12 things BTL landlords need to know in 2018

12 things buy-to-let landlords need to know in 2018
https://t.co/srJp9I6OK9

— Which? Money (@WhichMoney) January 2, 2018

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Renters pay £54bn to private landlords

Renters pay £54bn to private landlords in buy-to-let boom https://t.co/HEg7Zc0ZCe #property

— Property PR (@propertypr) October 1, 2017

Total private rental bill in GB now £54.5bn - more than double owner occupiers mortgage interest - more here https://t.co/LCVT3T0tgb pic.twitter.com/8kyVa7zOpx

— Lucian Cook (@LucianCook) October 2, 2017

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The different faces of UK landlords

Different faces of UK landlords revealed ... https://t.co/1J3GC9CrD3 #property

— Northwood UK (@northwooduk) September 26, 2017

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Landlords come under attack

Fight the landlords who set generations against one other | Nathan Akehurst https://t.co/TtGQKnr4gl

— Guardian Housing (@GuardianHousing) June 5, 2017

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Who are landlords?

Who are we? 

Well, its a good question, and the Council of Mortgage Lenders, with help from the London School of Economics have attempted to answer it from the responses of 2,500 landlords. 

Here's what they found out on

Mortgages

• Surprisingly, 49% of us own all our property outright. 
• 47% of us have a BTL mortgage.
• Of those with BTL mortgages, over half had portfolio LTV's below 60%.
• Only 1% had overall portfolio LTVs over 90%, ( they also sweat profusely at night. )

Portfolio size

• 62% of us own just one rented property, 
• The average size of  a BTL portfolio is 2.7 properties ( less than in 2004 )

Age

• We are getting older ( 24% were over 55 in 2004, now 61% of us are over 55 )

Profile

• Typically, we live close to our rental properties, over a third of us always self-manage, the a similar amount use an agent, the rest pick and mix.
• We have typically invested for both capital growth and income, as a way of supporting our retirement and current income.
• Two thirds of us earn less than 25% of our income from rent, with only1 in 20 of us making a full-time living from being a landlord.
• Nearly a quarter of us were accidental landlords who fell into renting out property.

Income

• The median average rental income was £7,500 per year.
• The mean average figure jumped to £17,300, (pushed up by some very high rental incomes). 

The future

• Most of us see rental property as long term hold. There is a slight sentiment amongst us to sell up or reduce portfolio size as a response to tax changes.
• Most of us expect net income to remain the same, or increase slightly over the next five years. 16% of BTL landlords expect incomes to fall.

 Download - The CML Profile of UK Landlords 2016

The rise of the silver haired buy-to-let landlord https://t.co/jvYINxnYVV #property

— Property PR (@propertypr) December 15, 2016

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BTL investors feature in arcade game

Housing Ladder arcade game has players dodging buy-to-let investors https://t.co/xnbQk0FqBF

— Guardian news (@guardiannews) November 17, 2016

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Britain needs more landlords

Leave the #buytolet market alone - Britain needs more #landlords https://t.co/E6h6w0of5b

— NLA (@nationalandlord) September 6, 2016

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Most landlords only have one property

Most landlords only have one rental property according to research by the Council of Mortgage Lenders and the London School of Economics, although this figure has been evolving. 

Back in 2010 the research showed 78% of landlords owned a single rental property, but six years on and that figure has fallen to 63%. 

It appears many single property landlords have bought another one or two properties over the intervening years, with the proportion of landlords with small portfolios of 2-4 rental properties growing from 17% in the 2010 to 30% this year.

Despite this shift, the majority of PRS landlords still see themselves as part-timers, with the percentage of landlords saying that managing property was not their main occupation increasing to 95% - up from 92% in 2010.

87% of landlords manage their portfolio financials as private individuals and not as companies.

In terms of revenue, 90% of landlords report that rental profits makes up under half of their total income.

NOTE : This 2016 survey covers English landlords only, whereas the 2010 survey was UK wide.

Read - Still small but growing: How have landlord characteristics changed since 2010? on CML 

Read - How have landlord characteristics changed since 2010? on Politicshome

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This landlord is no April Fool!

Ok it could have gone horribly wrong. Seriously badly wrong.

