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From Landlords to Investors, Old Landlords Looking To Get Out Of The Market · The Property Unleashed Podcast

• 0:00
  Speaker 1: Six reasons why landlords are looking to get out of the market.
• 0:04
  Speaker 1: Hello, my name's Mark Fitzgerald.
• 0:17
  Speaker 1: It's great to have you joining me here.
• 0:18
  Speaker 1: So six reasons why landlords are looking to sell up, whether it's their portfolios or whether it's just some rental properties.
• 0:26
  Speaker 1: I see a lot of people get hung up on limiting beliefs as to why people would sell their property portfolios, particularly when people are getting started, and I was very much the same.
• 0:38
  Speaker 1: I used to think I'm just getting started.
• 0:40
  Speaker 1: Now I want to build a legacy piece, something I can hand to my kids, but landlords are going to be selling their properties.
• 0:47
  Speaker 1: I keep hearing.
• 0:48
  Speaker 1: Why would they want to do something like that?
• 0:50
  Speaker 1: Well, I'm going to help you with that here today, because sometimes we have those limiting beliefs and they stop us from taking action.
• 0:57
  Speaker 1: But right here, right now, is a great time to be starting your property business, or continuing your property business, because there are so many old school as we like to say landlords now that are selling up, that are getting out of the rat race of property investing, and a lot of it can be down to the education that they've had.
• 1:17
  Speaker 1: Maybe they're just tired, maybe there's been stung with taxes and all sorts of different things there.
• 1:24
  Speaker 1: So let's get started, shall we?
• 1:27
  Speaker 1: So rising interest rates is a great place to start.
• 1:30
  Speaker 1: You've got to imagine, you know, 15, 16 years ago interest rates went down, didn't they?
• 1:35
  Speaker 1: Because we had the global recession, if you like.
• 1:40
  Speaker 1: And of course, a lot of people then started to build a property portfolio with interest rates at about 1% 2%, which was absolutely amazing.
• 1:48
  Speaker 1: Of course, they were cash flowing their properties really, really well.
• 1:51
  Speaker 1: Since 2022, interest rates have steadily gone back up.
• 1:56
  Speaker 1: They have leveled off a little bit now, but they went up quite high.
• 2:00
  Speaker 1: So if you didn't have a fixed mortgage maybe you were on a variable rate.
• 2:04
  Speaker 1: Obviously you'll start to see your month-on-month mortgage going up.
• 2:08
  Speaker 1: Now, even if you do have a fixed mortgage on a rental property, that's normally maximum of about five years.
• 2:14
  Speaker 1: You can get some 10 years if you were lucky and got it all locked in then and you were smart and savvy and we used to recommend that as well just before interest rates went up.
• 2:23
  Speaker 1: But predominantly, some people have it on two years, some people have it on five years, and then after that you have to renegotiate, if you like, the rates that they're going to be putting you on.
• 2:32
  Speaker 1: So a lot of the buy-to-let landlords now have interest rates that are up here.
• 2:38
  Speaker 1: They were down here before and now all of a sudden, they're seeing all of their profits from their month-on-month cash flow going because of these interest rates that we now have.
• 2:47
  Speaker 1: And even HMO landlords have found that it is stinging a bit because, of course, with the high interest rates, they're losing the money that they were having before.
• 2:56
  Speaker 1: Buy-to-lets properties, single-let properties, used to be really, really desirable because the interest rates were so low that you could just put a family or a couple or whatever into a flat, into a house.
• 3:08
  Speaker 1: They would stay there and you'd make, you know, four or five, six, seven hundred pounds in different parts of the country.
• 3:14
  Speaker 1: Now it can be very, very difficult to try and get those sorts of properties to stack.
• 3:20
  Speaker 1: So the rising interest rates is pushing a lot of landlords out of the market.
• 3:25
  Speaker 1: Now, as they're starting to have to renew their mortgages, they're thinking about it and they're thinking, rather than renewing this and locking it in and being stuck for another five years potentially, I'll just look to sell the properties.
• 3:36
  Speaker 1: So that's the first one.
• 3:37
  Speaker 1: Market conditions is another one as well.
• 3:41
  Speaker 1: Obviously, property prices over the course of 10 years or so tends to go up.
• 3:46
  Speaker 1: Some places it can double.
• 3:47
  Speaker 1: But you tend to start to make good money as long as you don't have to sell in a declining market.
• 3:53
  Speaker 1: So there will be a lot of landlords out there that bought in the 90s the early 2000s as well that have now got a lot of equity in their properties and they're thinking about freeing that up with the value that they of equity in their properties and they're thinking about freeing that up with the value that they've got in their properties now.
• 4:08
  Speaker 1: Maybe they're thinking to themselves I just want to get out of the market here.
• 4:11
  Speaker 1: I can make a hundred grand on my property, so I'm going to look to sell my properties now, I'm going to cash in that money and I'm going to sail off into the sunset.
• 4:19
  Speaker 1: And who's to blame them if that's what they want to do?
