Struggling landlords are selling up to avoid insolvency

Many landlords failed to plan for higher interest rates whereas the Conservative government did. That is why they introduced Section 24 and reduced CGT exemptions in order to squeeze as much money as possible from failing landlords.

The likelihood of many risks materialising accompany higher interest rates. Higher rents mean tenants struggle to pay so the risk of default increases. Less profit or a loss means landlords cannot afford to make essential repairs so the risk of fines increases. Nit making essential repairs means insurances may not be valid.

Interest rates need to fall if the PRS is to survive. Sadly, inflation is still 60% above the Bank of Engaknd’s target rate.

All the talk of increased bank rate is overshadowing the very substantial rise in the cost of maintenance. Skilled trades have increase their pay by more than 40% here in two years and materials have outstripped inflation as well. Our largest local housing association is falling soooo far behind with repairs we are getting regular (not frequent) calls from those affected wanting to move. Nottingham City has just revealed - owned up to - not having done any inspections in 8 years. Our insurance as a SPL now insists on every 3 months. Fortunately we are not hit with licencing yet. Bad news all round for LLs and Tenants. Not a peep from Shelter about either. No talk of a cap on either trades wages or licence fees - can't imagine why not.

Too many Landlords, especially those joining the profession, and yes it is a profession not a "let's make some quick bucks" venture, over extended themselves re loan to value.

BTL interest rates are still lower than they were 20 years ago!

Many also worked on 12 months rental income, didn't take into account non-payments, the sometimes unreasonable demands of tenants, and increases in interest rates and tradespeople if not doing the maintenance themselves.

It was recently reported on Prop118.com that 93% of landlords are in arrears with their BTL mortgages; and 37% of PRS have got out of the sector in the last 18 months.

Reply to the comment left by Judith Wordsworth at 18/04/2024 - 17:59
Not sure what was reported on 118, but don’t you question the veracity of 93% BTL mortgages in arrears? That equates to virtually every mortgaged landlord being in arrears - it simply isn’t the case.

Been in the prs for 24 years and never seen it so bad, you couldn't make it up under this Conservative administration . I could understand it under a socialist labour lot you expect to be vilified and put on by labour , but never under a tory administration.

There's no point in whingeing, this is all according to the plan. The government, backed by people like Shelter, GR and the media have been trying to get rid of private landlords and renters for years now and will only be rubbing their hands in glee at how unexpectedly "well" things are going in their favour. But they will probably be tame by comparison with the clampdown that Labour have got planned. Those who are over-leveraged or not making enough for the effort to be worthwhile should sell whilst they can. Those left can take advantage of the consequent extreme undersupply to choose only the very best tenants who are willing to pay whatever it takes to make the numbers work or to beat other tenants to gain the accommodation. Unfortunately, in the new normal there will be no room for people genuinely wanting to help out less advantaged tenants. Because no good deed will go unpunished by those who see us as little better than vermin exploiting those who are less fortunate by charging rent, or loving nothing better than to see another human being made homeless when they just need their property back or need to cover increasing costs.

Reply to the comment left by Keith Wellburn at 18/04/2024 - 23:51
Further to my comment yesterday, I had a look at the number of BTL loans in arrears. The first reference was Bloomberg.com quoting 13,570 UK BTL in arrears at the end of December 2023. Without subscribing I couldn’t see anything else, but we know that there are in excess of one million BTL loans - I am wondering whether the quoted figure referenced in a 118 article was, or was supposed to be, 0.93%.

Reply to the comment left by Michael Booth at 19/04/2024 - 06:53
Don't worry... Labour is about to come and make it even worse. I've been in the game since 1998, and remember how we were all encouraged by the government at the time to invest in BTL to bolster our pensions....now they knife us in the back!

Reply to the comment left by Cider Drinker at 18/04/2024 - 08:45
A lot of fiscally naive LLs have entered the market since 2008......now find themselves having to sell because they're subsiding their tenants

Personally I have no sympathy if they haven't stress tested their business model - BTL is no different to any other business ( actually can be a whole lot more painful!)

What's this actually means for the general population is that many of those displaced tenants are now having sorted out by cash strapped councils - mostly in temporary B&B accommodation

I think I was at a property conference last year where they said that there has been something like 25 attacks on the BTL sector... but the biggest thing (which I really believe is out of order) is the change to how mortgage interest is dealt with. Despite many people on this platform saying 'its a business' (and I totally agree) - housing / accomodation is a business... just like food and utilities... its not 'free'... every single other business can write off 100% of interest payments as it is a LEGITIMATE business expense!

Spare Room campaigned / lobbied the government about the difference in tax treatment of long term lets and short lets... and the government saying 'yes, it is unfair to treat the 2 differently' - they have scored an own goal by applying this rule now to short term lets from April 2025. So when the law changes unexpectedly, one cannot 'blame' the LL for not projecting this into their figures when they first bought... being taxed on the sales volume, and having to pay tax on a profit that you haven't even made (higher rate tax payer problems) is out of order!

But everyone should be factoring this in now... and if you are like the MANY who are expected to slide off a low fixed rate deal in 2024, 2025... just do your sums, because your interests costs could double or treble... with it taking so long to evict and then sell, I understand why people are flinging the house into auction. I wouldn't touch any of those with tenants in situ with a bargepole. And its bad for the LL because a vacant property is worth more than one that comes occupied. Another thing I bet many didn't factor into their calculation when they bought. I understand why many want to run for the exit. It's a trickle now, which'll turn into a stampede BUT there's others coming into the market, so there'll always be a seller for someone who wants to get out.