But. One thing I have learned from my many years of being a landlord is .....don't panic....keep the faith ....and normally things come right in the end.

Chancellor engineered property buying scrum

What am I talking about?! The Chancellor in his wisdom decided to introduce his own little property scrum by pre-announcing his 3% surcharge for property transactions for landlords and holiday home owners.  This has created a property scrum for potential property investors who have been snapping up buy-to-lets to beat the 1st April deadline.  I've been affected because the property I've been selling was being bought by a buy-to-let investor with cash on the table.  I'd already been warned by the estate agent that should we not complete the sale by the 1st April then the investor would be looking for me as the seller to pick up tab of the 3% stamp duty surcharge.

Nail biting weekend for this landlord

I've had a nail biting weekend trying to work out if there was any chance of my purchase going through.  The news at 5pm yesterday from my estate agent that the sale has completed and my property portfolio is one property lighter.  This is a temporary state.  The money raised from the sale of this property has already been earmarked for the deposit of another property I'm aiming to have exchanged contracts on by the end of next week.

Could this be an opportunity for landlords?

Luckily for this landlord I've avoided the very real prospect of feeling like an April Fool.  Like many landlords this weekend whether a buyer or seller of property I'll be celebrating my small achievement and planning my next move.  For other landlords who weren't quite so lucky I can only say that I feel for you.

The saving grace is that if you are a landlord still looking to sell then this whole buy-to-let scrum has pulled most of the affordable buy-to-let markets out of the market.  This means that if you are a first time buyer there is very little choice available in this part of the market.  For some landlords this could represent a massive opportunity to sell now and obtain a premium price particularly as we are now in the prime house buying period.

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2 million landlords in the UK

There are now 2 million landlords in the UK according to the latest reports in the Mail.

This is up 600,000 since the financial crash.

In 2000 only 2% of mortgages were buy-to-let.  Now buy-to-let mortgages are running at 18% of all new mortgages.

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Landlords forced to go green

Landlords are soon to be projected into the vanguard of saving the environment as proposals from the Energy Act 2011 come into force. 

The Energy Act introduced the much maligned Green Deal for landlords which most commentators have hailed to be a disappointing failure.

Landlords face a legal requirement by 2018

From April 2018, landlords will be legally required to raise the energy efficiency of rental properties to at least "Band E" levels of energy efficiency. Estimates are that this will involve significant work to over 450,000 properties which currently fall into bands F & G to bring them up to the higher standards.

A DECC spokesman said: "There will be no upfront costs to landlords so it’s not going to cost them thousands. Landlords can obtain money through the Green deal, eco or other subsidies so they don’t lay out money upfront. Depending on what improvements the property needs would also determine how much it will cost."

Landlord Energy Saving Allowance (LESA) ends 2015 

Will extra costs stack up for landlords?

The reality is that these works could cost landlords thousands of pounds for additional insulation and new boilers amongst other measures.  Many landlords remain unconvinced that the thousands of pounds of investment will ever be recouped in the capital value of their buy-to-let property. 

These expensive works will generally only result in small efficiency savings and reduction of energy bills by tens of pounds and therefore are uneconomic in all but the very long-term.  Tenant groups argue that tenants foot the cost of higher bills and are unable to act because the insulation and the energy efficiency of the boiler is a landlords responsibility. 

Who's right?

1.6 million landlords in the UK

According to HM Revenue & Customs records the  number of buy-to-let investors in the UK increased by 120,000 during 2014.

There are now 1.6 million UK landlords... and counting.

Social landlord chief execs pay

Private landlords are commonly regarded as money grabbing opportunists, and yet it appears those in the public sector are just as self interested when it comes to it.

The chief execs and managers are seemingly not adverse to feathering their financial nests, even if that means siphoning away some twigs that might have been used to help provide better accommodation  for someone who needs it.

According to Inside Housing, last year, the average chief executive handed themselves a 3.98% salary increase, despite the freeze on wages in many sectors of the UK.

According to the Guardian, the average chief executive in social housing, including bonuses, now earns £173,321, with the highest paid post hitting £322,316.

Nice work... maybe we need to move over to the public sector - just think of the pension.

The Guardian struggles to defend the high wages of social housing's chief executives


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Merry Christmas Landlords

Buy-to-let Is Morally Wrong!

