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Today, I had an email from a prospective property investor.
My reply follows:
Thanks for your email.
You want advice?
I could go on forever, but;
My take is that the long term success or failure of any business strategy is always dependent on the future changing landscape, which has changed faster this century than any other equivalent period of time. An example is the change from the high street to online which is having a massive impact on big names and not just small fish like you and I. In property the change in the last 3 years is incredible
BTL and property investment per se has historically been a long term form of investment of huge benefit to both landlords and tenants.
Lower income tenants rented for the long term and good landlords provided decent accommodation to decent working people at fair prices. Rents and property values rose with inflation.
The problem is that Government now plays to public opinion (votes) and not economic reality - after all it's not their money. Property prices rise because of demand and supply, both of which have been mismanaged by recent governments. When property prices rise, rents rise - it's not rocket science. Additional Government regulation and taxation adds to this, and this Brexit thing is a complete mismanagement f**k up, whether you are an inner or outer. I wouldn't trust Mother Theresa to go to a supermarket with my shopping list.
Housing benefit has been replaced by Universal Credit. Councils have sold off the best of their social housing. S24 has been introduced. Today we have reports of 3 year tenancies and rent controls (I don't need to give anyone a 3 year tenancy because as long as they pay the rent, behave, and look after the place I don't want them to leave - so they are secure. If they don't do these things then I need a law to get them out)
There are a lot of bad landlords who prey on the vulnerable and get away with it because of ineffective council pussyfooting enforcement (I despair at the enforcement of council officers on TV documentaries, as I do with parking outside my local school). The only way government seem to react is to put more regulation on landlords, which the good ones are already complying with and the bad ones continue to disregard.
All future investment choices should always be age dependent and what exit strategy you are looking for. If I was looking to invest in property now and was young enough, it would be either holiday lets or buy to renovate and sell.
So there you go. If you want to chat more then get back to me. As I said, i could go on forever but I'm just a grumpy old man with a honours degree from the university of life.
Hi Geoff,Thanks for sharing your thoughts.I concur with every word you say apart from:There are a lot of bad landlords who prey on the vulnerable and get away with it because of ineffective council pussyfooting enforcement My belief is that the council do not enforce anything, as they have nowhere to house tenants! If they shut down a 9 bed HMO, then that is 9 people from one property added to their waiting lists!The Government has tweaked too many levers within the PRS without understanding the consequences, and they have, in essence created a perfect storm.If landlords can survive the pain of the next two to four years, I believe that the good times will return. In the meantime, the homelessness problem in the UK will be rapidly amplified by Government meddling and disastrous policies!See - What causes homelessness in the UK?Homelessness - you ain't seen nothing yet!Is BTL dead or am I just late to the party?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
My belief is that the council do not enforce anything, as they have nowhere to house tenants! If they shut down a 9 bed HMO, then that is 9 people from one property added to their waiting lists!
Correct, and is a big part of the problem that government et al don't want to address. They think hammering landlords is the solution - but my gripe is that in many cases they pay housing benefit direct to these landlords and the tenants remain in squalor.The first thing they should do is stop the direct payment, and pay it to the tenant. There is no property inspection system in place to ensure a place is fit for human habitation before HB is paid direct to the landlord.
They will pay housing benefit where they are trying to evict people from the site.
Paying people to be able to live there whilst paying to try to evict them, if they had stopped the first they may not have needed to spend money on the second.
Relax, the housing problem is acute and soon it will become chronic and ultimately disastrous. Then the government will have to come cap in hand to the landlords they have vilified. I will turn the other cheek.
PS don't worry Heather Wheeler is going to solve the homelessness problem.