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.

Because you're out on your own there mate. Because extra-judicial summary eviction by landlord is not an appropriate remedy for debt. Because!

Let the market regulate itself

Ban interest-only mortgages and ban foreign property ownership.

Those who can afford to become landlords with minimal or ideally no leverage can do so (and hence there would be no talk of 'hoarding' properties - what does this even mean?)

Put in place sensible minimum standards for property maintenance and swift eviction for arrears.

Operate a minimum stock of social housing for those in real need

You know, the simple, old fashioned way. I can assure you than in no time rents would come down and there would be no need for landlord punishment or vilification

Debt is very rarely recovered even after months of waiting for the eviction process to complete

I don’t think it’s strange to believe that housing doesn’t owe anyone a profit.

Let the market regulate itself

Ban interest-only mortgages and ban foreign property ownership

Let's start by spotting the contradictions in the first two sentences of this plan!

You're keen on libertarian unregulated markets. The market accounts for this. Credit risk is well-known and easily allowed for. You need to minimise it, price it in to your business plan, and if it renders the business plan unworkable don't get involved.

As landlords our strategy is to minimise the credit risk by operating in sectors of the rental market less prone to problems and we get guarantees as watertight as we can from property owners.

I bet if the government suddenly started increasing taxes to compensate LLs for missed rent payments, you wouldn't be to happy as it would suddenly be your money paying for those tenants. So why is it fair LLs should pay?

They shouldn't, but the remedies for the enforcement of debt has to be by proportionate measures. Thankfully summary eviction for debt went out at about the same time as first world war.

As I explained in an earlier post, the difficulties of of credit control and debt enforcement are not exactly a state secret. If you think the risks outweigh the rewards then you should not be by in the residential letting market as a landlord.

Housing associations have to make a profit to buy more property. Our council threw in the towel as landlords and handed their housing stock over to a quasi charity/company 20 years ago. They've romped away, buying, building, refurbishing and evicting the worst tenants. The directors do earn big salaries compared to council housing officers but they get things done.

P.s. in many ways I think you and I are saying the same thing.

In my opinion most landlords massively underprice credit risks involved in residential letting. As an investment it isn't worth the candle at the lower end. Handing over a capital asset worth many tens of thousands of pounds, and taking a substantial risk on the non-payment of monthly rent, is a big gamble.

The difference is that I would not touch that end of the market with the barge pole. If a landlord does think that the risks are worth the rewards and they have a strategy to make it profitable then good luck to them! But they should not come complaining if it turns out that their calculations were mistaken.

@LauraNicolaides I am because I'm insured up to my eyeballs. Because it would not take much to be out of pocket by thousands and thousands of pounds in missed rent. And, as much as you can plan and put measures in place, unless you are a commercial LL or one with a large portfolio to spread the cost vs profit, you don't have that kind of cash lying around to subsidise non-paying tenants. Hence the insurance.

If you think the risks outweigh the rewards then you should not be by in the residential letting market as a landlord

The risks and rewards that indirectly determine who is willing to enter the market are shaped by legislation, and that's what should be changed

The difference is that I would not touch that end of the market with the barge pole. If a landlord does think that the risks are worth the rewards and they have a strategy to make it profitable then good luck to them! But they should not come complaining if it turns out that their calculations were mistaken

No, the problem is that many landlords entered the market years ago and the goalposts have changed

@MNisMyGuiltyPleasure a couple of people tell me this all the time. I've no idea why. Their pension plan is their business I don't give a shit if it's not working out because I have my own future to worry about.

IME most people who have a buy-to-let flat see themselves as performing a humanitarian act akin to donating a kidney or going "above and beyond" as you say.

Inspired by your post I might pluck up the courage to tell them I don't care next time they start up In the meantime would you like me to bore you with details of my personal finances and how I believe I am delivering a vital service by keeping the economy going all by myself?

@thehorsehasnowbolted Banks should be able to repossess houses instantly if anyone has more than two months of mortgage arrears. Fair no?

Of course not!

People can and will lose their homes for persistant arrears, whether they rent or own with a mortgage. But luckily most private organisations and regulators feel that there should be a little more due process than immediate eviction after 2 months

Not read whole thread but as small landlords sell up, insurance companies and unis are buying up in our area and funding new blocks of flats which are all rental...4 huge towers going up soon and funded by insurance company.

It's likely insurance companies will be benevolent, charge below market rates and treat tenants with compassion...

the completed blocks are already let out, rent is appx 100 a month below market average so not much cheaper but are offering one year contracts....the other group building huge blocks is L and Q housing association but they have a terrible record of ignoring repairs etc, most regret buying off them under the shared ownership plans.

I have been a landlord and would never be so again. The risks are now far too high as are the costs. I probably made about £13k in one year on a 4 bed property. It would have been easier to earn that in a weekend job tbh with a lot less risk and pain!
Great if you are ok with that but many people are not.

When my parents let a house out years ago to people on what would now be housing benefit the government paid the rent. Was so much better for everyone imo. My parents were guaranteed an income, the tenants were guaranteed a property and no need for my parents to sell up with their guaranteed income. After the benefits systems changed rents eventually had to factor in non payment and damages.

Unite DS halls of residence 954 rooms let for 42 weeks. Turnover £7.2 million Three years ago £6 million,. It's not a bad return.

We have a local Welsh builder who went into student accommodation years ago. They're now huge in the construction market. You've got new tenants every year, fewer arrears. Redecorating annually is an overhead.

@thehorsehasnowbolted

Everything that needs money spent is pretty contentious and can go either way depending on the solicitors.

What weekend job is that?

@TheGander I think rents should be paid direct too - I suspect one reason they aren't is that for a lot of private tenants the allowance they get is nowhere near the rent due. So a landlord would end up getting 2 payments in

I've already mentioned insurance companies- we have a nice legal and general built block here in Bath- they allow pets etc and tenancies are flexible but secure- however- they are at market rate! My own view is offer huge tax incentives to these big corporations to let at 30% below market rate or even at social housing rates- provided they can't sell for 10 years and with 6 months notice to a tenant

I bet they don’t.

They aren’t a charity, they answer to shareholders, some of whom are those people who are up in arms about landlords renting places to make a profit.
They are quite happy to profit from renting properties when it is where their pension is invested. But other people renting so they have some sort of pension then that for some reason isn’t acceptable to them.