Back in the 1990s, Anthony Wheatley was renting out washing machines in and around Scunthorpe.
Three decades later, he is renting out more than 150 properties. And he isn’t stopping there. Despite the increasingly tough buy-to-let market, which has pushed many landlords to sell up, Wheatley is looking to expand.
“When I started, it was a lot simpler,” said Wheatley, 50, from Doncaster. “But with the current interest rate rises, we’ve seen a wave of amateur and ‘accidental’ landlords selling up. As a result, there simply aren’t enough private rentals available on the market, and so demand has never been higher.”
Mr Wheatley purchased his first rental property in Doncaster when he was in his early twenties. From there, he and his father-in-law slowly built up the giant portfolio he runs today, owning a mixture of residential and commercial spaces to rent out.
Now, as his father-in-law takes a step back, Mr Wheatley manages the portfolio with his two sons, Dan, 28, and Owen, 24. The day-to-day running of the portfolio provides a full-time job for the three of them. He did not wish to disclose how much money he makes.
“They love what they do and love being involved. Mostly, it’s just generic tenant enquiries. We pride ourselves in trying to deal with any maintenance issues the same day,” said Mr Wheatley. “Sometimes we can’t — we’re not gas engineers or electricians — but we try to sort out everything we can.
“People think you just buy a house, put a tenant in it and it runs itself, but that’s not the case.”
Mr Wheatley is now looking at “sensible expansion”. He hasn’t put a specific number or target on the number of properties he wants to add to the portfolio, but they review all properties that become available in their area.
This goes somewhat against the grain of the wider landlord market. According to research from Together, the specialist mortgage lender, 17 per cent of landlords said that current market conditions had triggered them to sell and exit the market.
A further 14 per cent said they had stopped all property plans altogether, and 22 per cent said that the current market volatility had limited their ability to expand their existing property portfolio.
This is partly down to higher mortgage rates. The rate on the average two-year buy-to-let mortgage has doubled to about 6 per cent compared to about 3 per cent two years ago, according to the data company Moneyfacts.
A £300,000 loan would cost you about £750 a month on a 3 per cent deal, but more like £1,500 on a 6 per cent mortgage.
There has also been a wave of tax and regulatory changes that landlords say have made it increasingly difficult for the numbers to add up.
For example, landlords used to be able to deduct their mortgage payments from their rental income before they paid tax. If you made £15,000 in rental income but paid £10,000 in mortgage costs, you would only pay tax on £5,000.
But in 2016, this all changed. Now, landlords are unable to deduct their mortgage expenses and instead get a “tax credit” based on 20 per cent of their mortgage interest payments. It means that any landlords who are higher- or top-rate taxpayers pay significantly more tax on their rental income.
Landlords also now pay an extra 3 per cent stamp duty when they purchase a property, and Government plans to ban Section 21 notices (“no-fault” evictions) have heightened landlords’ fears over the challenges to evict tenants.
But Mr Wheatley has been immune to much of this. As he has owned many of the properties in the portfolio for decades, the loans as a whole are relatively small.
“We’re in a fortunate position. The increase in interest rates has had an effect, but not the same detrimental effect that we’ve seen on other landlords,” said Mr Wheatley. “Some landlords were making 6 or 7 per cent yield and now only 2 or 3 per cent, some don’t even break even.”
He also owns the properties through a limited company, rather than through a personal mortgage, which means that changes to tax relief do not impact his tax bill. Instead of the rental income being taxed as income (20, 40 or 45 per cent depending on your tax bracket), the business will pay corporation tax (19 or 25 per cent depending on the business) on the profits.
To expand the business, Mr Wheatley and his sons are overseeing the development of three bungalows, which will be added to the rental portfolio, and are on the lookout for smaller, starter homes that are suitable to rent to the younger generation.
He said: “At the moment, middle-aged people are looking to move out and buy properties, but the rent on the properties they leave behind are too high for the younger generation to afford. We need to be looking at properties to rent that are more affordable, for the younger generation of renters.”
Together’s research showed that other landlords agreed. A quarter of those polled suggested that student housing was the sector that offered the most opportunity for investors (it typically provides a higher yield), while 19 per cent said that the private rental sector more generally was a good opportunity.
Overall, Mr Wheatley is confident that the opportunity for larger scale landlords would “always be there”.
He said: “Some people have come into the business with low interest rates and it’s been very easy to expand very quickly. But now we’ve had the increase in interest rates to a level unexpected, and it’s pushed some people out of the market.
“But at the end of the day, we have a shortage of homes in the country, whether it’s for purchase or rent, which is recognised by the government and by landlords. So there will always be an opportunity for professional landlords.”
