Charlie Bryant, CEO of Zoopla and its parent company Houseful, has questioned the financial viability of becoming a private landlord in Britain.
In an interview with the Telegraph, Bryant pointed out that individual buy-to-let investors are turning away from the rental sector against a backdrop of tax hikes, high mortgage costs and increased bureaucracy.
Bryant told the Telegraph: “Put that into the context of the potential returns from alternative investments, whether that is bonds, the equity market or, frankly, putting your money with National Savings and Investments (NS&I) and the attractiveness of owning a rental property as an individual private landlord, buying it for yield, is not there.”
The removal of tax relief on buy-to-let mortgages and the 3% surcharge introduced on second homes in 2016 are both cited in the interview as contributing to a less attractive landscape for landlords.
Bryant believes pension funds and private equity firms will fill the void left by a private landlord exodus, as they seek to capitalise on the burgeoning build-to-rent sector.
He told the Telegraph: “Undoubtedly the next iteration [of the rental market] is, particularly with potential planning changes, will be larger, more corporate institutional landlords, under the build-to-rent guise.”
Bryant goes on to suggest a number of reforms for the property market, including rules to shorten transaction periods and the broadening of access to Land Registry data to allow everyone involved to see information about the history of a property, including hidden service charges.
Renting for small private landlords has become an increasingly challenging endeavor. The current tax and legal system seems to be working against us,, as a result selling your property quickly may be the only viable option to consider, while it is still feasible to do so, although it looks as the lower CGT rates are now going to vanish.
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How about a radicle policy from the new government? What if LLs could sell into a REIT without CG liability? Or even with a heavily discounted %. Institutional investment could take “Ownership” and units would remain available for occupation by renters.
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The BTR sector doesn’t want existing rental units here and there. They want purpose built, high-quality blocks and family houses in core cities.
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But where else can you put your money that has given such a large return on capital with such low risk?
Stock market? A lot of people would be very nervous of that.
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The capital appreciation has been good for those who invested 10 years ago or more. Anyone entering the PRS today will not have that good fortune, especially in London and the SE.
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I’m a bit shocked by the Zoopla boss’s opinion piece, which seems to undermine the BTL industry he serves. Here’s why BTL makes perfect sense:
I have a 25% tax-free drawdown from my pension that my provider will otherwise invest in BTL. They expect 6% per annum growth in capital appreciation and a 5-10% income yield, yet they’ll only give me 2-3% return on my investment.
I’d rather pay the tax on the income yield, deal with someone covering my borrowing costs, and invest in property myself. This way, I can keep pace with house price inflation and ensure my offspring have somewhere to own, rather than rent from my pension provider.
BTL is a compelling investment for small investors and supports the lettings and management industry that serves them.
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Its being pushed that way for it to happen. The same types of companies funding the new build sites are the same acquiring them to rent out. Whilst taxation makes it harder for BTL landlords to make a strong investment, these companies wont have the same taxation problems. Whether people are having a mortgage or renting, them money goes back to the same companies
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I guess, if he questioning the viability of BTL for the small investor, those operating, might as well cancel their subscriptions and link with portals that want to support and grow the PRS / small investor market.
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National Savings and Investments is offering 1% gross/AER for an investment account, not a good deal for investors either! How does giving an interview like this help an already struggling BTL market, appreciate Charlie is entitled to his opinion but what we could really do with from someone in his position is some positivity. We need more rental properties for people who are finding it difficult to find somewhere to call home, not less!
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What is there to be positive about investing in BTL right now?
BTR is not the replacement for BTL. It is supporting the lifestyle move from owning to renting for those who can afford to buy, but want the flexibility of renting. Young professionals in core cities.
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looks like the article was written by the PR department of a build to rent company
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