22:30 PM, 20th December 2018, About 3 years ago
That was the headline in the Times on 12th December 2018.
The article said ……
“The so-called ‘dinner party’ property investor is disappearing, with the number of landlords falling by 120,000 in less than three years after stamp duty reforms were introduced by George Osborne.
Figures calculated for The Times by Hamptons International show that landlords have sold 45,250 more homes than they have bought so far this year and a total of 119,250 since April 2016, when the former chancellor introduced a 3 per cent stamp duty surcharge on buy-to-let purchases.”
The Government believes no more than 400,000 landlords will be affected by the S24 restrictions on finance cost relief. I think they also realise that true business people will restructure in order to pay the optimal amount of tax and ring-fence their risks due the the continuous onslaught of new legislation.
The result will be smaller landlords paying the tax and cash strapped landlords being forced out of business. I genuinely believe that’s what the Government want.
I also think properties sold by landlords exiting the business will be replaced by properties acquired by those with optimal structures. There will be pain along the way for many landlords and tenants, that’s pretty much a certainty in my opinion, and whilst I despise the Government’s strategies strategy I think they will stick to them.
Within a decade or so I predict there will be very few unincorporated landlords, particularly full time professional landlords.
However, that doesn’t mean there will be a shortage opportunities. To the contrary, those who are optimally financed and structured may have the golden ticket to the best ‘after party’ any aspirational Buy-to-Let landlord could dream of. At this party, rents will be increasing due to scarcity of quality rental property whilst property values might well fall due to the number of former rental properties being put on the market for sale.
I predict the return of double digit gross rental returns and 30% plus R.O.C.E (Returns On Capital Employed).
Is your rental property business optimally structured to take advantage of this?
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