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  • Debt & Negative Equity

    Surge in landlords reducing portfolios

    The number of UK landlords reducing their portfolios, or even selling off their investments entirely, has increased significantly, according to law firm Irwin Mitchell.

    The law firm has blamed the government for the surge in landlords exiting the sector after it introduced a series of reforms which have made buy to let investments less profitable.

    Recent changes to the sector have included the introduction of Section 24, which has begun phasing out mortgage interest tax relief for landlords, the 3% hike in Stamp Duty on the purchase of second homes, the cap on tenants’ deposits and the ban on letting agents’ fees, which has seen these costs passed onto landlords.

    Some buy to let investors have also expressed concerns about the future of the market, in light of falling house prices in parts of the country and the possible introduction of rent controls, which was proposed by the Labour Party at its recent annual conference.

    Jeremy Raj, partner at Irwin Mitchell, said that it was ‘understandable’ that landlords would withdraw from the private rented sector under the circumstances.

    Exiting the sector may not be as straightforward as some landlords expect, however, especially if they have several properties.

    Mr Raj warned; “The capital gains tax liability that will crystallise on each property sale must be factored in when weighing up whether it is best for landlords to divest of their property portfolio.

    “Any restructuring of a portfolio should factor in the overall tax implications and a comparison of the costs of alternative investments, for which legal advice should be taken.”

    The situation will be even more difficult for landlords who are still paying off the mortgage on one or more rental properties, especially if the properties have fallen into negative equity, as they will still have to cover their outstanding mortgage costs.

    At Landlord Debt Advisory, we offer bespoke debt solutions for landlords.

    If you’re a landlord struggling with debt problems or the impact of recent reforms to the private rented sector, contact us on 0161 222 4311 or go to our website for an initial free, no obligation consultation.

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    Just wait 3 years and see the outfall with this

    a lot of Landlords are still in the dark with the changes

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    What about LL  like me who know all about what is going on but can't do anything about it!?

    Increasing rents is my only option as I don't wish to be homeless just yet as I certainly can't afford market rents!

    S24 is going to cause much upset to those who know what it will do and to those that currently don't.

    I cannot think of a single other tax measure which has the capacity to devastate the lives of tenants

    UC is just the tip of the iceberg.

    If LL  are selling up due this minor short term problem  with the consequent devastating effects on tenants and LL  alike then God help them all when S24 really kicks in.

    It seems like the LL  rats are taking their profits and leaving the sinking PRS  ship.

    I wish I could do the same! !!

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    We talk often about  the north v  south divide

    There will also emerge a FTB  v non FTB divide

    Those LL`s who invested in high yielding low market areas will suffer disproportionally more

    FTB`ers  wont touch them and the reducing pool of investors means those prices will be hit hard

    So the rise of the cash rich pure yield junkie LL will emerge

    Units bought for 25K  20 years ago are now maybe  100K .

    The Sec 24 hit LL`s   will take a 40% hit just to get rid

    They still make 35K so not so good but not too bad as they lick their wounds

    15% yields will return and a new type of LL will emerge

    Old school  - who hibernated for a while to avoid the S24 noise and now awake refreshed

    New school -  who see yield for yields sake and understand 15% beats the banks 1%

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    Jonathan Clarke. http://www.buytoletmk.com


    Cash is king as ever!

    Trouble is there is simply insufficient  cash rich LL  to replace all the S24 LL  bailing.

    So there will still be many homeless  tenants.

    But certainly those cash rich LL  sharks are circling

    Who can blame them!?

    That's  business

    No LL  has the divine right to remain viable if relying on borrowed monies.

    Trouble is a return to a PRS sustained by cash is simply not viable.

    It needs to remain the same size or even larger to meet demand.

    The last time cash was king was before BTL mortgages  and after the HA AST changes.

    Back then there were sufficient  council houses and the PRS was much  smaller.

    But since then we have suffered from mass uncontrolled  immigration and RTB and very few social houses being built

    RTB  has stripped the social sector  of 2 million council houses.

    This simply is unsustainable.

    There is going to be a tsunami  of homeless tenants as a result of Govt policies

    Cash rich LL  can only take up some of the slack left by exiting S24 and other LL.

    There is simply not enough spare cash to replace all these mortgaged LL  leaving the sector.

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    Agreed -  the sums will not add up and more and more  homeless will live on the streets

    They got rid of the Calais Jungle but I see 1000 have now returned less than 12 months after it closed

    https://www.express.co.uk/news/world/8701...ews-latest

    They are still wanting to get to the UK

    The people in charge in France  cannot deal effectively with just one town

    Imagine UC being rolled out across the whole of the country in its current state ...

    Our own  sec 24 homeless will soon match those French figures

    We will  soon have our own London Jungle equivalent

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    Jonathan Clarke. http://www.buytoletmk.com

    Yep totally agree with you.

    But guess who will get the blame for all the homeless tenants! !!??.............yep you've got it;  all those nasty mortgaged  sole trader LL  evicting tenants and selling up

    Anyone would think that LL should have the right to decide what to do with their own private assets!!......the mere thought!!!??


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    give it time JC high yields will return

    Prices will go on the slide and there will be bargains

    If interest rate rises are higher enough Home owners will sell too

    its a pack of cards just waiting for collapse

    Its on the cards so they say and if you play your cards right you could take home a large prize


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    15% yields on single let properties wow and what will the mortgage market look like JC?

    are you predicting this for the north only? I can't see that in the south? And if that happens it won't be for long as the southern money goes north ?

    more thoughts JC and DL I trying to work out my next move

    Kim

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    I think in selected areas in the SE 10% yields but more 15% yes in the north

    With PRA and interest rate rises it will be 75% LTV tops with 60% becoming more the norm

    I dont think this April will see this great exodus of LL `s as this  is just the first s 24 phase

    Many will hang on shrug it off ignore it and still carry on in denial

    April 2019 will see many start to really waver so  October  2019 the battered old ex LA property will be sold off as being seen more trouble than they are worth

    People who have had a good run will forego equity and take a hit just to get out

    The housing squeeze will continue as they will never build enough so families will stick together longer  or go back together when their sisters / brothers / fathers / mums get evicted

    Big ex LA units will do well . Families will look for these big properties in rough areas and  all muck in to keep a roof over heir heads

    So a large 4 bed will have maybe 5 family workers contributing 400 each  for a 2000 rent on a 150K house = 16% yield

    So HMO returns but classed as a single let as its all family

    They are all stuck because no one has the income to break out on their own

    I had one guy living in the conservatory of his ex with their son while she lived in the house with her new bloke and his kids .

    Highly unsatisfactory but suited them both financially  to keep a roof over their respective heads

    I also think small pokey studios will do well . When the choice is the street or a studio a studio is luxury

    And i think we will go smaller still and there will be a healthy market in Japanese pod style accommodation

    Just a bed for the night - Out wandering the shopping mall during the day or at work

    The Pursuit of Happyness film shows what can be done if push came to shove

    People survive

    Image result

    I could split my studios in two if required and they still get a 10 x 7 exclusive living / bed space

    500 a piece would mean a 13% yield

    If the choice was a mates sofa or  the street  then a 10 x 7 exclusive space to rest your head is luring

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    Jonathan Clarke. http://www.buytoletmk.com


    I can't see 15% yields on single lets ever returning to the SE. When were they last in abundance? Pre-2000?

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