Any landlords?

ThePrettyDamned

Barnezy said:

Thanks for the suggestions @ToneControl . I think I'm going to put it up for sale when the tenants 1yr clause comes up. Bad news for my tenants and sad to sell somewhere we loved so much and hoped to give the kids, but I shouldn't be subsidising someone else's living expenses, just because the government have decided to tax landlords out of existence. 

Good luck to renters... that's all I can say. 

It's a shame. I've rented in the past, and my experience is that landlords are useless - largely in it for the money, and not to work. Being a landlord is a job, but the landlords I had did not treat it as such, more a way of extracting retirement money from students. 

What makes it more of a shame is I now have purchased using the htb loan. We're fine, still able to save etc, but I think I'd rather rent - if renting were the same cost as mortgage, or even a bit more, no problem. Sadly, it's a good chunk more to rent here than buy (buying ain't cheap either!) and as such I'm more "rooted" and moving house is less attractive.

I would rather renting was taken more seriously in the UK. Plenty of other countries have renting sold as a service provided to people who want a flexible living arrangement and landlords are expected to take care of all problems very swiftly, accepting that serious issues can lead them to short term losses. 

Barnezy

ThePrettyDamned said:

Barnezy said:

Thanks for the suggestions @ToneControl . I think I'm going to put it up for sale when the tenants 1yr clause comes up. Bad news for my tenants and sad to sell somewhere we loved so much and hoped to give the kids, but I shouldn't be subsidising someone else's living expenses, just because the government have decided to tax landlords out of existence. 

Good luck to renters... that's all I can say. 

It's a shame. I've rented in the past, and my experience is that landlords are useless - largely in it for the money, and not to work. Being a landlord is a job, but the landlords I had did not treat it as such, more a way of extracting retirement money from students. 

What makes it more of a shame is I now have purchased using the htb loan. We're fine, still able to save etc, but I think I'd rather rent - if renting were the same cost as mortgage, or even a bit more, no problem. Sadly, it's a good chunk more to rent here than buy (buying ain't cheap either!) and as such I'm more "rooted" and moving house is less attractive.

I would rather renting was taken more seriously in the UK. Plenty of other countries have renting sold as a service provided to people who want a flexible living arrangement and landlords are expected to take care of all problems very swiftly, accepting that serious issues can lead them to short term losses. 

My short experience of being a landlord is that it's not worth it anymore and that tenants don't see things from the landlords perspective. 

We only did it as we needed to move quickly, and wanted to keep it in case we wanted to move back. 

It's been an expensive mistake. Whatever gain I make on the property is now subject to a 28% tax, its cost me to rent it out £7,200 in rent deficit vs costs and about £2,400 in Estate agency fee's. So in total its probably cost me £37k to rent it out for one year. Its cost the tenants £21,600. And people think landlords are the ones getting the good deal. 

ThePrettyDamned

Barnezy said:

ThePrettyDamned said:

Barnezy said:

Thanks for the suggestions @ToneControl . I think I'm going to put it up for sale when the tenants 1yr clause comes up. Bad news for my tenants and sad to sell somewhere we loved so much and hoped to give the kids, but I shouldn't be subsidising someone else's living expenses, just because the government have decided to tax landlords out of existence. 

Good luck to renters... that's all I can say. 

It's a shame. I've rented in the past, and my experience is that landlords are useless - largely in it for the money, and not to work. Being a landlord is a job, but the landlords I had did not treat it as such, more a way of extracting retirement money from students. 

What makes it more of a shame is I now have purchased using the htb loan. We're fine, still able to save etc, but I think I'd rather rent - if renting were the same cost as mortgage, or even a bit more, no problem. Sadly, it's a good chunk more to rent here than buy (buying ain't cheap either!) and as such I'm more "rooted" and moving house is less attractive.

I would rather renting was taken more seriously in the UK. Plenty of other countries have renting sold as a service provided to people who want a flexible living arrangement and landlords are expected to take care of all problems very swiftly, accepting that serious issues can lead them to short term losses. 

