To Sell or Not to Sell? That is the Question.
Tuesday 21st May 2024
On countless occasions in the past, I have shot myself in the foot by asking a landlord a simple question:
‘Do you really want to sell?’
and critically:
‘Have you something better to do with the money?’
Historically, the client would reflect and keep the property because there was no burning need to sell, and clearly no better place to put the cash. Plus, CGT at 28%.
They did not sell and we didn’t get a sale!
When I ask the question these days, I expect a whole variety of answers about where they would stash the cash.
A higher interest rate environment offers plenty of alternative investments.
Being a landlord is pretty shitty these days.
Quite apart from the social opprobrium meted out by the economically-illiterate in society and sadly in Govt, it is nigh on impossible to make a worthwhile return because of Tory tax changes.
Private landlords with mortgages are all exiting the market. Many of our overseas landlords are selling too because they no longer see London as a safe haven when a ‘Conservative’ Govt. brings in property taxes and laws more commonly seen in a Banana Republic.
There are though a couple of types of landlords who are doing quite well:
1. The long-term, 100% cash landlord - normally older, who has held the property for so many years that their CGT bill prohibits selling, unless there is a very good reason.
2. Company landlords who can still offset the interest on debt against the rental income – before tax.
These two groups are seeing far higher rents, largely because of the lack of supply in the market caused by private landlords with mortgages and international landlords exiting.
London property values have fallen in real terms in the last decade. The first time they have over any decade since 1953.
There is the potential for capital growth in the next 5-10 years. With a decent income too, the brave investor could do well.
Call me to discuss your thoughts.
Until next time……
PB
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