Fergus Wilson, Britain's most iconic buy-to-let investor, sells up all 900 houses for £250m
12-10-2015
The former maths teacher, who built the property empire with wife Judith, says landlords had become an "easy target for a tax grab"
Controversial landlords Fergus and Judith Wilson say they have tenants on benefits that are £800,000 in arrears
Former maths teachers Fergus and Judith Wilson have sold their buy-to-let empire Photo: Christopher Pledger
By Katie Morley
Britain’s most iconic buy-to-let landlords are to sell their entire property empire for £250m in what could mark the start of a wider sell-off by landlords.
Fergus and Judith Wilson, former maths teachers, will offload around 900 houses to a pool of foreign investors which include both wealthy individuals and institutions.
It comes after the Government imposed a string of measures designed to dramatically increase the amount of tax buy-to-let investors pay on their investment. Experts warn many other landlords may now be forced to sell, as their portfolios become loss-making.
Mr Wilson said he is sorry to be giving up on his properties but “common sense must prevail”. He said he is 67 years old and “getting no younger”.
The properties are all in Ashford, Maidstone and Folkestone in Kent. Mr Wilson said he had taken measures so that local prices, amid such a big sell-off, are not adversely affected.
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Mr Wilson told the Telegraph: "Buy to let became an obsession for me. I am a self confessed junkie. Each day I must have my daily fix. I look up prices and say to myself what a lucky man I am.”
He added that he thinks the buy-to-let boom is “definitely slowing down”.
“It’s been a fantastic time for buy-to-let landlords because the market has been unregulated. But now they’re bringing in all these measures to try and make some money. Landlords are an easy target for a tax grab.”
He describes buy-to-let as a "national hobby" that "simply got out of control".
Fergus and Judith Wilson
In his Summer Budget, George Osborne announced that landlords will no longer be able to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay tax, with the new rules being phased in between 2017 and 2020. The measures were, he said, designed to address "unfairnesses in property taxation".
This was followed up in the Autumn Statement with plans to introduce additional stamp duty for buy-to-let investors from April.
Mr Wilson sold a first batch of 50 properties in Ashford, Kent, to Chinese investors in June, selling at an average of £250,000.
Last year Mr Wilson told this newspaper that rents on his three-bedroom properties (almost all of his properties are either two or three-bed) had soared by 40pc in 15 months.
The homes are being sold with sitting tenants.
Naomi Heaton, chief executive of investment firm London Central Portfolio, said the Wilsons could be among a fresh surge of landlords selling their investment properties as many have been waiting for prices to rise.
She said: “Falling house prices in many regions of the country have forced a lot of investors to remain in the market, but this year house prices have bounced back a bit. This will be just what they have been waiting for and now may feel like a good moment to sell.
Ms Heaton also added that George Osborne’s recent buy to let taxes are “poorly thought out as they hit small British investors harder than large foreign buyers".
Some investors who have their properties held in limited companies may avoid the full impact of the income tax changes, an approach that is popular with landlords who hold mutliple properties. The Wilsons, however, have never chosen to use this structure.
They will also pay capital gains tax at a rate of 28pc on any profits that relate to the increase in value of their properties, which is likely to leave them owing HMRC millions of pounds.
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How the Wilsons built their property empire
The couple began buying houses when prices were low in the early 1990s.
They had previously claimed that house prices would never stop rising, and planned to launch a "Judith Wilson Investment Property Bond", which, based on claims that the UK property market doubled in value every seven years, they claimed would do likewise.
The couple relied heavily on leverage to build their portfolio, buying only new-build houses and remortgaging them as soon as prices went up, using the profits to finance further purchases.
Mr Wilson said: “It was remarkably easy because no-one knew what they were doing. I didn’t care if I didn’t make a profit as long as I owned the properties. I knew they would rise in value eventually.”
In 2006, Judith Wilson claimed the pair had built their property empire almost by accident, bidding £98,000 for a house even though they had just £10,000 in the bank.
She said: "We only found the mortgage afterwards. At the time, it was the scariest thing I'd ever done. Today I don't bat an eyelid when I buy a house."
In 2009 the Wilsons were named as the 34th richest couple in the UK by the Sunday Times Rich List.
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How the tax changes will work
By Nicole Blackmore
Income tax
George Osborne unveiled a shock tax change earlier this year which will remove landlords’ ability to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay tax.
In effect, the Chancellor wants to tax landlords on their turnover rather than profit, meaning that tax will be payable on nonexistent income. For some, tax rates will exceed 100pc: landlords will have to pay all of their profit in tax, and then pay more tax still. The tax increase will be phased in from 2017 and fully implemented by 2020.
Smith & Williamson has calculated that any higher-rate taxpayer landlord whose mortgage interest is 75pc or more of their rental income, net of other expenses, will see all of their returns wiped out by 2020. So mortgage costs above 75pc of rental income will mean the buy‑to‑let investments become loss-making.
For additional-rate (45pc) taxpayers, the threshold at which their investment returns are wiped out by the tax is when mortgage costs reach 68pc of rental income.
Some current basic-rate taxpayers will also be hit, because the change will push them into the higher-rate tax bracket. Very wealthy landlords who do not need mortgages will be untouched.
Telegraph Money has developed a buy-to-let tax calculator that gives an indication of how your profits will be affected by the new tax over the next five years.