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.

It’s a good time to buy if you’ve got cash because the rental prices are going up and there’s very little risk if you buy in a popular area.

What I wonder about is who’s buying all the properties that are being sold? In my area, Chinese cash buyers are buying up the properties but I don’t know if they’re buying in less popular areas. If they’re not, then surely it will be very difficult to sell and the property prices will drop.

I’ve just sold a property because even though I could charge more rent, if I was refused a new mortgage deal I wouldn’t make any money.

People shouldn't be able to own more than one property. Prices are scandalous as is, then property passed through generations, or profits from. Things are out of hand. Zero, zero sympathy.

Oh it’s my only property btw.

Zero sympathy for people that hoard property. Good, hope LLs do have to sell.

I agree @MNisMyGuiltyPleasure it can be highly stressful when you feel a hostage to the tenant’s incompetence or even dishonestly and don’t really understand what is going on. I had a tenant who was newly divorced- literally couldn’t change a lightbulb, would text me “ the light is broken can you send someone to fix it”. Or gummed up the ( new ) cooker so badly with all her frying the ignition no longer worked, so she demanded a new cooker . Generally I allow a few “ strikes” when they move in but if the demands don’t settle down I start to ignore them / have a word/ put the ball back in the tenants court. I have had some very practical and resourceful tenants though, who can troubleshoot minor issues themselves like rehanging a curtain pole. That’s always nice.

Re the monthly profit: there used to be some years and years ago. And why not? Many forms of investment offer that. But for many people becoming a LL was 'easier' than learning about stocks and shares. And safer. I don't see making a profit through a business an issue. Because being a LL is a business.

However with things changing over the past few years, most LLs are breaking even (like me) or losing money. And that's what's driving them out of the market. For those of you saying it's good the number of private rentals drops, is it because you really think the government will step in and build more affordable properties (yeah, right)? Or because you have forgotten that not everyone is eligible for a suitable property or financial support? And what about people who don't want to buy because they are somewhere for a limited length of time (or whatever other reason many people rent)? Where would they go without private rentals available?

The problem isn’t landlords (although I’ve suffered with some dreadful ones). The problem is lack of housing supply to adequately house the population. It’s far too hard to build (and build quickly). Hardly any councils can demonstrate good 5 year housing supply. Unless this gets sorted the problem will only get worse as everyone is fighting over the same small stock which drives up the price of everything.

Where do you expect people to live who don’t want to buy

We're not going to agree on this because I think that the way private renting works is hugely exploitative regardless of if it's small or big businesses. I also think landlords have gotten used to it being very, very easy money.

If the system isn't working for you or tenants now, maybe there's a chance there will actually be change. If so, it's great news.

Homes shouldn’t be part of an investment portfolio- I don’t care if you inherited it, it’s your pension, you’re a good landlord, you only have one-
i don’t agree with it!
Also costs have gone up- suck it up! I can’t pass on the costs of my home going up.

Housing associations are buying up around here.

Something will have to give - it must be terrifying renting at the moment. The rents around here have jumped massively, and there are huge numbers going after each property.

It’s very tough. My best friend is an estate agent, when she was here a few months ago she was saying she was busy as loads of people had handed in their notice as landlords had to up the rent. She came round again last week I asked her how it was going, she said 9/10 of those who gave notice actually asked to stay when they realised they couldn’t find cheaper elsewhere.
It’s expensive for everyone. Something needs to be done!

Also costs have gone up- suck it up! I can’t pass on the costs of my home going up.

Do you also say this to the trades you hire to fix things in your home? Or to the supermarket where you go and buy food? Or the petrol pump where you fuel up? If not, why not?

Because you reap financial benefits in years to
come when you sell, you want to
make a monthly profit on top.

The government changed rules on taxation for LL so instead of paying tax on gross profit minus mortgage interest rates (which are a legitimate business expense) they make LL pay tax on gross income, so the money they are paid in rent, and they have to suck up costs of mortgages. Now only those LL in a limited company will be making much profit. Smaller LL are ones selling up this year to avoid paying more capital gains tax if they sell from after April.

Also could say to you, why don’t you pass on the cost of your food bill to your tenants

I don't rent my loaf of bread off tesco though do I? I dont have to give the fusebox back whenever the sparky feels like it.
None of those are comparable.

I work in commercial property (and am a home owner) .

