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Selling BTL Property in Negative Equity

Chances are, if you invested in buy-to-let property 10-years ago, you may have ended up with a portfolio of properties now in negative equity. You may find yourself stuck with a lender because you simply cannot afford the high exit fees, and it would cost more to move to a new mortgage provider.

Landlord News by: Madalena Penny

In a report issued by Deutsche Bank in June 2016, the financial institution predicted property investors could see their returns falling to as little as 0.0 or 0.5 per cent. The tax changes currently being phased in has been perceived as a “major shock” to the wider housing market – with possible price falls of up to 20 per cent. The report states that London could face a substantial loss in BTL purchases, which have in the past contributed to about 40% of residential property purchases in recent years. Co-author of the report ‘Oliver Reiff’ said: New tax rules will reduce BTL returns on equity towards zero and result in low or negative cash flow, particularly by new landlords.”

For landlords in the current private rented sector environment, it can feel like a vicious circle. You can’t afford to sell, to change, nor can you afford rental voids. It may feel like you are simply treading water.

Because of the detrimental changes surrounding lending and taxes in the private rented sector, there has been a new trend creeping into property investment as more-and-more investors are looking to the North of England for better higher rental yields and return on their investment.

HOW TO SELL BTL PROPERTY WITH NEGATIVE EQUITY

Because of new business models, property investors are now actively seeking landlords stuck with property with negative equity and are prepared to buy it from them. The whole process is done in such a way that the landlord loses nothing in the process, except the problems it has caused them, leaving them free to invest in other properties without any penalties incurred.

Joseph Hetherington of Penny Joseph property management, lettings and auctions said: ‘Things need to change for landlords and property investors. By creating a network and brokerage of buy-to-let properties that match landlords with properties in negative equity, and investors looking to buy them is the next stage in the current economic property climate.”

For more information on selling and purchasing buy-to-lets in negative equity, contact Penny Joseph for more information.

Contact or email: enquiry@pennyjoseph.co.uk

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