LATEST: Mortgage problems drive surge in portfolio landlords selling up

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landlord mortgages

Landlords with portfolios of 20 properties or more are making up the bulk of enquiries about selling to the Landlord Sales Agency.

Despite reports that smaller landlords with one or two properties will be hardest hit by current market conditions, the firm has one landlord client with 50 houses that he can’t refinance because no lenders will lend, and another with 40 properties and a £6,000 per month mortgage deficit. Their only option is to sell.

Another landlord recently sold her 23-strong portfolio in Warrington through the agency, reporting that with a total value of £2.7 million, rising costs and interest rates means she is subsidising others to live in her properties.

Although the Landlord Sales Agency is averaging 240 enquiries a month from landlords, 75% of their agreed sales over the last year have been to other landlords who are keeping the existing tenants.

Rent rises

MD David Coughlin (pictured) says there is such a critical need for rental properties in this country, that he and his team are working with landlords to try and keep properties in the PRS by selling tenanted properties.

The firm has helped tenants pay their current rents, paid off arrears, paid for tenants to relocate and in some cases, even paid tenants’ rent in advance for the next landlord who takes on the property. For more challenging cases, they have built relationships with local councils who can support tenants’ rent payments, clear outstanding funds and even pay off legal costs.

Coughlin adds: “Tenants are having to accept rent rises, and in 50% of the sales we have agreed, the tenants have opted to stay with a higher rent because they know fierce competition for rental properties could see them paying even more elsewhere.”

Read more about rent rises.

6 COMMENTS

  1. “For more challenging cases, they have built relationships with local councils who can support tenants’ rent payments, clear outstanding funds and even pay off legal costs.”

    And who pays for this? No wonder council tax is going up.

  2. Simply amazing that 75% of sales are to existing LL.

    Clearly these idiot 75% are unaware of the pending Labour Renters Charter.

    Forget the RRB the Torues won’t be the Govt come the next GE.

    The Labour Renters Charter is now the Real threat.

    It is effectively the RRB with rather large knows on!!

    It is clear that in light of higher IR the leveraged PRS isn’t viable.

    Therefore for the future it would be appropriate to reduce leverage to no more than 50% LTV.

    Had that stricture been in place I would have bought 2 properties rather than 4.

    It is clear and now obvious that the industry standard of 75% LTV was too much.

    It simply can’t cope with the IR as they currently are.

    Chuck in the bonkers S24 and it is no surprise that LL with leverage in excess of 50% are now desperate to sell.

    That hardly makes for a stable PRS.

    Reducing leverage to the maximum of 50% would be a useful method to control the excesses of the PRS.

    It would ensure LL have far more ‘skin in the game’

    Tenants would also be reassured that their LL would be very unlikely to be in the position of having to sell up.

    Of course with reduced permitted leverage that would mean far fewer rental properties available.

    So that would result in increased demand which would result in far higher rents.
    All that would increase property prices.

    So reduced permitted leverage would be to the advantage of LL.

    Their business would be far more resilient.

    For the 95% of LL owning 2 letting properties they would be better off by selling off one and reducing leverage on the other.

    Obviously doing this would cause millions of homeless tenants.

    Nobody cares about homeless tenants.

    They would just be collateral damage as LL reset their business models.

    The now higher IR have now exposed the LL with leverage in excess of 50% and now with S24 that has revealed unviable letting properties.

    A trade off should occur.

    That would be that LL who started out with 50% LTV or reduced to 50% LTV would no longer be subject to S24.

    If this occurred there would be a mass sell off of Letting properties to reduce to 50% LTV on remaining letting properties.

    If property values reduced which would gave the effect of increasing LTV then that wouldn’t drag LL into the S24 tax regime.

  3. If anyone hasn’t noticed, there are cash rich conglomerates out there swooping up small portfolios at rock bottom prices. Buying at 70% of market value and getting sky high rents with no financing costs. A case of the rich getting richer at the expense of small landlords who were hoping to have a bit of a pension. It’s got Tory written all over it.

    • No LL has the right to exist especially mortgaged ones.

      If cash comes along to buy up hugest quantities of property that is just the market.

      Anyone can be a buyer.

      Got nothing to do with the rich getting richer.

      Cash outbid leverage everything.

      That is just capitalism.

      If that cash means LL are wiped out and have no pension TOUGH!

      That is capitalism red in tooth and claw.

      My suggestion is move away from investing in properties the cash buyers want.

      Cash will always be king and yes money goes to money.

      It does with leverage but cash is far superior to make money on money

      Cash buyers will only be buying up as LL leave the market.

      There will be a massive transfer of letting property to cash buyers which includes institutions.

      Many small LL will determine to leave the PRS.

      Tenants will have to suffer the expense of corporate LL!!

      It won’t be a happy experience.

      Little LL who reduce leverage will still survive maybe reducing to perhaps just one property.

      Still OK for a pension.

      There is no doubt that Govt is attempting to corporatism the PRS.

      It might achieve eradication of the 50% of the PRS that is leveraged.

      There isn’t much it can do to the 50% of the PRS LL that are mortgage free!

      But definitely the days of being a leveraged LL are coming to a close.

      Govt doesn’t want leveraged LL!

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