Why are so many landlords now selling up do they anticipate a housing market crash coming?

MEM62

jimjames said:

MEM62 said:

jimjames said:

coypondboy said:

Landlords selling up as rising interest rates and inflation kill the market any thoughts if you are a landlord at the moment?

Rent is one item that should be kept in line with other rises so should be able to track inflation, at least over medium term.

The market rate for my property has not changed in nearly six years.  Yet, my tax liability, expenses and running costs have all increased over that period. 

I guess it depends on location then. Mine has gone from £600 to £850 as the market rent in the last decade.

West London / Heathrow in my case.  The market was largely kept buoyant by the airport - landlords and aircrew love flats.  However, with aviation being on its knees for the last couple of years and people pushing the boat out for 2-bed houses rather than flats following lockdown the market for flats currently is not good.  Over the same period that the flat has lost £40K our house in Basingstoke has gained £60K.  Go figure!  

solidpro

Our semi-rural 4 bed house has gone up 25% in 8 years, mostly in the last 2. Our 2 bed city centre flat hasn't gone up at all in 5 years. ahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh hindsight.

Thrugelmir

masonic said:

coastline said:

masonic said:

solidpro said:

However, I since learned that basing such a calculation on 'past performance' is entirely subjective. On one, hand, what else can I do but look at the last 20 years? Well I could look at the 1960s-1980s and see that an index tracker would have made exactly nothing in 20 years.

Where did you get the data for 1960-1980 please? Was it just the value of the index, or did it include dividends? It seems to be at odds with data I've seen, for example:

It'll be this with the total returns showing flat periods around 1960-80.

FGg7rdIXMAsRMQq (900×510) (twimg.com)

Adjust the chart to 1960-80. Yearly data also linked.

S&P 500 Index - 90 Year Historical Chart | MacroTrends

MSCI World goes to 1969.

MSCI World - Wikipedia

Data for global markets from 1900 exists, as it has been used in Tim Hale's book amongst others. 

It's based on an academic study that has been pieced together. Published every year what is now the Credit Suisse Year Book, previously Barclays. The big caveat is that markets in the past were very different to those investors enjoy trading today. 

gravlax

The government want to appear to please voters that see landlords as profiteering from the misery of renters, while actually increasing profits for their property owning chums in the City.

All the legislation (removing mortgage interest allowance, proposed new energy efficiency standards etc.) is designed to squeeze landlords that are not cash rich and need to have mortgages. Many will sell up. That will leave the wealthier owners that can hold properties even at low yield returns, who will then profit greatly as rental supply cannot meet demand and rents and yields increase dramatically. They always look out for their own. 

Notepad_Phil

gravlax said:

The government want to appear to please voters that see landlords as profiteering from the misery of renters, while actually increasing profits for their property owning chums in the City.

All the legislation (removing mortgage interest allowance, proposed new energy efficiency standards etc.) is designed to squeeze landlords that are not cash rich and need to have mortgages. Many will sell up. That will leave the wealthier owners that can hold properties even at low yield returns, who will then profit greatly as rental supply cannot meet demand and rents and yields increase dramatically. They always look out for their own. 

Or is it that the legislation is designed to take away some of the advantages that a landlord has previously had and attempts to make sure that a landlord ensures that their properties have some half decent standards for people to live in given that we are in the 21st century. 

gravlax

Notepad_Phil said:

gravlax said:

The government want to appear to please voters that see landlords as profiteering from the misery of renters, while actually increasing profits for their property owning chums in the City.

All the legislation (removing mortgage interest allowance, proposed new energy efficiency standards etc.) is designed to squeeze landlords that are not cash rich and need to have mortgages. Many will sell up. That will leave the wealthier owners that can hold properties even at low yield returns, who will then profit greatly as rental supply cannot meet demand and rents and yields increase dramatically. They always look out for their own. 

Or is it that the legislation is designed to take away some of the advantages that a landlord has previously had and attempts to make sure that a landlord ensures that their properties have some half decent standards for people to live in given that we are in the 21st century. 

No doubt it was also about taking away some of the advantages (raising more tax), and it is a good thing if landlords with sub-standard properties are forced to improve, or forced out. But the majority of landlords are not of that type. I agree that all the headline reasons appear reasonable and fair, as indeed they are and need to be to appeal to the wider electorate. My point was not to be taken in that this is the sole motivation. They will be aware that the mid- to long-term result will be insufficient supply to meet demand, and this will be taken up by larger corporate property investment firms, and the wealthier property investors, both of which will profit greatly from higher yields. They know what market they are creating.

Thrugelmir

gravlax said:

The government want to appear to please voters that see landlords as profiteering from the misery of renters, while actually increasing profits for their property owning chums in the City.

To understand why, you need to comprehend history and the events leading up to the GFC. 

chucknorris

Grumpy_chap said:

MEM62 said:

My motivation for selling is that the value is not increasing yet my liability for CGT is.  (In fact, it is currently worth around £40K less than it was at the time we bought the house almost six years ago.)   

AIUI, if the property has not gained in value, the liability for CGT will be NIL.

That is not true! And that is why CGT without an indexation allowance for inflation is unfair! For example: Someone who owns and sells an investment property (or any other asset subject to CGT) which doubles over 20 years, and say RPI also grew 100% over 20 years, then there has been NO real term growth! But despite no real term growth there is still an unreasonable tax chargeable gain imposed.

MEM62

Notepad_Phil said:

gravlax said:

The government want to appear to please voters that see landlords as profiteering from the misery of renters, while actually increasing profits for their property owning chums in the City.

All the legislation (removing mortgage interest allowance, proposed new energy efficiency standards etc.) is designed to squeeze landlords that are not cash rich and need to have mortgages. Many will sell up. That will leave the wealthier owners that can hold properties even at low yield returns, who will then profit greatly as rental supply cannot meet demand and rents and yields increase dramatically. They always look out for their own. 

Or is it that the legislation is designed to take away some of the advantages that a landlord has previously had and attempts to make sure that a landlord ensures that their properties have some half decent standards for people to live in given that we are in the 21st century. 

Doubt that very much.  You do not encourage landlords to upkeep their property to 'half decent standards' by eroding the revenue that their investment yields.