Property Investor Report : London Breakfast Briefing with the NLA – Part 1

Report: London Property Breakfast Briefing: the first part of what was a valuable insight on the new landscape for UK property investment.

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Along with distinguished guests,  I was recently invited to a Property Breakfast Briefing at London’s Royal Academy of Arts, organised by the UK’s National Landlords Association. Here’s the first part of my report on what was a valuable insight on the present and future of the UK residential market and the prospects for the private rental sector (PRS) in the new political landscape for UK property investment.

Here in this two-parter are some rather insightful observations from Richard Lambert, CEO of the National Landlord’s Association and Jim Pickard, the Political correspondent of the Financial Times, who gave his views on the recent Mayoral changes in London and its effects on the PRS.

Part 1 : Speaker – Richard Lambert, CEO National Landlords Association

Here are some insightful observations from Richard Lambert, CEO of the National Landlord’s Association, made during his presentation at the gathering.

Based on a recent UK-wide NLA survey, Landlord confidence has collapsed as a result of the UK government’s tax assault on private landlords. As many of us know, since April this year a “second-home” stamp duty surcharge of 3% has been in place on all second homes and traditional buy-to-let residential property investment. 

From the survey it appears that George Osborne has had the equivalent effect on confidence in the PRS as the Property Crash during the Great Recession of 2008/9. Quite an accomplishment!

More feedback from the NLA PRS survey- Landlord Sentiment

The more properties owned by a landlord, the more likely the landlord is to expect a forthcoming crash in the residential property market. This is as expected though since landlords with larger portfolios statistically tend to be more highly geared.

A prevailing comment from landlords was on the lines of  “I was going to buy more property, but because of the taxation changes, now I won’t”. Some are reported to be selling off property immediately or planning to sell up completely.

The number of buyers are falling, and sellers increasing. In the first quarter of this year a cross-over was reached where the number of selling landlords exceeds the number of those buying.

Tenant Demand remains high

A piece of good news for landlords was there is no evidence of weakening in tenant demand across the UK. Therefore a common response to the forthcoming “landlord Tax” on mortgage interest for those landlords staying in the game, is to consider simply raising the rents to stay profitable.

A fascinating debate around this is : can landlords really define the rental market in this way? Aren’t business-centric landlords already achieving this? In other words, charging the most the market can stand already?

Specialisation and going “Ltd”

Other landlord responses to the impending changes are equally interesting: a trend is being seen towards specialisation and segmentation in the PRS. This presumably is borne out of the idea of adding value to a tenant’s experience with greater expertise in specialism that comes from a vertical and/or niche market. That is my take though – this wasn’t reported in detail.

The survey showed that 1/3 of landlords questioned are looking at incorporation.

In his summary, Lambert concluded from the survey that property still seen as the best investment option by most landlords, but a growing number are no longer convinced. 

Disclaimer : all stated remarks in this article are my personal interpretation during the event and should not be taken as direct quotations from panel or audience members.

(Watch out for second and final part of this article which will cover the presentation from Jim Pickard, Financial Times’ chief political correspondent as well as lively questions from the audience).

Please post your comments or questions on any of the issues raised, or if you’d like more detail with a one-to-one chat with me over the next few days, contact me directly using link below.

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