Britain’s biggest landlord is selling his property portfolio for around £250 million ($331 million) and he says that the Brexit vote is making it easier to offload the homes.
Fergus Wilson and his wife Judith announced in December last year that they plan to sell 900 rented houses to a consortium of Arab investors and on Sunday they confirmed that they have already successfully sold half of these properties.
In an interview with The Financial Times, Fergus Wilson said the knock-on effect of Britain’s vote to leave the European Union on June 23 has made it easier for him to sell his portfolio. This is because the pound has fallen to 30-year lows against the US dollar and therefore made it cheaper for overseas investors.
“I think foreign buyers are saying at the moment that Brexit helps as it is cheaper [to buy UK property] in their money [after the fall in sterling]. Many… are trophy hunters — they want to impress their friends with a photo of the house they own in Britain,” he told the FT.
Wilson has so far sold 400 of the 900 houses in Kent, England to 50 tenants and the remainder to overseas investors. He said that he is hoping to sell the entire portfolio for £250 million and will make £200 million in profit, after he pays back around £45 million to lenders.
He also explained that it is the optimal time to sell up because prices are high and the era of the amateur buy-to-let landlord is “over.”
“If you were an amateur landlord in those days, as long as you could spell your name, you would get a mortgage. No one appeared to check anything. I wouldn’t say it is impossible but it is much tougher. Some [banks] are offering loan-to-value of only 60%,” he said to the FT.
“Is it the wrong time to be an amateur landlord? Yes. Some people will succeed but on the whole, too many amateurs walk into pitfalls… The day of the amateur landlord is over.”
Tighter lending and higher taxes
Wilson is not wrong about the environment being tougher for buy-to-let property owners. In March this year, the Bank of England’s financial supervisory unit, the Prudential Regulation Authority (PRA), said it would tighten rules on the availability of buy-to-let mortgages, after a review into the market highlighted concerns about risk-taking.
The PRA said that while the property market continues to surge, “there is a risk that firms relax underwriting standards, thus affecting their safety and soundness.”
The main proposals from the PRA are to make sure lenders:
- consider how affordable the mortgages are long-term for borrowers;
- run tests on borrowers to make sure they can withstand an interest rate rise to at least 5.5% over five years;
- restrict lending to so-called portfolio landlords — people with four buy-to-let properties or more — because they have a higher propensity to default.
Meanwhile, a new surcharge for buy-to-let investors came into force on April 1 this year. March saw a particularly high number of buy-to-let mortgage loans because the new stamp duty — a tax placed on buyers when they purchase a property in the UK — came into effect on April 1.
A 3% surcharge now applies to all purchases of second homes.Figures released from the Council of Mortgage Lenders (CML) show that lending of buy-to-let mortgages was down a massive 85.4% in April compared to March following the introduction of that new stamp duty.