OK, so it wouldn’t make a great film but the changing fortunes of the so called king and queen of Buy To Let make for some fascinating conjecture for anyone interested in the subject.
Just how did they manage to buy so many properties and make so much money that they seemed invincible?
Just how did that change so suddenly to the point where they were rumoured to be going bust?
Why have they had death threats? Is it their dress sense?
The Guardian was last week graced with an audience with their royalships who spent a great deal of time explaining that their crown was firmly in place without any risk of slippage and their financial situation was fine thank you; they just want to retire.
In this case however, retirement means selling their properties, which is fine, but it may leave some of their many tenants out on the street if the properties are sold to owner occupiers. Shorthold tenancies are clearly insecure but people renting from a ‘professional’ landlord with a big business may have felt more secure than most; apparently they are not. One of the Guardian’s interviewees is a Wilson tenant (also retired) whose house has been put on the market although they have been perfect tenants, not in any breach of tenancy, not in arrears. They aren’t too happy.
So if the Wilsons are selling off a large proportion of their portfolio – even the secure, successful properties – does that indicate that their lenders aren’t happy?
Absolutely not, Mr Wilson told the Guardian. They have massive loans; one monthly payment alone, to Mortgage Express, is £353,000. The others are not disclosed but even that would keep most landlords awake at night, especially with low yields on low value properties and increasing tenant default. In October 2008, 13 per cent of Wilson tenants were in arrears, but the banks apparently, were behind the BTL couple and happy for them to continue, with lower interest rates and improved payment schedules.
So why are they placing two properties a week on the market? Because they believe that Buy To Let is "absolutely dead and will never return". And because they want to go horse racing and have holidays. And presumably, because if all their properties are similarly geared to the two mentioned in the Guardian report, they will make a good profit even after the 18 per cent CGT.
However, maybe they aren’t so equity rich, maybe the properties bought in 2002 have since been remortgaged to release capital for more properties, a normal growth strategy. If the gearing is high and yields are low, when interest rates increase and (tenant default increases with it) there could be trouble ahead.
So maybe they are right to sell, sensible even. So why is all so puzzling? And why are they so irritating?
