BTL landlords will be ousted as City investors move in

Reply to the comment left by Dennis Forrest at 20/06/2023 - 12:39
We had a holiday let outside Bath 25 years ago, and it was, indeed, hard work. We self-managed, but still relied on numerous trades for the inevitable day-to-day problems, which you had to fix immediately. The marketing costs were significant, and we still had problem guests. We let to one couple from the US for 6 weeks, while the husband was working here. But the wife was home all day, with the heating on full blast, and used a full season's logs.

So, I have the necessary experience, and when I left London in 2019, I bought a house which I extended significantly and refurbished, with the intent of holiday letting. I'm still not letting because the area is full, there are guest problems, the regulations are getting tougher, and there is pressure building against holiday lets being better taxed than BTL and taking up much needed local housing. The 'generous' environment will change.

I am about to buy a 'forever home' with my partner [another refurb project], so am considering making it my house available for executive short lets and insurance lets. This will give me some cash flow, and I can see which way the market is going.

As for staycations, I couldn't wait to go abroad again, and that applies to most. The UK is unreliable for weather, and extremely expensive for poor quality, especially for families. I'm retired, and don't have 50 years to wait for the UK to heat up... assuming that's even happening!

Reply to the comment left by Darren Peters at 20/06/2023 - 12:52Exactly my point - too individual to interest big corporate investors. Holiday lets may only be suitable for smaller BTL investors who have say no more than 5 properties. Location is very important - I would say avoid Devon and Cornwall which is too seasonal ang go instead for market towns which have all year round attractions and perhaps attract more older people less tied to school holidays. As I said you can be as hands on as you want, advertise on Airbnb for free, do your own cleaning, laundry, maintenance. OR you can use a big national company like Sykes and they can do everting for you and you just sit back and watch the cash coming in. They are on commission and will try and get the very best return for you and themselves. You could expect around 8% net for a good holiday let compared with say % net for a BTL, and don't forget at least an 8% tax saving when you sell up. 10% BADR versus 18% or 28% CGT. my maximum holiday let is 4 weeks but never had people stay longer than 2 weeks. I charge almost as much for winter as summer lettings to cover the extra heating costs.

Reply to the comment left by Rob Thomas at 20/06/2023 - 10:56
Rob, I would argue that far from being oblivious to the student market differences in rent, the politicians are fully aware and are fixing it by eliminating the private landlord competition. By making all rentals continuous rolling tenancies with no fixed term while allowing an exemption for purpose-built student accommodation, the forthcoming Renters (Reform) Bill totally undermines the business model of private student landlords causing many to leave the sector since they will be unable to evict any students who do not leave at the end of term so cannot guarantee the accommodation will be available for the following year. Of course, any who stay on after the end of their course are no longer students and will render the entire property subject to council tax.

Reply to the comment left by NewYorkie at 20/06/2023 - 13:04
I have to disagree with your comment, 'the generous environment will change.' BTL will never IMO be regarded as a business whereas a full functional holiday let doing over 200 days a year always will.
One of the reasons BTL will never be regarded as a business is you can't start a business by accident. e.g. Aunt Agatha has died and left you her house and because it's a bad time to sell houses you contact your local estate agent to find a tenant for the time being. Was it ever your intention to start a BTL business if your aunt had not died? NO. Do HMRC want to contact these people and inform them that they have just started a new business?? Contrast this with a holiday let business. Assuming you do not buy an existing holiday let business you are making a conscious and concerted effort to start a business from scratch which requires quite a lot of time and effort. Don't forget holiday lets pay business rates often zero for owners of single or only a few properties. Don't also forget, ignoring the sad human side, the recent Covid epidemic was a bonus for holiday let owners. (N.B. make sure your property has individual not shared access) From December 2020 to March 2022 we received £24,970 in Covid grants. Compare that with a BTL and you were lucky if your tenant still had a job and could afford to pay the rent.

Reply to the comment left by Dennis Forrest at 20/06/2023 - 13:44“Aunt Agatha has died and left you her house and because it's a bad time to sell houses you contact your local estate agent to find a tenant for the time being”. Which in reality you won’t be able to do when the Rent Reform Act is passed.

Reply to the comment left by Tony Johnson at 20/06/2023 - 09:34
I’ll bet you didn’t know that George Osborne, who in 2015 announced S24 cancelled for non corporate landlords, afterwards was for a time an “adviser” to Blackrock?
Can you say Conflict of Interest?
The whole thing was stitched up years ago.
As an Independent Landlord I have no problem competing against BTR companies but what disgusts me is that I have been deliberately disadvantaged by the Government.
https://en.m.wikipedia.org/wiki/George_Osborne

Reply to the comment left by Tony Johnson at 20/06/2023 - 09:34At last a well informed comment from someone obviously well informed of the true situation something of which most are quite ignorant.

BTR is done for profit pure and simple. It's not about offering aspirational nor affordable accommodation. It's bodies in boxes - bit like battery chickens. Rack 'em and stack em'. They serve their own purpose and pitched at a certain part of the housing market. Rents will be high as they will have (to be seen) to build to ever increasing gov/eco required standards. Communal charges will be added on and rise at every opportunity. There will no doubt be a plethora of middle men/agents so you as far as customer service goes/ reporting issues...good luck on that one!
The lower end of the scale - anyone on benefits will be left out completely. Those tenants will only benefit if the council does a deal with the B2R brigade, and they offer a tiny proportion of accommodation as a sweetener to get past planning... even then they will only be offered at 'affordable' rent levels which will be way over what the DWP pay in LHA. The council will then have to kick in and pay any top ups long term if they want the tenant shifting...
Meanwhile the council lists get longer and more people are incoming to the country...
The sandwiched middle - B2R's are no good for families, young couples or anyone that wants a garden or space. This middle group will be left wanting. They want and need houses/local schools etc. 2/3 bedders will be sought after...but as B2R wont invest - too time consuming not enough profit. Will only private LL's will be able to offer these?
Not if they have left the market..
We have the RRB and other anti LL bashing policies hitting home now and its hurting. Shelter and Gen Rent have come out from under their shell (the only accommodation they actually provide being for themselves) and are screaming a pile of untruths, but they are beign given more airtime than ever - why because it deflects from government and their constipated housing policies... LL's will either sell to FTB's or other LL's who I am guessing wont be so hot on legislation etc...standards will drop if this is the case..
Will ANY of this really make a dent in the crisis as is? Nope.

JLL are looking at new builds. There are hundreds of thousands of 50 to 100 year old properties in provincial towns and cities that are tenanted. JLL's investor clients have zero interest in them. They have zero interest in tenants who have poor credit scores. They have zero interest in sorting out the housing crisis.
The problems in the PRS are being exacerbated by high interest rates but these problems have been a long time coming and are largely the fault of the Government and the pressure caused by immigration.

Reply to the comment left by Ian Narbeth at 20/06/2023 - 15:30
I think that you will find that in practice the build to let investors will build tiny homes and rent to housing associations whose tenants will be on benefits.
Renting out to individual tenants will be too much admin unless the admin will be located in Manila or some such place.