Landlords are selling up in droves

[MNisMyGuiltyPleasure]

I am a landlord. Not full time but I have a couple of flats I let out. I have been for many years and bar twice, have always had good tenants. I am still friendly with a few of them who moved out to buy their own place, in fact. I go above and beyond what's expected of me because I want my tenants to enjoy living in my flats. However I am getting more and more concerned about the hike in costs related to letting properties. This has already started driving many, many LLs to sell up, with the result that the number of private rentals is dropping, driving rents up. And I'm serious thinking of selling up and finding somewhere else to invest my pension.

This morning another landlord shared this article www.property118.com/property118-founder-selling-his-best-property/ and this started a conversation about the risks of letting, which are only making more people get out of the lettings market.

So to all those people calling landlords greedy, and saying they shouldn't put rents up: if they are, it's likely they are because their costs related to letting are going up, and they need to cover themselves to meet additional costs should tenants not pay (cost of living or whatever other reason). My accountant last year told me to assume I will only make money from my flats when I come to sell them, and to budget to break even at best until then.

I get that shelter is something everyone should have, but please don't blame landlords for the hike in cost of private rents. Because if they all left the market (which may well happen at some point), the situation would be worse, not better, for tenants.

I am sure I will get a few people to flame me for the above, of course. If they do, I'd love to hear if they are renting, letting, or if they own their homes.

So people who are retired are also greedy scumbags?

On a related note, personally I believe that going forward smaller LLs will be squeezed out of the market by developers and 'professional' LLs as both can buy at higher prices than smaller LLs. But they then charge higher rents because they can afford for their properties to sit empty. And because they are more difficult to get hold of for tenants than smaller LLs, tenants will actually be in a worse situation than they are today. FWIW, my tenants send me happy christmas cards!

@MNisMyGuiltyPleasure you sound like one of my old landlords, that i had a great relationship with over the course of a decade.

After about 3 years of me being in the property, we spoke and he offered to split the agency extra between us and cut out the agency.

After 10 years they wanted to sell, i moved in with my gf at that point. No issues over the deposits, they redecorated, replaced windows and sold it on. Actually they offered me a great price if i wanted to buy it, but i don’t use property to create or maintain wealth.

From my perspective, you get great tenants and landlords and sadly, awfull ones too. I know quite a few landlords who are selling up with the accumulation of changes and expectations, and all are decent people, but i can’t say if they were good or bad LL.

I do think there needs to be a decent rental market, but I think perhaps that we are increasingly a nanny state with more people requiring assistance than ever and it’s now an expectation that the state will assist - and thus i think bad LL’s have created an industry problem and thus the legislation followed. I dont see this changing any time soon. There is also the socio economic issues that improve when you have a nation of homeowners, so i can’t see that getting anything other than more support by virtue of making it harder for the smaller LL to turn a profit. And finally you have the small town issue where second homes and BTL’s to the locals has affected prices.

Ultimately, however you ended up being a LL, no matter how small a portfolio any LL has, it’s a business. So don’t expect regulation to ever get any lighter, or profits easier to make.

I did consider buying a few properties and renting them out - i’d be a cash buyer for them, but the more i dug into it, the risks were just too much and more importantly, there’s easier ways to make 6-10% pa - tax free.

Whatever you decide - best of luck - you sound like one of the good ones.

Ultimately, however you ended up being a LL, no matter how small a portfolio any LL has, it’s a business. So don’t expect regulation to ever get any lighter, or profits easier to make.

Don't expect rents to get any cheaper then.

Private landlords are not charities.

Imo, people that called for all the taxes etc and inability to remove people from your house when they trash it or don't pay etc are reaping what they sowed.

A developer built two blocks of rental apartments in Manchester. A Chinese consortium bought both off plan, sight unseen. Good luck bringing them to court if something goes wrong.

There's a lot of rentals coming on the market they're being hoovered up by overseas investors. The rental sector will continue to thrive.

