Exiting Buy-to-Let Properties on Property Moose in 2018

Notwithstanding the impact caused by the removal of the Property Moose secondary market (from 28th February 2018), there have been some significant changes to the economic and political position of the UK property market over the last few years.

Much of the press coverage has focused on the impact this has had on the London property market. However, it has also resulted in changes across the wider regional property markets, both geographically and on specific asset types.

Behind the scenes, we regularly work with large advisory and property valuation firms to assess the existing portfolio and our future investment strategy. This allows us to keep up-to-date with changes to the market and potentially any risks or opportunities that exist.

The current buy-to-let portfolio has been built on the basis of continued member feedback and requests to target lower capital/higher yielding properties which has meant that we have focused on the areas where we can deliver this type of property for our members. To date, the buy-to-let portfolio is geographically split as follows:

North East	49%
North West	33%
Yorkshire & Humber	7%
Midlands	11%

In terms of asset types, the properties are split as follows:

Single-family buy-to-let	75%
HMO	18%
Mixed-use Commercial	7%

We consider the property market across the specific areas and property types we hold is uncertain as a result of a number of key factors:

• Housing allowance & Universal Credit

Many of the properties that are held in the portfolio are targeted at tenants who are in receipt of housing benefit and this is generally why the higher gross yields are achievable. There has been a significant change in the availability of housing allowance and, with the introduction of Universal Credit, there is a lot of uncertainty as to the ongoing performance of properties focused on social tenants. Much of this relates to the management of risks where tenants cannot or do not pay rent or cause damage and, unfortunately, with the continued changes being implemented in relation to social housing, the assessment, and management of these risks looks to be more difficult over the foreseeable future.

• Brexit

Without getting into a debate on Brexit, there is a measurable impact on the desire or possibility of EU workers staying in the UK. The HMO and some of the single-family properties have historically seen a high proportion of EU worker tenants as they have been in areas where there is a high demand for that type of labour. Again, there is a level of uncertainty as to the impact this may have on the portfolio.

• Help to buy/large house builder support

We all know there is a housing shortage in the UK. Unfortunately, the impact that certain incentives are having on secondary property sales in some geographic areas are significant.

There are currently significant numbers of new build homes on offer with very few upfront costs due to government and developer incentives. Outside London, we believe this is having an impact on the secondary housing market, creating a slower market and potentially a fall in house prices.

As a result of the potential uncertainty around the existing buy-to-let portfolio combined with the removal of the secondary market, we are giving all investors the opportunity to vote on an updated strategy for their buy-to-let investments.

Exiting the properties has always been a key part of the investment strategy for the buy-to-let investments that have funded on the website – you will know that they are all listed with projected initial terms. Many of the initial property terms are maturing in 2018, and by the end of Q1 2018, we are going to issue an individual vote for each property that will outline a bespoke disposal strategy that will aim to maximize capital returns.

We are very positive about this process as we aim to deliver capital returns to all investors. We hope our members can see the potential benefit of seeking property exists using a bespoke strategy for each unit, and we thank you for your support.

Investors in all of the properties will receive multiple votes, and we ask that they take the opportunity to vote for their desired outcome.

You can read about the exit process HERE.

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