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Ross Ashcroft catches up with Britain’s Buy to Let King Fergus Wilson.
A man who bizarrely seems to be totally in the dark to the underlying mechanisms that drive the property market.
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Interesting stuff. You ought to interview more property developers.
I’m wondering if we didn’t have the public build the infrastructure would there be any further ethic issue with property investors/speculators skimming the capital gains?
Indeed, the current property market crash has created a significant opportunity for renting households with stable employment and some savings to obtain homeownership. How deep this pool of potential homebuyers is in the U.K. is a question worth pursuing. It is also likely that a good portion of these first-time homebuyers are obtaining some level of financial (i.e., gift) support from parents in order to meet down payment requirements and to cover closing costs for the transaction.
Fair play to him to giving an interview.
I don’t blame people like Fergus and his wife for doing what they have. The structure of the UK tax regime means it will always create ‘entrepreneurs’ like this because there’s easy profit to be made from speculating in housing. Don’t hate the player as the saying goes.
To be honest I think people like the Wilsons are useful for making the case for a land tax. Instead of 900 owner occupiers with a VI in keeping the surpluses accruing in housing you only have one, with 900 households on the receiving end of this perverse economic relationship. If there were only a handful of people in the UK that owned all the land then it would be quite clear where the problems lay. But because we have a cartel consisting of many owners the issue gets confused because people think that there’s a free market in land ownership. This dissipates the potential outrage because it sets up one large group against another, making it harder to get the right policies in place.
To summarise, lets have a few more Wilsons so the economic drain of land ownership is illuminated for all to see.
Of course he’s sure house prices are going to go upwards…he’s got nine hundred of them to sell before it all goes pop! Hilarious. Goldfinger strikes again.
That’s the most exasperated I’ve ever seen an interviewer act. Brilliant to watch, especially with the interviewee not paying attention most of the time.
You can’t say he’s totally in the dark on the mechanics because he is aware of the cycle. 17 years in his words rather than the the 18 that the Renegade Economist goes by, but close enough.
It illustrates the point perfectly well though. The rich landowner has no regrets, sympathy or trouble sleeping with the rules as they are because he does very well out of them.
Well, fair play to the interview for keeping cool. Young people should actually be very ANGRY that people like Mr. Wilson, aided and abetted by the banks who have been bailed out by the tax being paid by (amongst others) young people, is effectively monopolising the property in his town excluding other people from buying. It’s almost feudal. How long before he owns every property in the town. Would he become a squire then – or a lord of the manor perhaps. Would everyone in the town hope to get a job up ‘at the big house’.
In a society where the building of housed on land is tightly regulated (and, more or less, prevented) by the government/councils – it is OBSCENE that one person should be allowed to own more than one house. I don’t give a monkey’s how rich someone is – when we all have ONE home each, then let rich people own TWO or more.
This is highlighted crucially in the South West of England. In towns like Salcombe whole roads of houses lie unoccupied for most of the year – some are used for just one week a year. Why should someone from London own a second home in the West Country when people there cannot afford a first home. In a sane world there would be riots.
To give you some idea of just how unscrupulous Fergus Wilson is, he has just served notice of eviction on my 73 year old mother because she insisted on having her gas central heating repaired by a Gas Safe registered engineer and not one of Mr Wilsons “handy men”. The man is truly obnoxious. The Health and Safety Executive are now investigating the situation, but a Google search will reveal tale after tale of simply atrocious tenant management, deception and intimidation by the Wilsons. I think before anyone lauds them for their financial prowess and holds them up as examples of entrepreneurism, they should educate themselves about the character of these people. What scares me the most is that ‘ol Fergie now plans to appear in TV property programmes offering advice to would be investors. How can someone so insidious and bigoted be allowed such publicity?
Ross, how did you resist from wrapping that chair you are sitting on around his head?
Wow! What an interview.
Is he special advisor to Gordon Brown?
It’s breath-taking to see him sit there and come out with that stuff.