My short experience of being a landlord is that it's not worth it anymore and that tenants don't see things from the landlords perspective. 

We only did it as we needed to move quickly, and wanted to keep it in case we wanted to move back. 

It's been an expensive mistake. Whatever gain I make on the property is now subject to a 28% tax, its cost me to rent it out £7,200 in rent deficit vs costs and about £2,400 in Estate agency fee's. So in total its probably cost me £37k to rent it out for one year. Its cost the tenants £21,600. And people think landlords are the ones getting the good deal. 

And yet big companies have various workarounds to more easily make profits from streets of (improperly cared for) homes for masses of profit. 

It's broken. 

Dominic

It's not so much that big companies have "workarounds" ........it's simply that whether big or small a corporate holding is a different entity tax-wise .
 The OP probably has lost money.....I'm guessing the property value at circa £700 k ; it's not the principle that causes loss it's the timing ; if the market had risen 12 per cent in the meantime ( as it has done in some 12 month periods within the last 20 years ,if not more) then he would be comfortably in profit .
 The market has not been kind to his investment.
The whole skill of being an "investor" ,irrespective of the commodity is to know when to get in and when to get out !
To quote Kenny Rogers'  R.I.P. " You've gotta know when to hold 'em ,
                                           Know when to fold 'em ,
                                          ...............................................'til the dealings done " !

crunchman

robgilmo said:

Barnezy said:

guitargeek62 said:

Barnezy said:

It just seems the government is completely against private landlords, but surely the consequence is less rental properties and much higher rents for tenants, making it harder to save to buy their own place (if they want to) and less secure. 

Our place is currently on a permission to let repayment mortgage, and we're making a £600pm loss when tax is considered. Moving to a BTL interest only might get us to a breakeven point, but is it then even worth it, given the hassle of being a landlord? 

Not sure I agree with the former - if less people are buying second/third/nth properties to let out, then more properties will be on the for sale market and therefore there could be a correction in prices that increases affordability for current renters.

Potentially in the long-term, but not significantly. Renters will deffinately have less choice and therefore higher rents, if people are put off/taxed out of being landlords. Remember the majority of renters are young people who don't have the savings yet to buy, even if houses cost half what they do today. They will have even less chance if there are less rentals and rent increases.

The governement tax rules seem to target the private individual landlords. The big ones that setup Ltd companies to buy the properties under to avoid tax etc, will only become more prevalent and controlling of the market. 

Sorry man, but why do Landlords think they do renters a favour? Its because of Landlords that people are forced to rent, its because of landlords that homes are unaffordable, its because of landlords that people cannot save to buy, its because of landlords that many youngsters around here cannot afford to live in the villages they were born in, not the other way around, not at all.
If all the land lords/second home owners pulled out you honestly think there would be less choice and higher rents? Really? Thats just wishful thinking.

The problem is that the current rules drastically affect the person who wants to buy one property as a retirement investment, but they don't affect people with 20 properties who do it through a company.  Until prices get more sensible, first time buyers will not be able to get on the ladder, so all that will happen is that the properties for sale will get hoovered up by the person who already has 20 properties.

These rules don't help renters very much at all, but they do penalise the small scale landlord who wants to invest for their future, and benefit the ones who already have multiple properties.

Barnezy

Dominic said:

It's not so much that big companies have "workarounds" ........it's simply that whether big or small a corporate holding is a different entity tax-wise .
 The OP probably has lost money.....I'm guessing the property value at circa £700 k ; it's not the principle that causes loss it's the timing ; if the market had risen 12 per cent in the meantime ( as it has done in some 12 month periods within the last 20 years ,if not more) then he would be comfortably in profit .
 The market has not been kind to his investment.
The whole skill of being an "investor" ,irrespective of the commodity is to know when to get in and when to get out !
To quote Kenny Rogers'  R.I.P. " You've gotta know when to hold 'em ,
                                           Know when to fold 'em ,
                                          ...............................................'til the dealings done " !

