The UK Buy-to-Let Property Crisis Explained

In the UK, but-to-let investing is seen as the main route to financial independence. But over the last 15 years, the government has introduced a series of policies that have made it clear they do not want rental investors to do it.

This, along with higher interest rates, has brought the BTL market to its knees.

Financial Planning

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[JamesShack]

If you’re a BTL investor, how have these changes affected you and what do you think it means for the future of the market?

[timclark]

Build-to-rent was announced as a new investment class in the same year as the mortgage interest changes were made. Lloyds, BlackRock, John Lewis, etc all entering the market.

Small landlords out, corporate landlords in. None of this is an accident.

[scazz]

This is a spectacularly detailed video and extremely educational.
Great work bud

[afreeman]

Very well explained and nice clear charts.
I rent out 2 houses to social tenants, hence lower than market rent, and it was to people I knew were in unfortunate circumstance so it was to help them out. This was 12 years ago so I have subsequently been subject to all the measures you nicely and correctly list. I can not survive the present circumstances for much longer so my goal is to get out, like many others. I would get a better return on the money if it was rotting in the bank.
I 100% blame the last 13 years of this government, particularly Osborne, for creating this mess and its getting worse. My houses are energy rated D, there is no economically viable way to get them up to C.

[mangalsingh]

Brilliant video, you have confirmed and supported my reasoning for selling our buy to let properties. I'm out. Been moving money into tax efficient strategies like the ISA and SIPP.
Keep up the good work

[wildgeeseod]

After many big banks announced they’re going to be moving into the letting market, the government has simply started assisting them to acquire property as cheaply and easily as possible.

[StumpyVandal]

At first I was thinking “wow, this government is actually doing something progressive for society for a change!” And I say this a a landlord myself; albeit in a country way less generous than the UK has historically been to investors. Then the truth comes out; they’re screwing smaller middle-class investors in favour of the monstrously huge property companies that should be taxed out of existence. They’re absolutely shameless.

[getreal]

What a great video James, the only place I've ever found a detailed non-biased honest description for this part of the UK housing market so very well done mate. Hope u get to 100k subs v soon.

[Raymondjohn]

Considering the prevailing inflationary conditions, it appears improbable that the stock and housing market will register substantial gains in the immediate future. Therefore, it is advisable to temper one's expectations and acknowledge the potential length of the market's recovery period. It is my professional opinion that it would be prudent to defer any significant investment decisions until the economic environment stabilizes in areas of concern. Until then, exercising caution and refraining from engaging with the current turbulence would be the most judicious course of action.

[davefish]

I came into an inheritance about 10 years ago and thought about getting a property to rent out .
Even then it didn’t make much sense as the only ones making money were the letting agents as
far as I could see. It seemed like a lot of work for about 2% more than I could get by just putting the money into savings. Glad I did that as it’s got a lot harder since

[bandolero]

The move is to force out smaller investors/landlords and let the larger ones registered as companies, often with government members holding shares in those companies, mop up imo.

[si]

Yup, we fell into the possibility to be landlords when myself and partner moved in together. We considered it a retirement investment, with about 50% paid off. We have sold last year as it was just getting too difficult, as landlords with empathy we always did repairs no matter how small - this often meant we made no profit that year. Then a tenant who didn’t report a leak cost us massively. Followed by all the changes you point out. we just bailed out just in time and I’d never invest in property again, all profit now tucked away with investments.

[CCTVPearson-pxfj]

Excellent presentation. Two points…

1. EPC changes have currently been pushed back to 2028 for ALL tenancies and are likely to be pushed back again.

2. For higher rate taxpayers it’s even worse. They could lose their child benefit too.

[Visablehand]

Maybe I am wrong in thinking this but...
The sting of selling a house you bought for £150k and selling for £250k is a £28k capital gains tax bill. (28% of 100k).
I can't see an investment that could gain that £28k back in any time frame, so might aswell keep the house rented for the long term.

[Deebles]

As a renter with friends that are renting, most of us are paying between 60-80% of net income, depending on salary and where in the country we live (which are both correlated anyway). After food and bills there’s literally not much more they can squeeze out of us for rents to continue rising.

[TJE]

Great video James, really interesting to see a real worked example! Your point at the end around the composition of households changing is an interesting one - rentals tend to house more people per square foot (although would be interesting to see some numbers on this).

Ultimately, property prices will have to come down in real terms dramatically (and probably nominally as well!). I would argue this is just a reversal of easy money which has led to property values-to-median income ratios that were at record highs in mid-2022.

Hold on for the ride - it could get bumpy...

[Mr]

Switching a property from the individuals name to a limited company is generally unviable, they will have to sell to the limited company incurring 2 sets of solicitors fees (sale & a purchase), plus stamp duty plus the additional 3% stamp duty.

The government likes to tax and increase landlords costs, thinking this is a vote winner (possibly is) however like any other business, eventually all these costs will be passed onto the customer, in this case the tenant.

All these government policies promoted as benefiting tenants have the opposite effect in most cases

[iainamurray]

I do think that far too many people saw the BTL market as risk free because property “Always goes up”. Very few small investors actually understood the risks.

[emilytemple]

Great video! I will be showing this to my staff - we are planning consultants so our clients are directly affected by this. Oh & a permanent change to Air B&B needs planning permission 😊

[guyr]

Great video James, I’m in the north east we have two properties neither have a mortgage. One is leasehold and the management company are a nightmare to get any work done. They don’t answer the phone after 1 pm. Second property is freehold, we jump on any maintenance as it’s protecting the property. We are both 63 and I can see us renting for another 3-4 years and then possibly selling them both.
I see regular postings on other media channels trying to attract investors in BTL through various management companies, the costing illustration they always use is 25% deposit, interest only mortgage then re mortgage after 3-5 using increased value of the properties for deposits on other houses. I just see that as being highly leveraged AND massively at risk when the rates have jumped.
Definitely feel the Government is looking to have bigger housing groups control the rental market. Will be interesting if labour do anything different not holding my breath