The Daily Mail is saying he is 350,000 behind on his loans and they are about to foreclose this week
House of cards
The man is a Buffoon.
If he was as shrewd as he tries to imply he would have sold up two years ago. To carry on being a major buyer when the market was falling confirms his status in the animal kingdom
It ceases to amaze me that when investors have geared investments they fail to adjust their rate of return to reflect the risks involved.
If the portfolio is worth around £135m with £85m in debt he has wealth of £50m
If it falls by 15% to £115m with £85m in debt he has £30m
This is of course a fall of 40% due to a 15% downward adjustment. If the market gets a whiff of fear his portfolio may be trimmed a lot more than 15% and a 30% correction may be possible with void periods whilst the properties are sold plus disposal costs could see their wealth evaporate
What he describes in this interview is exactly the philosophy of Robert Kiyosaki the author of the Rich Dad Poor Dad series – this is the best selling personal finance book of all time. There is nothing extraordinary in his philosophy but most people don’t follow it – the rules are simple, buy an undervalued property (they are easy to find at the moment) and rent it out insuring you get passive income. Never sell it but continue to collect the rent and re-mortgage it when you want to pull some money out. There are also tax benefits and depreciation benefits on owning a rental propety that make it a far better investment than stocks – just read Rich Dad Poor Dad and the forumula is there – they don’t teach this in schools in the same way we don’t get a financial education in schools because the education system was set up to keep us in the dark on financial matters so that the rich can continue to be rich – but if you follow this simple formula you have a chase of joining the ranks of the rick
Excellent interview. You let him do nearly all of the speaking and it illuminated how unaware he is to what’s coming down the line for him. There’s simply no way his strategy and model can survive unless he stopped buying property before 2004-ish. Otherwise, the capital gains have been wiped out by the market correction (which surely has another, greater leg down to come).
By the way, the mortgage company with which he is allegedly £350k arrears has a “margin call” capability in its standard buy to let terms and conditions.
House prices will continue to fall for the next 10 years (the lost decade). Until salaries are 3x anual earnings the market will continue to be undermined. Ross was very astute in obtaining confirmation from Fergus Wilson that house prices will start to rise from February 2010. The BTL (Buy to Lose) King will be dethroned within the year.
Guys…really…just the most arrogant interview and set of comments I have seen in a long time. I support a lot of the “Renegade Economist”’s views and approach, but do you think that this kind of behaviour makes people agree with you…or think you are extremists who should be ignored??
Excellent interview, and I’m glad you’re talking about this, as I see very little coverage of this in the news, but it’s bothered me for ages. I live in London and we have lots of buy to lets in our road. While those of us who own homes spend a lot to keep our houses in good order and looking nice, the buy to lets generally look run down, often with rubbish piled out in front. There is a steady changeover of tenants, noisily moving in and out, often late at night, and we never know what type of people are going to move in. The tenants generally don’t join in with the community life of the street, which must be sad for them, but their response is generally disinterest, which is understandable as they don’t stay very long. I see the landlords (and estate agents, as they usually ‘manage’ the properties) as parasites, giving nothing back to the community, yet draining money out of the street, running a business off our backs. It’s all about greed, and I think they should be taxed heavily, hopefully pushing prices back down to a level where everyone can afford to buy their own home.
You need to stress the point that value is accruing to the property speculator from infrastructure paid by the tax paying populace, in addition to other locational effects. Thus, they earn their name as kleptocrats/kleptocracy, as labeled by Michael Hudson. There are other areas where kleptocrats steal value from the citizenry.
The equation is more complex, as locational value changes over time, as industries come and go (superseding technologies, over-seas competition etc.) and new infrastructures come into being. As new locations become desirable for industries and home buyers, values can plummet in previously desirable areas. This leads to big problems for some speculators, as indicated by commentator stephen clacy above. Previously profitable sites can become ‘under-water’ and over leveraged speculators go bankrupt. These situations can arise even when the property market is broadly rising. Zoning regulation for new development tied with infrastructure development is intensely political because of the vast profits to be made by privileged competitors.