University halls of residence, private developer. Son calculated the gross profit ate £8,000,000 for his two blocks in 2019.

Why is the idea of government building large numbers of houses pie in the sky.? There have been periods of huge government house building since the 1940s, it’s only in relatively recent years it’s stopped.

The trouble is that that isn't a bad run - it's about par for the course compared to friends, and it happened to someone who was a desirable tenant (student / young professional - until the last property when I'd inherited a dog and it got more complicated) and clued up about how landlord & tenant law works.

For those more vulnerable - low income, English as a second language, completely unaware of their rights etc etc it's so much worse.

I did look into suing the landlord but it turned out that charging the last month's rent at the start of the tenancy (rather than taking a damage deposit) was a very grey area, legally speaking. He actually told me he "couldn't be bothered with the paperwork of protecting deposits". The good news was he had no way of claiming for damage.

The regulations have to deal with the lowest common denominator - even if that means causing inconvenience for other, better operators. There are huge public safety issues involved - from gas to mould. By way of comparison, you don't hear restaurant owners complaining about inspections because my restaurant is clean, it's those other, bad restauranteurs that you need to be dealing with, but I declare myself to be good so should be subject to little regulation. But that's the sort of thing that many landlords are saying.

A ban on revenge evictions, an end to S21 (so often used in revenge evictions) and more money for environmental health teams to deal with private landlords would be a step in the right direction (and, in my fantasies, putting landlords who paint over the damp in the stocks in the town square while members of the public fire paintball guns at them, but alas that might have to remain a fantasy).

I think It is clear in many areas private rentals are becoming a scarce commodity. When a landlord sells up often their current tenants are finding it difficult to get a new place and often have to compete and pay more. Not in all areas but many.

if you make it too difficult for landlords then of course they stop being landlords. Or increase rent to cover costs and risks . And of course there isn’t enough social housing. It’s ultimately the tenants who suffer.

years ago it was a profitable thing to do, be a landlord, so tenants had rhe luxury of Choice and affordable rents. Those days are gone in many areas . People in many areas are scrabbling for rentals. Cramming themselves into too small properties as they can’t afford one which is more suitable.

Because the council lose both ways. They need the money to build. Then if the tenants are poor, elderly,economically inactive, the council don't get a return in rents, rates, etc. Councils are in financial troubles already with the services they provide. Our rates are mooted to rise another 10% in April. Our services to be cut again.

Their pension liabilities are enormous, they have to pay the police, fire service (ours want a 10% increase % this year)

Councils are skint

The fundamental difference between diamond engagement rings and housing is that one is a luxury, an entirely optional purchase, and the other is a fundamental necessity on a par with food.

I do find it ridiculous that people are so willing to buy mined diamonds over lab grown diamonds when the latter are so much cheaper and more ethical (environmental and social impacts of mining can be huge).

Councils are skint because of government choices

From selling off council homes to tax rates and tax distribution

A mistake small time private landlords often make is thinking they are "investing" or creating a pension. First and foremost if you are a private landlord you are running a business and what is more you are running a business providing an essential service. Therefore you fund it adequately, you comply with the regulations and you properly plan for risk and ongoing expenditure.

If you want an investment that provides a passive monthly income do not l, for the love of god, become a landlord.

The trouble with national or local governments building housing is that it requires long term financial planning that goes well beyond the 5 year election cycle.

At the moment, councils are paying out £££ in rents to private landlords via the housing element of UC but never see a return. Of course, on each years accounts this is the cheapest option and doesn't involve the opposition lambasting them for running up debts.

If, for instance, and I use these figures as an example, a council is paying out £10k per year in benefits for private rented housing, they will be paying that sum forevermore. Or - they could spend £150k building an equivalent property to house the same tenants. It's a big outlay but cost neutral in around 15 years, and at that point the costs of housing those social tenant are maintenance costs only forevermore. But, in 15 years, at least 3 elections will have happened and it will probably be the opposition in power reaping the political rewards for their foresight and planning.

