@nationalandlord @PorticoProp#postbrexit

Setting the Scene: After BrexitRichard Blanco (NLA)

#postbrexit

IMPACT OF BREXIT ON THE PRS

Impact On Construction• Fallen 1.1% in last quarter

The Broader Economy• Wages (2.3%), Growth (0.5%), Inflation (0.9%), Pound (down 15%)

Immigration & Demand For Rental Property?

Impact On House Prices?• 5.2% UK

International Investors• SDLT 6 x £250,000 = £60,000• SDLT 1 x £1.5million = £138,750

Government Policy• FTB vs Landlords vs Build To Rent

Knowns & Unknowns• March 2017…. 2019, Hard or Soft Brexit

To Buy, Sell, Hold or Trade?

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TAX CHANGES

Now In Force• Replacement of Wear & Tear Allowance• 3% Stamp Duty Surcharge

Still To Come• Withdrawal of Higher rate tax relief on finance costs begins 6 April 2017• Phased over 4 years, moving 1 in 4 to higher tax band

Lack of awareness & understanding…..• 51% say no change, but only 56% understand

#postbrexit

LANDLORD SENTIMENT

Strong rebound in optimism for own letting business• 39% to 54% rate good/v good

12% Report softening of tenant demand

64% expect decrease in profitability because of tax changes (71% have borrowings)

1 in 4 consider moving to Ltd Company

33% think Brexit will have a negative impact

LHA landlords historic low of 16%

#postbrexit

LANDLORDS HAVE ADOPTED A MORE NEUTRAL APPROACH

Perceived Impact of Brexit on the PRS (%)

AllSignificant positive

impactSlight positive impact

Will have no impact

Slight negative impact

Significant negative impact

Q11ai To what extent, if any, do you believe the result of the recent EU referendum will impact the Private Rental Sector?Base: All (900)

Overall, however, sentiment is still, significantly, net negative, with 3 times as many landlords feeling the vote will have a negative impact than positive (33% vs 10%).

KEY METRIC

Profitability:

Net positive

10%No. of properties

% Positive % Negative1 7 362-3 6 374-5 13 326-10 13 3111-19 11 3020+ 15 27

25Not sure

(7%)

(22%)

(29%)

(14%)

(28%) (Q2 2016 results)

#postbrexit

BANK OF ENGLAND BTL REGULATION

• Compulsory stress test of 5.5% (commercial exempt)

• Some lenders increased rental cover to 145%

• New criteria for portfolio landlords

• Will affect maximum loan to value in London

EXAMPLE• 75% of £620,000 is £465,000

• Rent is £2,400

• Mortgage of 2.49% would be £964 per mth

• Mortgage of 5.5% would be £2131 per mth• X 145% = £3,090

• Max loan would be £361,128 = 58% LTV

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REGULATORY HEADLINES

2016 Housing & Planning Act• Banning orders & database, civil penalties, client money protection, electrical safety

checks

Rent Smart Wales • Compulsory registration & licensing/accreditation

Right To Serve Section 21 Notice• EPC, DPC, GSI, Right To Rent

End of No Fault Eviction in Scotland• Consultation until 25 Dec

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REGULATORY HEADLINES

Lower Welfare Benefit Caps• From £22k to £23k (£20k outside London)

Minimum Energy Efficiency Standard• No F & G from April 2018

Homelessness Reduction Bill• “A person in respect of whom a valid notice under section 21 of the Housing Act 1988

(…..) has been given is to be treated as homeless from the date on which that notice expires”

Licensing & Article 4 Directions

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