• 4:21
  Speaker 1: Blame them if that's what they want to do.
• 4:25
  Speaker 1: But a lot of people won't be thinking about refinancing that equity out and going to buy more properties.
• 4:27
  Speaker 1: A lot of people are just thinking I'm going to get out of this property investing game completely, I'm going to cash in on it and I'm going to go and retire and sip some pina coladas somewhere.
• 4:37
  Speaker 1: Another one is the management challenges that people face Now of old school landlords who have seen a lot of changes over the years.
• 5:06
  Speaker 1: I've had enough.
• 5:07
  Speaker 1: I've had it up to here.
• 5:08
  Speaker 1: I don't want any more of these changes.
• 5:09
  Speaker 1: I don't want to be a part of this anymore, and it's putting them off, staying in the game and getting out, and that really is just down to lack of information, maybe lack of knowledge about what is coming.
• 5:20
  Speaker 1: The changes themselves aren't great, but they're not the end of the world as well.
• 5:24
  Speaker 1: They could have been better, but they could have been so much worse and of course, we don't really know what's going to happen until we start to get into a full swing.
• 5:32
  Speaker 1: Some people do not want to hang around.
• 5:35
  Speaker 1: Some old school landlords don't want to hang around.
• 5:38
  Speaker 1: That leads us, then, into tax.
• 5:40
  Speaker 1: Tax is a big thing and of course, there's been some changes to your capital gains tax.
• 5:45
  Speaker 1: Of course, when you're buying the properties and things like that, obviously there is also changes to the taxes when you are making money, when you sell the properties as well, your capital gains tax is not as good as it once was and of course, you really do have to weigh these up when you're looking at buying properties and, of course, selling properties.
• 6:05
  Speaker 1: But again, a lot of landlords who have bought properties over the last 30, 40 years will have bought the properties in their own name.
• 6:15
  Speaker 1: And, of course, since 2017, we've had section 24 coming in, which has meant that you cannot deduct a lot of the expenses from the management of your properties like you could in the past, and that has hit a lot of landlords hard.
• 6:34
  Speaker 1: It's some cases, absolutely crippled property businesses because of the amount that they're getting taxed, because it puts them into a higher rate tax bracket.
• 6:47
  Speaker 1: All of a sudden things were great and then it changed massively.
• 6:49
  Speaker 1: So tax is a great big problem for a lot of old school landlords who are trapped, some of them in a vicious cycle and are just looking to get out.
• 6:58
  Speaker 1: Another one is change of strategy.
• 7:01
  Speaker 1: Sometimes people want to diversify their portfolio, so they're looking at I want some properties and I want some stocks and some bonds and different asset classes as well, and sometimes they'll sell a few properties just to help them invest in some other asset classes as well, just so that they don't have all of their eggs in one basket.
• 7:23
  Speaker 1: So, again, a change of strategy.
• 7:26
  Speaker 1: Some people I've said this in the past will do residential properties, but will all of a sudden, now maybe, have gone into commercial properties and then they want to sell their residential properties to fund their commercial strategies as well.
• 7:39
  Speaker 1: So there's lots of different things there that are changing and, of course, last but by no means least, is life change.
• 7:46
  Speaker 1: Everybody's circumstances at some point in life changes.
• 7:49
  Speaker 1: What you're trying to achieve and do now, will it serve you in 10, 20, 30, 40, 50 years time?
• 7:55
  Speaker 1: Potentially, potentially not.
• 7:58
  Speaker 1: There are a lot of landlords that are tired, a lot of old school landlords as well, that just want to get out of the game, as we've said here already, and they just want to retire and have an easy life, and by getting rid of these properties they will do that.
• 8:10
  Speaker 1: They can capitalize on, obviously, the rising property prices that have been out there and, of course, the market conditions, and it's time for them to bow out of this market.
• 8:22
  Speaker 1: So what does that mean for us?
• 8:24
  Speaker 1: Well, it means that the cycle continues.
• 8:28
  Speaker 1: Who's to say you know, if you're listening to this or watching this, that in 50 years time you don't want to sell up and get out yourself?
• 8:35
  Speaker 1: You're not one of these tired investors, tired landlords it might happen to any of us, and that is the cycle that keeps on happening.
• 8:44
  Speaker 1: So the next time you think to yourself, why would a landlord sell me their property?
• 8:49
  Speaker 1: Why would they want to sell their portfolio?
• 8:51
  Speaker 1: It's for these very reasons and more.
• 8:53
  Speaker 1: Everybody has their own reasons of why they get into property and what they want to achieve from their property investing businesses, and that's no different for old school landlords and people like that as well.
• 9:05
  Speaker 1: So I hope this has helped you opened your eyes up to the opportunities that are out there.
• 9:09
  Speaker 1: It's a great time to be getting out there and making it a win-win for all parties, but doing some great property deals.
• 9:14
  Speaker 1: If you need any help with that, please do check out the links in show notes below, and we are more than happy to help you and support you on your property investing journey.
• 9:23
  Speaker 1: You take care and bye for now.