It's also a little known fact that Thatcher banned councils from building more social housing with the money reaped through right to buy. I believe there are / were also rules preventing councils going into debt to create more social housing. The destruction of social housing in favour of private landlords was a deliberate political choice by the Tories.

Funny how nobody ever mentions that BTL first mushroomed under Labour, after Gordon Brown’s raid on pension funds helped to reduce people’s faith in them - plus, more importantly, mortgage interest tax relief was scrapped for BTL, but not for owner occupiers. Which was grossly unfair.

I can only think that the Labour govt. reasoned that a mushrooming of private landlords would reduce - or absolve them from the need to provide enough social housing.

Plus, while still complaining about the fact that Thatcher introduced it, they had 13 years in which to abolish Right to Buy, but they didn’t. Could that possibly be because they thought it would lose them votes?

Please don’t anyone bother accusing me of being a Tory voter. It’s always a toss up between Tory and LD here, so my tick has gone to LD for decades.

mortgage interest tax relief was scrapped for BTL, but not for owner occupiers. Which was grossly unfair.

It's not even slightly unfair, much less "grossly". An owner-occupier's house is their home. A landlord's rented-out or empty house is a financial asset. They are completely different things.

So what is wrong with investing in a house to give you a income as opposed to investing in a big company that makes its money doing pretty much the same

I suspect most of those who think that landlords are greedy and no one should be making money off people with property have pension plans invested in companies who do just that

People don't like private landlords as a a substantial minority of them are quite shit. Random low level investors who often have little idea of what they are doing, are often woefully undercapitalised and seem to regard tenants as a nuisance rather than the entire point of their business.

This is why people get enraged by the term "accidental.lanord" there is othing accidental about choosing to start a business that provides an essential service to people.

Then perhaps central government need to look at how they are allocating resources and perhaps stop prioritising their friends over the needs of the country.

100% this - although HA can use the money from right to buy to fund building, not sure about councils.

Because the council lose both ways. They need the money to build. Then if the tenants are poor, elderly,economically inactive, the council don't get a return in rents, rates, etc.

These same tenants need to be housed and the government will pay one way or another.

They'll either be paying the housing element of UC to a private landlord, or they'll be covering costs of housing they built themselves.

The council tax reduction or exemption will apply regardless of whether they're in social or private rented housing.

These vulnerable and economically inactive people just don't pop in and out of existence on the basis of housing policy. Their housing needs always cost money - the question is how that money is spent - with short term or long term goals in mind.

@Kennykenkencat. who knows what the difference is, but people seem to ignore large conglomerates that do it as they are hidden away but many people will know a landlord who has a property or two to rent out. Perhaps because the formed is a business and often run as that with new properties and the later is a retirement fund or inheritance thought, and not run as a business and older properties that need more work. Whats your thoughts on it?

@LastOfTheChristmasWine absolutely- it makes more financial sense for councils to at least have physical assets and paying out lower levels of housing assistance (when appropriate) than to be paying out for housing allowance to a private landlord.

They are building some council housing here in Bath now for the first time in very many years. Not huge amounts but they are ramping it up and for the first time in a long time (with a change in council control) actually denying student housing new build private developments- Quite rightly too

Sorry I should have clarified. I know many landlords have interest only mortgages so the profit will be on increase in house price. All in all i think buy to let mortgages have benefited the few at the expense of current potential ftb as buy to let mortgages have contributed to - not the only reason - inflated house prices. I would like to see less buy to let mortgages over time but I know more social housing needs to be built to replace shrinking buy to let housing stock.

Not listened to yet but this podcast series looks interesting on how Britain’s renters pay sky high rents for zero security. Even done a debate on do private landlords play any useful social function?

podcasts.apple.com/gb/podcast/crash-course-with-michael-walker/id1653753850