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.

Well one presumes your brother pays an agent as he doesn't want the bother or finds it too difficult.

Yes, he doesn't need the hassle. Pays 8% to the agency. He's paid off the mortgage so gets the income from the flat on top of his monthly wage. Gets an accountant to work out his tax on the flat. Sounds great to me...

You can do all that with an investment portfolio and not be hoarding a house. Just saying.

So you give your money to other people to hoard houses on your behalf

No?

The private rented sector is valuable part of the housing mix, but it needs much better regulation. I would not shed a tear if a fair few crap small time landlords were pushed to leave the market and found an investment more suited to their abilities

The issue is the legislation is affecting those good landlords who are trying to comply with all the new stuff coming in and because it isn’t then profitable they are the ones who re selling up.
The crap or slum landlords won’t take any notice of any of the regulations and so won’t be affected by anything

Very soon there will be only crap or slum landlords and big companies who have on their board or pay consultancy fees to the very people who strangled btl with their legislation

The U.K. now doesn’t operate a free market where property is concerned.

We'll probably sell two rental flats which we own when the current tenants give notice.

Taxation on turnover rather than profit has had a big impact (no judgement on that but it certainly changes the maths as it was intended to do, and favours landlords who want to operate through limited companies). And I'm guessing that an incoming Labour government will regulate/reform further (no judgement on that either, something needs to be done to the dysfunctional housing market, it just makes more sense to put the money elsewhere before it happens).

Rents have absolutely gone through the roof of late (we've never been shy about getting the maximum the market will bear each changeover, but fair play to landlords who don't).

@BanjoKnickers - why are you paying tax on turnover? Are you not deducting expenses? You can deduct expenses for your repairs, maintenance, insurance, letting fees, accountancy fees, legal fees.

If you are talking about the mortgage interest, if you are a basic rate taxpayer you are getting the same amount of tax relief on mortgage interest as you were before. If you are a higher or additional rate taxpayer you are still getting approximately half the same level of tax relief as you were before.

Hardly taxing turnover.

Hi @ChilliBandit , yes I was being a bit rough-and-ready with terminology. Our major expense is the cost of finance which in most businesses is deductible in full. Unincorporated landlords paying the higher rate are no longer entitled to do that, which usually makes it more attractive to invest elsewhere (which I think was the reason for the change).

I'm not very much engaged with landlord "chatter" but I think it's a common reason for a move out of BTL. (And as I hinted above, I don't have strong feelings, I think it's a fine to use tax policy to encourage and discourage investment here or there, and it does seem to be working.)

It’s not playing “rough and ready” with terminology. It’s purposefully using wrong terminology to make residential landlords look more hard done by than they are. If you run a business I’d hope you’d know turnover is very different to profit.

Very few businesses are dealing in a finite essential resource on a small island. It makes sense they have additional burdens.

Yes, good points @ChilliBandit

Councils won't build new properties as its "dead" money as they won't get income in return.

HAs are now building more than ever. But remember up until Theresa May's govt, HAs were capped on how much money they could borrow to build meaning building was slow. May removed that cap, but then we had covid etc so it's all still slow.

Private LL bridge the gap between those that cannot get a social house and those that cannot or don't want to buy. If LL were all decent, there probably wouldn't be the hatred. But there are too many LL who won't effect repairs or act without any honour and decency which turns people against them.

But, there will never be enough social housing to go round. The population is increasing, mostly by the elderly or the low/unpaid. Meaning the shortage of low cost housing will get worse.

There is approx 1.6 million council properties and each council has 12,000-20,000 people on waiting lists. Some areas, like Tower Hamlets have twice that.

We need private LL, but we also need a system whereby people who want to buy a property can do so!

But LL should not hide the fact they are in it for a profit, pure and simple. Not to provide a service although they invariably do, but because whether that's a monthly profit or a profit from equity when sold the fact is you are in it for the money. Don't pretend otherwise.

@MooseAndSquirrelLoveFlannel A lot of councils very much are building new housing for rental now - I can think of several in my local area alone that are very actively building (I work in a related field). They often get grant funding from homes England to help finance the build costs.

However, I do agree with you that decent responsive private landlords are very much in the minority and most invest far too little in maintaining their properties and seem to think owning an investment asset should come at no cost

We rent out 2 properties. We didn’t BTL. DH already owned them. Absolutely not much money being made as rent where i live averages £700pm. After tax, insurance, saving for maintenance etc there’s not much left.

if it was up to me, id sell both. Not worth the hassle of tax returns, that isn’t working, that isn’t working (im talking silky things like lightbulbs etc). I really hate it

but i can see why DH wants to keep them as they are there for the kids

Councils won't build new properties as its "dead" money as they won't get income in return.

I presume central government could give councils the money to build social housing. This would surely be cheaper in the long run than the housing benefit govt pays to private landlords.

This is encouraging to hear. Has this increased in recent years?

Yes it's a fairly recent change

Do you also begrudge supermarkets for making a profit on basic necessities?

Supermarkets make a relatively low % profit compared to many other businesses

I think everyone begrudges the recent news from Shell, however, that they're making $40 billion per year in profit on basic necessities, while so many struggle to hear their homes.

Most LLs, don't make much profit, if any, until they sell the property. And that is such a long-term game that by then the value may not be as high as initially thought, they may need to sell, early, etc. It's a business - there are risks, fine. But the fact that you say that it's OK for supermarkets to make a profit on a basic necessity because it's low % profit is absurd. It's the principle - it's either fair or not. And, in addition, LLs' immediate profit (like supermarkets') isn't high either.

What about corner shops who make a lot more % than supermarkets.

Food is not as limited a resource as housing. There are lots of options when it comes to budget and requirements. You can for relatively low cost even grow some of your own food if you have space. I also have an issue with supermarkets paying their staff so poorly that full time workers still need tax credits etc, whilst the supermarkets make big profits.

I can’t however imagine a shop owner, big or small coming here to complain that they are providing a public service but aren’t getting enough help from the government to boost their profits. I too would tell them to find another business then.

Obviously you have no idea how little buying power your corner shop owner has 🙄 compared to the big boys

Not self employed then are you.