We've not lost anything overall as we've owned it for 6 years and are up c£100k. It's just been an expensive year due to tax. However on reflection the year might not be as bad as thought. If we were to sell the CGT only applies to a small proportion of the gain due to the period we lived in it. Maybe a couple of k in tax which I can live with. Also the renters are paying the unrecoverable costs of the property (mortgage interest and services charge) and the loss we're making is purely due to the repayment element of our mortgage as its still on a residential, repayment mortgage on permission to let, so in effect going in to savings. 

I'm going to speak to the mortgage company and a tax advisor, but what I'm hoping is to move the flat to a BTL as we have c35% equity, and then port our current mortgage to a new residential property to take advantage of the stamp duty holiday... as its only 3% for a second property upto £500k. It means we can't get the "forever home" now, but can still get a decent place, plus retain a London property, with a long term sustainable approach. 

Anyway lots of moving parts involved. 

Thanks for the advice. 

Bowks

I let my flat in West London when I moved in with my partner 5 years back and I've just sold it, following a shitty experience with tenants and the fact that the area is going downhill, plus the fact the location isn't terribly good for commuting.

My last tenant was in contract until May this yer, but fucked off in December owing me 5 months worth of rent. The letting agent struggled with finding new tenants based on the scum that the council had moved into the adjacent flats. The tenant they did find wanted a rent reduction and the whole place redecorating, as the previous tenant had not looked after the place.

As the property was ex local authority, I managed to find the details of their property procurement team and we agreed a sale, at market value, back to them, which was approved in very early March. Unfortunately, COVID 19 put this on hold, but it all went through a few weeks back, I have my money and no more headaches!

Just the Capital Gains clobbering to come!

The rent was halved after tax and letting agency fees, the subsequent sum was halved again once I paid the mortgage and the profit was just sitting there as a slush fund. Not worth doing IMO as a private landlord. It might well be different if it is run as a business.

spark240

Bowks said:

I let my flat in West London when I moved in with my partner 5 years back and I've just sold it, following a shitty experience with tenants and the fact that the area is going downhill, plus the fact the location isn't terribly good for commuting.

My last tenant was in contract until May this yer, but fucked off in December owing me 5 months worth of rent. The letting agent struggled with finding new tenants based on the scum that the council had moved into the adjacent flats. The tenant they did find wanted a rent reduction and the whole place redecorating, as the previous tenant had not looked after the place.

As the property was ex local authority, I managed to find the details of their property procurement team and we agreed a sale, at market value, back to them, which was approved in very early March. Unfortunately, COVID 19 put this on hold, but it all went through a few weeks back, I have my money and no more headaches!

Just the Capital Gains clobbering to come!

The rent was halved after tax and letting agency fees, the subsequent sum was halved again once I paid the mortgage and the profit was just sitting there as a slush fund. Not worth doing IMO as a private landlord. It might well be different if it is run as a business.

I have to wonder what you thought was going to happen?

strtdv

In a lot of Europe renting is the norm, people aren't interested in buying property in the way they are here.

I'd also point out that @Barnezy might consider a couple with pretax combined income of £80k to be "at the other end" from a couple with a combined income of £250+k, but in reality the couple on £80k are still in the top 20% of earners

robgilmo

Barnezy said:

robgilmo said:

Barnezy said:

guitargeek62 said:

Barnezy said:

It just seems the government is completely against private landlords, but surely the consequence is less rental properties and much higher rents for tenants, making it harder to save to buy their own place (if they want to) and less secure. 

Our place is currently on a permission to let repayment mortgage, and we're making a £600pm loss when tax is considered. Moving to a BTL interest only might get us to a breakeven point, but is it then even worth it, given the hassle of being a landlord? 

Not sure I agree with the former - if less people are buying second/third/nth properties to let out, then more properties will be on the for sale market and therefore there could be a correction in prices that increases affordability for current renters.

Potentially in the long-term, but not significantly. Renters will deffinately have less choice and therefore higher rents, if people are put off/taxed out of being landlords. Remember the majority of renters are young people who don't have the savings yet to buy, even if houses cost half what they do today. They will have even less chance if there are less rentals and rent increases.

