Buy-to-let king and queen dismantle property portfolio

Published 06th Mar 2010

Fergus and Judith Wilson bought 700 homes in a buy-to-let frenzy that raked in £225m. Now they're trying to sell up, and tell Patrick Collinson how they nearly went under


Buy-to-let is "absolutely dead and will never return". So say Fergus and Judith Wilson, the husband and wife team who became Britain's king and queen of buy-to-let, and who are now selling up.

At one time the former maths teachers were snapping up a house every day, building a fortune estimated to be around £225m at its peak. Now they are selling at least two a week, as they try to offload their 700 houses without destroying the local property markets of Kent, where they built their empire.

At Connells estate agency in Ashford the windows are full of two- and three-bed starter homes for sale at upwards of £180,000. If you pop in, the chances are you'll be offered a Wilson home. In the one branch alone, eight of their properties are for sale.

Is this a sign that their controversial empire is crumbling? No, says Fergus Wilson, 61, who says the difference between his borrowings and the value of his properties "is around £180m, although it was as high as £225m". He adds: "Reports of my death are greatly exaggerated." Monday was the first day of his retirement after two decades of lettings which have involved four murders, death threats, court cases and cannabis farms.

But the small business of his multiple loans doesn't go away just because he's retiring. He dismisses a report that a property had been grabbed back by a lender after the couple failed to pay the mortgage. "We have never had a single repossession," he says.

Defaults by newly unemployed tenants jumped as the recession began to bite, and he admits October 2008 was the crisis point, when nearly 100 of his properties, 13% of the total, were occupied by tenants who were not paying all or part of the rent. "We asked for a meeting with our lenders. I said, if you think you can run the show better than me, you can have them all back. They said no. They were determined that we shouldn't go under. If we went under, then everyone went under."

Every month the couple have to meet huge repayment commitments. They don't disclose their total borrowings, which are spread across many institutions, but say that for one lender alone, Mortgage Express, their monthly payment is £353,000. Mortgage Express was part of Bradford & Bingley, one of the banks whose loans are now in the hands of the taxpayer. So we all own a share of the Wilsons' properties.

What saved the Wilsons was, curiously enough, the collapse of Lehmans. In 2008, with banks pulling the plug on buy-to-let lending, the Wilsons were struggling to refinance their borrowings. But after Lehmans collapsed in September 2008, the Bank of England slashed its base rate to 0.5% and the Wilsons found on nearly all their loans they could revert to base rate plus a fixed percentage – typically 1.5% – at the end of the fixed period.

"We were going to be, to put it bluntly, stuffed. The reason we were saved was the drop in interest rates," Fergus says. He is now paying an average of just 2% interest. "I earn a yield from rents of around 5% and pay 2% in interest. The average mortgage cost is about £300 per month with £800 income. This gives about £300 per unit per month after paying agent and repairs etc. The renting game has never been better. I do not have one house available to rent in Ashford, Maidstone or Hawkinge."

He has also renegotiated payment terms so that, instead of paying at the start of the month, he now pays at the end of the month to help with cashflow. It means that, despite the credit crunch, falling property prices, falling rents (down 10%, he says) and jobless tenants, in 2009 the Wilsons earned more income – and paid more tax – than at any time in their lives.

What happens if interest rates rise? Once the base rate goes above 3.5%, the cost of servicing their mortgage debt will begin to exceed the rental income. Judith says: "Interest rates are not going to rise quickly. If they do, then the whole country is bust."

Will they find buyers? The Wilsons were canny enough to focus on small starter homes in the south-east, usually semi-detached two-bed properties with gardens, which are popular with first-time buyers.

Negotiations to sell all the properties as a single block to an institution reached an advanced stage but then fell away. So now the properties will be put on to the market in a steady drip feed. "We are in no hurry to sell. Lots of the vultures are trying to persuade us our properties are not worth what we think they are. But we don't need to sell for financial reasons," Fergus says.