I think what frustrates me about so many residential landlords is they have been utterly naive about their investments and seem to expect them to never cost them any money. It's madness if fairly small interest hikes mean they have to sell, they clearly didn't get their budgets right in the first instance.

I am seeing friends who are being made homeless because landlord are now selling for this reason and it's infuriating. Any sensible investor would have modelled predictable interest rises (and void periods, repair costs etc) before buying.

And I hate that aspiring first time buyers are often treated so badly by the very category of people who are keeping those first time buyer properties out of reach.

I would like to see a much more regulated sector with a lot more protection for tenants

All these comments about landlords barely breaking even or losing money do seem to miss the point that the landlord will ultimately own a high value asset that can be converted into cash. Yes that sale will be subject to CGT, just like most other investment products, but ultimately it is an asset. Historically property has appreciated in value and, while that is currently a little slower or marginally reducing, we are not seeing a crash. So my sympathy for hard done by landlords suffering from all those awful tenants rights is somewhat limited.

I’m in the same position. Mines mortgage free, don’t want to put the rent up as I’ve a good tenant and I tell them it’s their home but my bricks and mortar.
its fair easier to have a good long term tenant than lots of difficult ones. (I’ve had my one that didn’t pay eight months rent, courts were less than useless). Leant my lesson, got an agent and lots of insurance now but that all adds to the cost of renting out property.

LL often slated on here, I was an accidental LL, keeping my ex home gave me a way to step out of my then new relationship if it didn’t work out. Ongoing it’s still my insurance which when you read some of the posts on here I think is prudent to keep when you see what can happen to women when their men decide a newer younger model is more desirable.

unfortunately we are unlikely to see good stories of landlords because it doesn’t make as interesting a read as all the horrendous ones.

I am an intentional landlord. I don't like the phase accidental landlords - sounds like it hasn't been thought through properly.
Anyway we're retiring this year, we have several properties and are going to sell one after the other over the next 10 years to boost our retirement fund and secondary because we don't want the hassle when we have retired.
Before we just kicked them out, we asked if any of the current tenants would consider buying and luckily one lot did, a couple of ftb who are saving up to buy anyway. They love the house and have two dogs so don't want to rent anymore because so many landlords refuse pets. So it's a win win here. We aren't all cunts.

But they aren’t paying the mortgage- most BTL are interest only. The landlord still
owes the full mortgage at the end. The only gain is any increase in property value. So if there’s no profit on the rent there’s really very little motivation to do it.

It's a common choice with landlords because of the likelihood of a monthly profit, even renting out at the going market rental rate, in addition to any likely profit at the end of the mortgage term. It's splitting hairs, because they are paying the mortgage for you until you decide to sell, etc.

Genuine question, what is your desired outcome with this?

State ownership of property? Who pays for the purchase? The upkeep? Onus on the state to pay? Spare cash?

Not all landlords are Champagne swigging millionares. Many are people who saved, and invested in a property as part of their retirement as they do not have a pension.

The focus shoule be on ensuring the rogue landlords are held accountable, and the decent landlords treated well. They are providing a much needed service.

I have spoken to too many people this year, who have been handed notice, as their landlords are selling up. They are then on the social housing ladder, and we all know what a lottery this can be. Families been in the same house for years, now being served notices, as the landlords can not financially keep the houses any more.

The governmen has eroded any benefit in having a property as an investment, the argument as to whether this is moral or not, is apparent in the issue it is now casuing.

The next few years, is not going to be pretty for social housing lists.

Yes, SO MUCH better for the super wealthy 1% to own everything and middle of the pile people have no chance of supplementing incomes with moderate investments in a rental property 🙄

Background: I have rented privately, then owned my own one bedroom place for three years which I then rented out for a year while I moved in with my partner to make sure we were compatible living together. We now own a mortgaged property together (sold one bed when we did this).

I barely broke even when I rented my place out. No way could I have operated that for a profit even where I am (south east). I get why some landlords may be selling up. I suspect this hits accidental landlords harder than those with a portfolio of properties without mortgages. I treated my tenant like I always wanted to be treated, and in return they looked after that property and handed back in immaculate condition. I was lucky.

However, it took me until my mid 30s to get on the property ladder where I am and without private rentals I’d have been in trouble. I wouldn’t qualify for social housing and have a decent job but couldn’t get mortgaged until I’d saved for about 12 years.

I don’t know what the solution is but we need a balance of enough properties for young people to buy and enough rentals for those of us who couldn’t buy for whatever reason. We obviously need a stack more social housing than we currently have.