The governement tax rules seem to target the private individual landlords. The big ones that setup Ltd companies to buy the properties under to avoid tax etc, will only become more prevalent and controlling of the market. 

Sorry man, but why do Landlords think they do renters a favour? Its because of Landlords that people are forced to rent, its because of landlords that homes are unaffordable, its because of landlords that people cannot save to buy, its because of landlords that many youngsters around here cannot afford to live in the villages they were born in, not the other way around, not at all.
If all the land lords/second home owners pulled out you honestly think there would be less choice and higher rents? Really? Thats just wishful thinking.

I dont know many people straight out of uni that have £50k minimum in savings, to buy a flat in London. I do know a lot of people straight out of uni that want to get job and live in London though. 

Even if properties were 50% their current value, how could a 22 year old with uni debts, get £25k together to buy a house, so they can accept that job in London? 

I've been both a renter and now a landlord. People are niave if they don't see any benefits to renting. 

Firstly for my flat I had to fork out £120k in savings, all from my own earnings that took years to save and alot of sacrifices made for. This covered the deposit, fees etc to buy, and £22k in stamp duty which I will never get back. I then spent £25k doing it up and about £3k in general maintenance over the 5 years we lived there. So I'm £150k in. The mortgage costs £1,600pm of which £900 is interest that doesn't go towards paying down the debt. The service charge is £300pm, so £1,900 in monthly cost total, of which £1200 are unrecoverable costs. 

My tenants get to live in that same flat for £1,800pm, thats it. If anything breaks, its my problem. If they decide they want to move to another area, they just move. No need to worry about the current market value, whether they can find a buyer, estate agent fees, people looking around, redecorating to sell etc... oh yeah and they haven't had to layout £150k, which could have been earning them money somewhwre else, or maybe they just get to live an extravagant lifestyle and don't save. 

Are you're trying to say renters don't get a good deal? 

There is a need for private renting and the fewer there are the more rent will be, it's just supply and demand. Being a renter and hoping there are less landlord owned properties is like turkeys voting for Christmas. 

I dont live in London, but I know quite a few people from London, they own most of the rented housing stock here in Suffolk, as a result the few remaining homes that the people who actually live here should be able to buy cant, is this the supply and demand you are talking about? Renters get a good deal? I pay 975 a month rent, next door pay 300 a month on their mortgage, their home is worth more than ours but still over priced for what it is, so, tell me again how Im getting such a great deal?
And, people can save for deposits quite easily if most of the housing market round here wasnt owned by landlords, because the gap between supply and demand would be less thus making the market more competitive.
But its not just the fault of landlords, estate agents are just as bad for driving up house prices and rents. 
Being a renter and hoping there are less landlord owned properties would mean that we might actually be able to afford to buy a home, and perhaps our children would also have a chance of actually living where they grew up.
Its no coincidence that as house prices rise so does the number of homeless people.

Another factor to take in , and one which landlords are probably quite happy with, is the lack of social housing and the lack of new homes being built, and lets be honest here, when someone can own more than one home yet a working family find them selves on the street, something is very wrong.

Tex Mexico

This isn't aimed at anyone in particular, but on the subject of landlords:

In an economy where stagnant wages and rising property prices now mean that homeownership is becoming increasingly inaccessible to a growing portion of the younger workforce, it doesn't make sense for the government to incentivise multiple ownership through beneficial tax rates or restricted regulation.

Where you can make the argument that this limits multiple ownership to only the very rich who can afford it through economies of scale, the remedy to that is not necessarily to make it easier for the more affluent middle-class to retain the properties they move out of instead of putting them back on the market.

The idea that a home should be a profitable investment is to my mind one of the perversions of capitalism. Now that the housing bubble has contracted and it's no longer to be expected that people will make a hefty return on selling their houses, there's now this idea that you can instead get someone else to pay off your second home's mortgage plus 20%.