Fear of a property flood

Agents in the Ashford and Maidstone areas say the sales market is relatively firm. Properties offered by Connells included a two-bed terrace, which the agents said belonged to the Wilsons, at £180,995 (Land Registry figures suggest it was bought by them for £105,000 in July 2002) and a three-bed detached house at £245,000 (acquired for £156,000 in October 2002). If they achieve these sorts of prices, then it's likely the Wilsons will be making a considerable profit, and, thanks to the reduction in capital gains tax to 18% in 2007, will face only a small tax bill.

But the Wilsons' decision to sell their properties has dismayed officials at Ashford borough council. They fear a flood of evicted tenants at a time when the waiting list for council houses is already lengthy. "Your business decision to sell your portfolio of properties in Ashford, Shepway and Maidstone obviously will have an effect on the stability of the housing market," Tracey Kerly, head of Ashford's housing department, said in a recent letter to the Wilsons, in which she begged for a "staggered serving of notices" on tenants "to give us some time to prepare options with future families that may become homeless".

Tenants tracked down by Guardian Money (see below) said they had no problems with the Wilsons as landlords. The properties are in good condition, rents are reasonable, and maintenance issues are dealt with swiftly. They have received assurances from the Wilsons that they will try to find buyers who will take them on as sitting tenants, but remain fearful that a buyer will evict them.

As the UK's highest-profile landlords, the Wilsons are used to criticism, much of it personal: they are property speculators who push aside first-time buyers, bidding up house prices, and forcing people into a lifetime of renting; or the eccentrically dressed couple regarded as a joke in horse-trainer circles, amateurs who enter no-hopers in big races.

"We recognise a lot of people are upset that we own so many properties. Some people say no one should have more than one property, but I thought communism was out of favour. One or two people want to douse us with petrol and set us on fire, but I think that's going a bit too far," Fergus says.

Judith had the last laugh on the horses. In last year's Grand National, her horse Cerium started at 500-1, and came in fifth, earning £24,000 in prize money and the Wilsons another £80,000 from bets they placed.

They will spend their retirement looking after their 12 horses at their home near Maidstone. Apart from the horses, their lifestyle is not lavish – Fergus claims not to have been abroad on holiday for 20 years. He has been approached by the makers of Channel 4's Secret Millionaire, but says he's probably too well-known to be on the programme. Indeed, as the Guardian photographer was taking snaps of the couple outside the Ramada Hotel near Maidstone, a passer-by asked if they were buying the hotel as well.

Fergus believes no one will be able to repeat what they did during the frenzied years of buy-to-let, when an astonishing £150bn-worth of loans were granted to property speculators. There are now few buy-to-let lenders in the market, and those that are charge high interest rates. "Lenders offer buy-to-let at such silly interest rates it cannot pay." And to the legions of critics of his property empire, his final words are: "They can always buy them off us."


A tenant's story

"We have no axe to grind against the Wilsons," say two of their tenants, a retired couple who preferred not to be named. "We can't argue with the rent, and it's a nice place to live." They moved into the modern two-bedoom home last summer (it costs about £650 a month), and keep the place immaculately clean.

In many ways they are the perfect tenants – a quiet couple who keep the place in good condition, pay the rent upfront, and want to stay for as long as possible. But now the property is for sale and they face the possibility of eviction.

Their predicament represents that of thousands of older couples. They had bought a flat on one of the Spanish Costas in the hope of a sunny and peaceful retirement, but one of them fell ill and had to return to the UK for NHS treatment. At the time, the property market in Spain was crashing. "We were lucky. At least we got something for our property, although much less than we paid for it. Other people lost everything."

Now they are at the mercy of the private rental market. Their money won't buy a property, and they are too old to obtain a mortgage.

The Wilsons have said they will try to sell the property with the couple as sitting tenants, and their tenancy agreement guarantees them for a year but they feel very uneasy. "I don't know why he's selling this one. I've been ill and I don't think I could go through the whole process of packing up and moving again."

Source: ' Guardian '

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