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Richest landlords stick with rentals as sales market tanks

A prominent buying agent operating at the high end of the prime London market has given an interesting insight into how the country’s wealthier landlords are faring.

Jo Eccles, managing director of Eccord, says: “Landlords are coming under considerable pressure as their mortgage deals come to an end. Many are testing the water in the sales market when tenancy breaks arise but are finding themselves unable to achieve the sale price they want, particularly those who own £1m to £5m apartments which have underperformed in the last few years. 

“Anyone who purchased in the last 10 years will probably be facing selling at a loss, which can be difficult to accept. 


“Within the rental portfolio we manage, 10 of our landlords have tried to sell their investment properties in the last six months, but seven have returned to the rental market and decided to sit tight for the time being. 

“We are seeing no new investment purchases purely for buy to let, as the numbers simply don’t stack up when you can get a 5.0 per cent yield on a low-risk government bond. Any new investment purchases in prime central London need to have a dual purpose, for example, the buyer intends to live in it themselves in the future or it’s a long-term investment for a child.”

Eccles also reports that London’s global appeal - despite the difficulties over the economy, Brexit and political uncertainty -  continues to attract overseas buyers and corporate relocators.

Eccles continues: “The corporate relocation market is once again highly active, for the first time since the pandemic. Almost every property we have let within the last six weeks on behalf of our landlord clients has been acquired by a corporate tenant, the majority coming from the US and working in senior roles within tech, media and finance. 

“London’s global reputation as a safe haven with outstanding schools, rigorous financial and legal systems and a lively cultural scene remains hugely appealing, and international buyers are also circling the market in more significant numbers with a view to buying in the second half of this year or early 2024. 

“Safety is a factor that cannot be underestimated. An American couple who visited London in May for the King’s Coronation were so struck by the relaxed atmosphere during such a significant event, in contrast to major concerns over gun crime in the US, that they made the decision to relocate here at the earliest opportunity and have just acquired a significant property in Kensington.”

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    Who in the right mind wants an IOU nothing government bond at 5%? Yielding a negative real interest rate of about -5% (5-10% inflation) = -5% real rate?

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    Someone who wants a similar return to BTL property at a guaranteed rate with guaranteed payments with zero mortgage downside risk, tenant risk, maintenance costs, service charge inflation or liquidity concerns. Wrapped up in an ISA meaning that 5% is equivalent to a pre-tax return in the BTL sector of between 6.25% and 8.33% depending on your income tax band


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