There is no escaping the fact
that over the last couple of decades, the rise in the number buy to let
properties in Loughborough has been nothing short of extraordinary. Many in the “left leaning” press have spoken of
a broken nation addressing the fact that many youngsters are unable to buy their first home resulting with the rise of a new cohort of younger renters daubed as ‘Generation Rent’. As a result, landlords have been perceived to hoover up all the properties for their buy to
let property empires. The government has been blamed in the past for giving
landlords an unfair advantage with the tax system. It is also true that many of my
fellow professionals have done nothing to avail themselves in glory, with some suspect,
if not on some rare occasions, downright dubious practices.
Yet has the denigration and
unfair criticism of some Loughborough landlords gone too far? It was only a few weeks ago where I read an article in a newspaper of one landlord who had decided to sell their
modest buy to let portfolio for a combination of reasons; one of which being
the new tax rules on buy to let that were introduced last year. The comments
section of the newspaper and the associated social media posts were pure hate,
and certainly not deserved.
Like all aspects in life,
there are always good (and bad) landlords, just like there are good (and bad)
letting agents. So it should be said, there are good tenants and in
equal measure bad tenants. Bad letting agents and bad landlords should be
routed out but not at the expense of the vast majority whom are good and
decent.
But are the 1792 Loughborough
portfolio buy to let landlords at fault?
The Tories allowed people to
buy their own Council house in the 1980’s, taking them out of the collective
pot of social rented houses for future generations to rent them. Landlords have
been vilified by many, as it has been suggested by some that they have an unhealthy and
ravenous avarice to make cash and profit at the expense of poor renters who are unable
to buy their first home. Yet, looking beyond the headline grabbing press, this
is in fact ‘fake news’. There are seven reasons that have created the perfect
storm for private renting to explode in the 2000’s.
To start with, the Housing
Acts of 1988 and 1996 gave buy to let landlords the right to remove tenants
after six months, without the need for fault. The 1996 Act, and its changes,
meant banks and building societies could start to lend on buy to let properties,
knowing if the mortgage payments weren’t kept up to date, the property could be
repossessed without the issue of sitting tenants being in the property for many
years (even decades!). Meaning in 1997, buy to let mortgages were born and
this, my blog reading friends, is where the problem started.
Secondly, in the early
2000’s, those same building societies and banks were relaxing their lending
criteria, with self-certification (i.e.
you did not need to prove your income), mortgages 8 times their annual
salary, and very helpful interest only mortgage deals helped to keep repayments
inexpensive.
Thirdly, the totally
inadequate building of Council Houses (aka Local Authority Housing) in the last
two decades and (so I’m not accused of
Tory bashing) - can you believe Labour only built 6510 Council Houses in
the WHOLE OF THE UK between 1997 and 2010? Giving the Tories their due, they have
built 20,840 Council Houses since they came to power in 2010 (although still
woefully low when compared to the number of Council Houses built in the 1960’s and
1970’s when we were building on average 142,000 Council Houses per year
nationally). This meant people who would have normally rented from the Council,
had no Council House to rent (because they had been bought), so they rented
privately.
And then the remaining reasons are outlined below:
· Less of private home building (again look at the graph)
over the last two decades;
A loss of conviction in personal pensions meaning
people were looking for a better place to invest their savings for retirement;
· Ultra-low interest rates for the last nine years since
the Credit Crunch meaning borrowing was cheap;
· A massive increase in EU migration from 2004, when we
had eight Eastern European countries join the EU. That brought 1.4m people to
the UK for work from those countries – and they needed somewhere to live.
Thus, we got the perfect
storm conditions for an eruption in the Loughborough Private Rented Sector. Commercially speaking, purchasing
a Loughborough property has been undoubtedly the best thing anyone could have
done with their hard-earned savings since 1998, where property values in Loughborough
have risen by 262.2%.
Yet, the younger generation
have lost out, as they are now incapable to get on the property (especially in
Central London).
The government have over the
last few years started to redress the imbalance, increasing taxes for
landlords, together with the banks being tighter on their lending criteria meaning
the heady days of the Noughties are long gone for Loughborough landlords. In
the past 20 years, anything but everything made money in property and it was as easy as falling off a log to make money in buy to let in Loughborough – but not
anymore.
Being a letting agent has
evolved from being a glorified rent collector to a trusted advisor giving
specific portfolio strategy planning on each landlord’s buy to let portfolios.
I had a couple of instances recently of a couple of portfolio landlords, one from
Rothley who wanted income in retirement from his buy to let’s and the other
from Sutton Bonnington, who wanted to pass on a decent chunk of cash to his
grandchildren to enable them to buy their own home in 15-20 years’ time.
Both of these landlord’s
portfolios were woefully going to miss the targets and expectations both
landlords had with their portfolios. So over the last six to nine months, we have
sold a few of their properties, refinanced and purchased other types of Loughborough
property to enable them to hit their future goals (because some properties in Loughborough
are better for income and some are better for capital growth). And that my
blog reading friends is what ‘portfolio
strategy planning’ is!
If you think you need
‘portfolio strategy planning’, whether you are a landlord of ours or not
(because the Sutton Bonnington landlord wasn’t) give the office a call on 01509 260777.
Thank you for reading.
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