Most of my friends are in their thirties and forties, make maybe a bit over £30k and live in houses that cost between £100k and £200k, which would have been at the top end of their budgets. I know exactly one guy who owns a second property, and he's a high-ticket city lawyer who makes three times what I do. The cost of living in London might be skewing the perspectives of some, but in my part of the country £800k worth of property requires a full-time gardener and kitchen staff.

EricTheWeary

The estate I live on is roughly divided into three with the bottom end of the estate being maisonettes. These are mostly lived in by older folk or first time buyers so come on the market fairly frequently. A lot were then bought up by people living on the estate as buy to lets - relatively small investment, it’s only a walk away if any work needs doing. Everyone I know who bought one eventually resold having made a loss as landlords ( offset by whatever the property increased in value in the interim then minus selling costs). 

Obviously people do make money as landlords but I think you have to be quite cutthroat and have a portfolio. It amazes me how much students have to pay to rent - if you can buy and rent in a prime student area the return seems much better than in nicer residential areas. 

spark240

As a Ltd Co. but part time LL.....I thought Id post a few bullet points.

1. No.of properties  - 8 ( now 4) over 15 yrs period
2. Average purchase price - £80k
3. Average sale price - £100k
4. Time committed to this - very little really.
5. Letting agent - No, never.
6. Mortgages BTL Ltd Co Interest only.

So - has it been profitable so far...yes....but mainly because of the drops in interest rates...not rise in values...lucky ?....who knows, plus indexation relief was a big bonus..

Would I do it again as private LL - No, mainly due to financial restrictions....the actual business is fine.

Barnezy

People have been claiming house prices are too high for decades. If you think they are high now, wait to see where they are in another 10 years. They are not high, they are where the market has put them. 

Everyone loves someone to blame. Private landlords are an easy boggy man, but the reality is they only make up 20% of UK property market and provide a valuable service to many. The real issue is supply and low interest rates. With Covid I don't see interest rates changing anytime soon and with supply, I don't see any house builders, building themselves out of profit. Whenever there is a market drop, supply slows down and then the inevitable rebound will come as supply shortages bite. Covid will compound this by slowing down the new build sector with all the additional safety guidance they are having to adhere to. And then wait for money in commercial property sector to start moving to the residential sector, as employers start embracing working from home as a permanent policy and commercial property looses value. 

This is a good analysis of why they are, where they are: https://www.economicshelp.org/blog/8733/housing/uk-house-prices-high/  

crunchman

The obvious solution is for the government to charge capital gains on your main residence.  I believe that happens in a lot of other places.

It reduces the incentive to drive prices ridiculously high.  High prices are bad for everyone except city fat cat bankers who make money off the ridiculous amounts people have to borrow to buy.

Barnezy

crunchman said:

High prices are bad for everyone except city fat cat bankers who make money off the ridiculous amounts people have to borrow to buy.

That's not true. 

High house prices are good for anyone who owns their home, which today represents are the majority c70% of homes. It also benefits people who will inherit property.

The only people wishing house prices to fall, are people who don't own a property. 

Buying a house isn't risk free. when you plough all your savings in to a property, that reality hits you. You've just put £100k at risk, so now if you lose your job and can't pay your mortgage, you don't just get evicted, you loose everything you've worked for. Then there is the risk of being locked in to negative equity or your foundations failing, your roof leaking, pipes bursting, etc. When you're a landlord, the risks increase further... what if the tenants trash the place, use it for illegal activity, don't pay their rent. None of these risks matter to renters, worst that can happen is they can't pay their rent and get 3 months free living whilst the landlord pursues eviction.   

It's very easy to look at the plus sides, but there are a lot of potential downsides to investing in property, hence why more and more landlords are pulling out. 

Maybe another solution is 80% inheritance tax, as it's unearned, risk free income to the receiver. It can be ploughed in to building more social housing and social care, benefiting wider society, not just those receiving it. Will also encourage older people to not horde property and money, which is bad for everyone. 