This is dated 21st October, 6 weeks AFTER he and his wife publicly announced they were selling their property portfolio.
http://www.dailymail.co.uk/news/article-1210885/Maths-teacher-property-tycoons-700-homes-sale-go.html
So I would be very surprised if he weren’t talking up the prospects for the housing market. Perhaps ‘a health warning’ to this effect should be given at the start of the film.
You talk of “creaming off capital gains” and “windfall gains” as if it’s guaranteed his properties will increase in value.
At one point you say “allow the capital value of the property to increase”, as if he just has to permit it and it will happen.
You use the fact that he doesn’t use his own money as an accusation.
The fact is he’s brave enough to trust his judgment, is good at finding properties, and his track record means banks will lend to him.
In answer to your question on how you should feel about being unable to buy one house while he has 900, I would say “you could have 900 too some day, mate, with a bit of ability and some courage.”
Firstly, all gas appliances MUST be serviced and installed by GasSafe (was CORGI) engineers. Rented property needs an annual Landlords inspection. If this man is using handymen, he should be heavily fined and all his properties inspected properly. He is breaking the law, which is a criminal offence, although I doubt if the police would get involved leaving it to H&S. He can’t evict people for getting in certified engineers, and deducting it from the rent – assuming he was warned by the tenant. Just sit in the property – change the locks – and if he comes around get the police who will threaten to arrest him or his men if they harass the tenant. He has no right of entry whatsoever – not even to inspect. Only the GasSafe man can gain entry, and only with the police, who have to be convinced there is a danger, not a normal service. Once in court he will lose.
Fergus just goes by the laws and deals on gut instinct and knowledge of his area. He forecasts house price rises – although stating it was a sort of fact rather than crystal ball gazing. Well they have been rising by the odd 0.5 to 1% here and there. He can sit on his properties and ride out the CC. That is how large landowners make their money – wait until the time is right and re-let say a farm they took back with a higher rent.
Whether he has 900 homes and some have none or one, is irrelevant. The underlying problem is the planning and land laws. LVT would be fine,but only if people are allowed to build on subsidised fields. Only 7.5% of the UK is settled, if more land is available to build on, then more people would buy, and build their own homes as in other countries, and the likes of Fergus would be history.
I’m sure most of his tenants rent because they can’t afford to buy. Yes, he didn’t have much of an idea of the underlying drivers to the housing market, which to be fair is complicated and can change from district to district. If a new factory opens in the area his land value rise, so he makes money because of someone else’s efforts, but so does the fish and chip shop increased business. So, he would look at it that way. LVT would make him and the chippy make a fair share, as his shop value would rise too. He views houses and land like they were washing machines.
Taxpayers money in improved infrastructure have increased the value of his 900 homes, that is for sure.
Let’s not lose sight of the who actually pays his rents.
Many of his tenants, maybe the majority, will be entitled to
housing benefit. HB cost the economy £20 billion last year.
Landlords like him are in fact living off the council
tax payer.
Controlled rents will return, I have no doubt. When this
legislation is enacted, the bizarre practice of BLT will
vanish like snow in August.
I Know Fergus has 900 houses and I understand some people will feel this is wrong, but he started off with only 1, and has built up to the 900. I hope he does sell his houses and makes a profit. wether we like it or not the fact is that what Fergus done anyone can do.
what a load of cobblers! i am an property investor and professional landlord, and also have flats, i do not have ‘poor’ people or need to be at the bottom end of the ‘wilson’ scale by taking drug users and poor people!!!
i have a good selection of properties, and have some very good tenants, it is wrong and unfair to brand tenants in the way he has! they pay his mortgages, and above there good landlords too,
i rent to the homeless,domestic violence victims and peopel who have lost their homes through losing their jobs! however that doesnt make my properties at the lower end of the market! infact it makes me a better landlord that why my propeties are all full up, rents all paid and i have received 3 awards for my troubles!!!
So Mr Wilson have respect for people in flats and good landlords who are happy to help others!!