

She joined the group after volunteering on the campaign to end Section 21 evictions and previously worked at youth homelessness charity Centrepoint.

There is evidently a cross-over between the campaigning group and public office as its director Baroness Alicia Kennedy was previously a Labour peer.

Step down

However, she is due to step down from her role and Generation Rent is recruiting for her replacement which it says presents, “an exciting opportunity to lead a dynamic and committed team to radically improve the lives of Britain’s private renters at a moment of huge political opportunity”.

The successful candidate – on a £57,000 salary – will be expected to lead the organisation and strengthen its position as “a leading participant in the housing debate”. 

This winter it has been calling for stronger action from the government to raise energy efficiency standards in private rented homes, ensure grants are available for fuel poor households and supporting tenants to ask their landlords for improvements.

It has also been campaigning for a rent freeze and says that thanks to its collective action, the government has promised to scrap Section 21.

View Full Article: Generation Rent activist now working for DLUHC as PRS advisor

Tenant AWOL?

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Hi, This is my 2nd post since I joined this forum. It’s still related to the same issue where I purchased a property with sitting tenants, where I had no choice on the tenancy agreement being created by the previous landlord for 12 months despite him knowing that he was selling the following week!

View Full Article: Tenant AWOL?

BREAKING: Housing minister lasts just FOUR months after Rishi’s reshuffle move

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Landlords and the wider rented sector face more uncertainty after it was announced this morning that housing minister Lucy Frazer, who has only been in post since October last year, is to become secretary of state at the new department of Culture, Media and Sport.

In private at least, the news is unlikely to be welcomed by industry leaders as Frazer’s replacement, who is yet to be announced, will be the be the 15th housing minister since the 2010 election and the 6th in the past 12 months.

Frazer had been welcomed by leading housing organisations and figures because she is a landlord.

As we reported on her appointment to the Department of Levelling Up, Housing and Communities (DLUHC) at the time, there were hopes the private rented sector would have a new voice within the government.

Frazer rents out a property in London and also defended the government’s decision to stand down eviction protections for residential tenants after the pandemic.

She told BBC Question Time in 2021 that tenants had been “protected for a long period of time”, adding “it is important that landlords can take control where necessary”.

Frazer is also being rewarded for her loyalty – after his successful bid to become Prime Minister, she publicly backed Sunak, tweeting: “I am confident that our principled and tremendously capable PM will lead us effectively through these economically challenging times”.

Reformer

During her brief stint at DHLUC towers she got involved in property industry reform, short-lets regulation and the looming Renters Reform Bill.

Frazer is the MP for South-East Cambridgeshire since 2015, she had a brief spell as transport minister during Liz Truss’s premiership and was previously treasury minister and a minister in the Ministry of Justice.

She has also been solicitor general and before becoming an MP was a practising barrister.

Frazer’s move coincides with major changes to Whitehall including a new Department for Energy Security and Net Zero, which will be now overseeing the EPC upgrade deadline and its funding for landlords, headed up by Grant Shapps.

View Full Article: BREAKING: Housing minister lasts just FOUR months after Rishi’s reshuffle move

Scotland’s PBSA is ‘unfit for purpose’

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Students in Scotland are being forced to live in unsafe purpose-built student accommodation (PBSA) and a rent freeze should be reintroduced, a new report reveals.

The National Union of Students in Scotland (NUS) claims that students are being forced to live in unsafe

View Full Article: Scotland’s PBSA is ‘unfit for purpose’