Tuesday, 26 November 2019

Labour Party’s U-turn on the £363,665,300 grab on Warrington landlord’s wallets





Well, with the General Election just over the horizon and having been asked by a number of Warrington homeowners and Warrington buy to let landlords what the different main parties would do to the local property market, in this week’s article we focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them…. at a substantial discount.

Shadow Chancellor John McDonnell told the FT in September that, under a new Labour government, tenants would be given the Right to Buy their tenanted home with a hefty discount - just like the Tory Right to Buy policy for Council house renters that came into force after the 1979 General Election.

Yet it was not certain who would have been expected to pay for discounts on buy to let homes sold to tenants. Four years ago, Jeremy Corbyn advocated using the £14bn of tax allowances that UK landlords had at the time to pay for these discounts, allowing tenants to buy their tenanted home at the same discount as they would a local authority home without leaving the landlord out of pocket.
However, these tax allowances have been substantially reduced with the changes in the way mortgage interest relief on landlords’ mortgages is calculated, meaning that this method of funding would no longer be feasible. In fact, bankrolling a project at a modest 20% discount for the whole of the UK would cost £177.84bn; a lot more than the £14billion quoted by Mr Corbyn. So, what would that policy cost Warrington landlords?
Labours policy of 20% Right to Buy discount could
cost Warrington landlords £363,665,300

 … and if Warrington tenants got the maximum discount of 35% that Council tenants have with the Right to Buy scheme that would cost Warrington landlords £636,414,280.

However, it appears Mr McDonnell has re-considered the original suggestion and done a (slight) U-turn, stating it should apply only to the richest landlords and not those who only own a couple of rental properties. He was quoted in The Times as saying, “There’s a large number of individuals or families who have bought another property as an asset for the future and we wouldn’t want to endanger that”.

Yet, even this somewhat watered-down account still creates threats to the private rental sector and Warrington’s overall stock of private rented homes. John McDonnell seems to have altered his initial thought to permit all private tenants the right to buy from their landlords to apply only to those with more than a couple of buy to let properties. The shift appears to be aimed at pacifying middle England small time landlords who are probably swing voters with smaller property investments and instead, Labour’s focus is on the larger scale buy to let investors. Looking at the stats, and being generous that we are only looking at landlords with 6 or more (not the couple that Mr McConnell suggested) ……

Of the 8,189 rental properties in Warrington, 2,236 are owned by Warrington landlords with 6 or more properties in their portfolio

To target these larger scale landlords, who would unquestionably leave the property market in their hordes if their buy to let investments could be so easily destabilised. There would be mass sell offs before the legislation became law, thus making the tenants homeless (and who would house them??) ..and even if that didn’t happen, it would be very damaging and someone (probably landlords) would have to stump up the £48.54bn national bill (£99,298,520 in Warrington alone).

If Labour want to fix the property market, it needs long term certainty and confidence, yet even these revised policies would instantly challenge this

And don’t think I am just Labour bashing here as the Tory 2014 Help to Buy scheme hasn’t really helped either as their scheme which gave first time buyers (FTB) a 20% interest free loan, if they put down a 5% deposit, has been a boon for new home builders.

The Tory’s announced recently another £10bn of taxpayer’s money will be pumped into a scheme which, quite frankly, wasn’t needed to boost an already decent property market. The banks were already giving 95% first time buyer (FTB) mortgages from 2010 and the Help to Buy scheme was only allowed on new homes purchases, meaning it didn’t help the larger second-hand market. That £10bn could have been better spent building Council houses, not helping the large plc builders line their pockets with Government cash.

Next week I will be focusing on the Conservative Party Policy and what difference that will make to our Warrington Property Market.


If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.



Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.
Don't forget to visit the links below to view back dated deals and Warrington Property News.

Friday, 22 November 2019

Warrington Buy to Let – Past, Present and Future





Investing in a Warrington buy to let property has become a very different sport over the last few years.
In the glory days of the five years after the turn of the Millennium, where we had double-digit house price growth, mortgage companies (notably Northern Rock, HBOS and their ilk) desperate to get on the buy to let mortgage bandwagon with rates so low it would make the belly of a snake seem high and an open mildness to give loans away with not so much more than a note from your Mum and with hardly any regulatory intervention… anyone could make money from investing in property – in fact it was easier to make money than fall off a log! Then we had the unexpected flourish of the property market, with the post credit crunch jump in the property market after 2010, when everything seemed rosy in the garden.
Yet, over the past five years, the thumbscrews on the buy to let market for British (and de facto) Warrington investors have slowly turned with new barriers and challenges for buy to let investors. With the change in taxation rules on mortgage relief starting to bite plus a swathe of new rules and regulations for landlords and mortgage companies, it cannot be denied some Warrington landlords are leaving the buy to let sector, whilst others are putting a pause on their portfolio expansion.
With the London centric newspapers talking about a massive reduction in house prices (mainly in Mayfair and Prime London – not little old Warrington) together with the red-tape that Westminster just keeps adding to the burden of landlords’ profit, it’s no wonder it appears to be dome and gloom for Warrington landlords … or is it?
One shouldn’t always believe what one reads in the newspaper. It’s true, investing in the Warrington buy to let property market has become a very different ballgame in the last five years thanks to all the changes and a few are panicking and selling up.
Warrington landlords can no longer presume to buy a property, sit on it and automatically make a profit
Warrington landlords need to see their buy to let investments in these tremulous times in a different light. Before landlords kill their fatted calves (i.e. sell up) because values are, and pardon the metaphor, not growing beyond expectation (i.e. fattening up), let’s not forget that properties produce income in the form of rent and yield. The focus on Warrington buy to let property in these times should be on maximising your rents and not being preoccupied with just house price growth.

Rents in Warrington’s private rental sector increased
by 4.38% in the past 12 months

Rents in Warrington since 2008 have not kept up with inflation, it is cheaper today in REAL TERMS than it was 11 years ago and some landlords are beginning to realise that fact with our help.


Looking at the last few years, it can be seen that there is still a modest margin to increase rents to maximise your investment (and it can be seen some Warrington landlords have already caught on), yet still protect your tenants by keeping the rents below those ‘real spending power terms’ of the 2008 levels.

Buy to let must be seen as a medium and long-term investment ….

Rents in Warrington are 8.2% higher than they were 3 years ago and property values are 16.22% higher than Jan 2016

…and for the long term, even with the barriers and challenges that the Government is putting in your way – the future couldn’t be brighter if you know what you are doing.

Investment is the key word here… In the old days, anything with a front door and roof made money – yet now it doesn’t. Tenants will pay top dollar for the right property but in the right condition. Do you know where the hot spots are in Warrington, whether demand is greater for 2 beds in Warrington or 3 beds? Whether town centre terraced houses offer better ROI than suburban semis? With all the regulations many Warrington landlords are employing us to guide them by not only managing their properties, taking on the worries of property maintenance, the care of property and their tenants’ behaviour but also advising them on the future of their portfolio. We can give you specialist support (with ourselves or people we trust) on the future direction of the portfolio to meet your investment needs (by judging your circumstances and need between capital growth and yields), specialist finance and even put your property empire into a limited company.

If you are reading this and you know someone who is a Warrington buy to let landlord, do them a favour and share this article with them – it could save them a lot of worry, heartache, money and time.


If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.


Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.
Don't forget to visit the links below to view back dated deals and Warrington Property News.