Why does everyone target people that earn wealth, but ignore those who are just given it? 

robgilmo

Barnezy said:

RaymondLin said:

Question, just this point... why single out a specific age of 22/out of uni age?  I know he said youngsters but we all know he meant people younger than him, anyone up to mid 30’s not just 22 year olds. 

OK, my brother is 27, earns £130k a year. He has no interest in buying a property yet. He's lived in Clapham, Wimbledon and now Putney. Just moved in with his girlfriend who makes simular money. Either see the benefit in buying yet, despite being able to afford to if they want. Also they are not serious enough yet to buy together. So for him renting is great. Lives in an £800K flat overlooking the Thames fot £2100pm. 

Opposite side of the spectrum I have a friend who is a barman in a top London hotel. Him and his Mrs earn maybe £80k pa combined. They are both 34. They rent in Angel because they want to live in zone 1. They get to live in a flat they could never afford, even at half its value. If they couldnt rent or they were competing with bankers to rent the same property, they'd need to live outside London and the commute would consume 35% of their earnings. 

Let's say for arguments sake landlords were made to sell their properties... that is only c20% of homes in the UK. Do people really think that is going to make homes more affordable? What are all the renters with no savings going to do? What are people with terrible control over finances and poor credit ratings going to do? 

Home ownership is at an all time high at the moment  c74%. Private landlords are at a 7yr low.

It's not landlords that are the cause of the high cost of ownership, its the number of people in the UK and therefore demand and low interest rates. 

BTW I'm renting our current place so we could get my son in to the school we wanted and decided exactly where we want to buy our family home. I pay less in rent than the mortgage on this place would be, can move whenever we want and haven't had to layout anymore savings. Washing machine broke this morning, WhatsApp the landlord to fix, not my problem. Its great! 

Our freezer broke a while back, landlord told us to dispose of it and they wouldn't replace it because they were doing us a favour by leaving it in the house for us to use, their broken dishwasher is now sitting in the garden beside their broken freezer, along with their broken shower door that they didn't want to fix.

ToneControl

strtdv said:

In a lot of Europe renting is the norm, people aren't interested in buying property in the way they are here.

I'd also point out that @Barnezy might consider a couple with pretax combined income of £80k to be "at the other end" from a couple with a combined income of £250+k, but in reality the couple on £80k are still in the top 20% of earners

not in London, average salary is £37k

crunchman

Barnezy said:

crunchman said:

High prices are bad for everyone except city fat cat bankers who make money off the ridiculous amounts people have to borrow to buy.

That's not true. 

High house prices are good for anyone who owns their home, which today represents are the majority c70% of homes. It also benefits people who will inherit property.

Wrong.

Most of them are paying out a huge chunk of their income on their mortgage.  They would have far more disposable income, and a better quality of life, if prices were lower.

If they were spending their disposable income, then they would be paying VAT, which would help everyone given the state of government finances.  They would also be creating jobs for the people who make and sell the products they are buying.

Everyone wins except the bankers who are getting fat raking in the interest on their mortgages.

stickyfiddle

crunchman said:

Barnezy said:

crunchman said:

High prices are bad for everyone except city fat cat bankers who make money off the ridiculous amounts people have to borrow to buy.

That's not true. 

High house prices are good for anyone who owns their home, which today represents are the majority c70% of homes. It also benefits people who will inherit property.

Wrong.

Most of them are paying out a huge chunk of their income on their mortgage.  They would have far more disposable income, and a better quality of life, if prices were lower.

If they were spending their disposable income, then they would be paying VAT, which would help everyone given the state of government finances.  They would also be creating jobs for the people who make and sell the products they are buying.

Everyone wins except the bankers who are getting fat raking in the interest on their mortgages.

Yep. Those who benefit are landlords, as someone else is paying that high mortgage. 

If you only own one house and want to move your house might have gone up in value in the X years since you bought, but so has the new one you're buying, which only leave you better off in cash terms if you downsize, which isn't the case for most moves.

There is a huge amount of capital tied up in property in the UK, which would likely be much more useful if it was invested and/or spent elsewhere in the economy.