Our old friends at the Guardian are at it again.  This time claiming that buy-to-let is morally wrong!

They say:

1. It is morally wrong because landlords are hoarding and ramping up the price of a scarce commodity i.e. residential property.
2. We are scared because our pension pots are inadequate.
3. Landlords are after a quick killing and constantly hike up rents
4. Landlord are barred from renting to social security tenants by their mortgage companies
5. We ignore notices of inspections

I say:

I am a fervent believer in the right of free speech so I absolutely respect your right to print this misinformed diatribe.  Perhaps next time you might rather than employing a jobbing reporter get somebody who understand just a tiny bit about property and the private rental market?

1. Landlords don't hoard anything.  We have merely responded to demand from more people who want to rent rather than buy property.  If the commodity was so scarce why hasn't there been a boom in property prices.  In many ways landlords ability to fund new purchases has prevented a house price crash that could have been so devastating for home owners and the wider economy.  If our banks were in trouble without a sustained housing crash, imagine what it would been like with a Spanish style property slump!

2. Yes we are all scared that our pensions are going to be insufficient.  That's because returns from most forms of investment have been haphazard if not precarious under successive governments and so called safe investments such as government bonds' yield diddly squat.  So for many of us without a gold plated public sector pension a property pension is the next best thing.

3. Quick killing.  I wish!  The average length of time a landlord holds a rental property for is something like 22 years.  Hardly an over night killing.  As for massive rental hikes.  Outside London most regional landlords are lucky if they see increases above inflation in the last 10 years.

4. Landlord being banned from taking social security tenants by mortgage companies.  Not my experience but if this is true you have to ask yourself why.  Perhaps it because of crazy ideas like the Local Housing Allowance which made direct payments to landlords so much more difficult and increased the risk borne by the landlord and their mortgage company by unacceptable levels.

5. What is a notice of inspection?  Does anybody know?

I don't know about buy-to-let being morally wrong.  I think what is more wrong is letting journalists who know nothing about the subject but have a left leaning London centred liberal axe to grind go off on one.  But being a true liberal...I totally respect the Guardians right to spout RUBBISH!

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Landlords - "who are ya?"

Football fans will be familiar with the terrace chants of: "who are ya ...who are ya?"

So landlords who are we?

Well according to the latest ARLA survey on landlords prepared in June we are:

53 years old and have been a landlord for 12.2 years and have an average rental property portfolio of 7.6 properties.

I'm afraid I have no figures for the percentage of us with beards; neither for ladies or gents.

So landlords "who are ya?"

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A quarter of Tory MPs are landlords

Here at Property Hawk we like to keep an open mind when it comes to the political parties.  The latest headlines in the FT claim that over a quarter of Tory MP's are making money out of letting to tenants.  Whether you agree with this or not, the good thing for landlords is that at least these MP's will have some basic understanding of what's involved in letting to private tenants.  They understand that being a landlord is not like printing money and that most landlords aren't t uncaring and exploitative.  They probably appreciate that an increasing amount of the national housing provision is being financed at NO cost to the taxpayer by private landlords.  How many MP's from the Labour or Liberal party has the same kind of direct experience and understanding of what the private rented sector is all about?  Arguably all this puts the Tories in a better position to oversea, regulate and promote the health of the private sector (history bares this assertion out).  Others may disagree.

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Landlords can barely grunt

For some reasons many tenants see landlords as neanderthal ape men who just grunt.

However we make up for our lack of conversation with excellent spanner skills.

Tenants should remember that actions speak louder than words.




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FT landlord top tips

The Financial Times offers up some top tips for new landlords.

Our tip is use Property Hawk.

BTL sector praised

It's about time that BTL landlords got some recognition for their positive contribution to society.

The Paragon Chief Exec, John Heron spoke of the vital role BTL had played in the provision of accommodation in the private rented sector at the Council of Mortgage Lenders conference.

Mr Heron commented "The private rented sector makes a great contribution to the UK economy – it facilitates labour mobility and flexibility, provides an income to thousands of small businesses, supports a number of associated industries, such as letting agents and maintenance companies, oils the wheels of the housing market and makes a great contribution to the public purse."

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