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.

But there wouldn't be any private rentals without landlords.

Great. Let's be Singapore. Government built flats for sale at reasonable prices.

Private landlords, REITs and treating property as investment not a public service has produced global homelessness, poverty and social inequality. It is an incredibly bad thing for society and any individual not wealthy enough to join in. It's a massive global issue causing all sorts of bad things like youth flight from cities, social determinants of health to fall, the death of inner cities, environmental issues.

You're a teeny tiny cog in a massive behemoth of shit. Just because you don't have a global view, doesn't mean you're right.

And you asked so I have been a private LL, a social LL, a renter, an owner and everything in between.

In addition to the costs already outlined if you decide to rent your property, you will probably be liable for capital gains tax when you eventually sell.
I am a landlord, and the only opinions I am interested in are those of my own tenants, but you will see from the comments here that being a landlord is not a popular choice.
I have seen posts on other threads where some people think private landlords should let property at less than their actual costs due to the hope of future capital growth.
If you will just about be breaking even you will be putting yourself in a very vulnerable situation. You won’t be able to accumulate a buffer for even routine expenses - or find a tradesman who is willing to wait for you to pay his bill when you finally release your capital! There is no ‘cannot afford’ as the tenant is paying rent for a properly maintained and fully working property.
How would you cope if a tenant failed to pay and you were without income for the many months it takes to get a court eviction?
I have not asked any of my tenants to leave, as it will be hard for them to get other private accommodation, and they are not in any priority groups for social housing. If any of them leave of their own accord I will definitely be selling rather than re letting.

As opposed to now where millions of people who want to buy can’t afford to buy, including a whole generation, partly due to property hoarding. Yes god bless the landlords, poor them

Good, they should sell up. If they don't have enough capital that they have to hike people's rents by such huge amounts to cover the mortgage with only one month's notice then maybe they shouldn't be landlords. My landlord increased my rent from £750 to £1050 after I had been there for 6 months and gave me on month of notice. Absolutely outrageous. I have a wonderful landlord now who has written it into my contract that rent will only go up once a year and never by more than 4%. So yes, there are some good landlords out there, but I don't have an issue with some having to sell up, because nobody has the right to property and that's just life.

Good. I hope you lose all your properties and have to rent, then see how much sympathy you have for people like you.

@MrsTerryPratchett I agree with that too- I guess I was just trying to find a balance on my post !!

That's what Denmark does too- social rent allocated flats for 20 somethings and it's up to you what you do with it then so long as you keep paying the rent - some of them are lovely too

@MNisMyGuiltyPleasure - the problem is, you don’t actually want it balanced, because the situation is now more balanced, having been in favour of landlords for a long time. You want things back more in favour of the landlords again. What you are failing to acknowledge is that the proportion of bad landlords is just as high as the proportion of bad tenants, but that, when it comes to power discrepancies, it is the tenant who is in a more vulnerable position - they need a home - whereas the landlord merely has an asset from which they wish to profit, so that must be taken into account when deciding where the “balance” lies (along with the fact that the law is a blunt instrument, not a speedy, cheap, accurate way of establishing who is definitely to blame for any landlord-tenant disagreement). It should not be easy to make someone homeless. Sorry if that doesn’t suit, but that is not because the law favours tenants too much, it’s because there is not enough adequate, affordable housing of any sort on offer. We have a housing/homes and general affordability problem in the UK, not just a landlord-tenant problem.

Is it the case that evictions are taking a long time because of backlogs and delays in the court system? I worked in homelessness prevention until about 5 years ago, and evictions were much quicker than "months" then. If the problem is court delays, that's the fault of the government, not the tenant. As is the lack of social housing, which leads to people being told to stay put until they absolutely have to leave, or be deemed intentionally homeles, at which point the councils no longer have to help them.

And the requirement for maintenance is to ensure that landlords don't do things like sabotage water supply or heating to force tenants out, which was not unusual in the 60s/early 70s.

Landlords in certain markets are finding themselves squeezed. They tend I believe to be the highly leveraged investors in the poor quality low rent space, who nickel and dime repairs etc because their margins are so tight.

I have a small portfolio, half mortgage free. The other half is 50% LTV mortgaged on fixed rates till 2025. I have small flats in modern purpose built blocks rented by young professionals who earn enough to pay a four figure rent. They are in high demand - I had a 24 hour turnaround just this week between a tenant giving notice and a new tenant putting down a deposit. This type of tenant doesn’t tend to trash the place and moves on relatively quickly. Because I’m in this market, and financed in the way I am, I can still make a decent return.

This is the thing, I have no issues with landlords who actually look after their properties. My current landlord is wonderful and I don't know where I want to live in the future, so I don't want to buy and am grateful I can rent. My last landlord refused to fix anything to the point that even the letting agency were contacting me to apologise and started searching for another property for me before they took the landlord off their books. Based on years of renting I'd say most landlords fall into the latter category.

My Facebook feed is full of posts of people literally begging for accommodation. Students could not take up their places at university as no-one will rent to them now.

This has more to do with the rapid expansion of certain universities than landlords exiting the market.

For example, in Bristol, the student population was
2001 - 25,573
2011 - 35,638
2019 - 58,100
University of Bristol in particular has undergone a big expansion, but UWE has got bigger and you've got new providers like Uni of Law and BIMM too.
Source: www.bristol.gov.uk/files/documents/1946-population-of-bristol-december-2021/file

By all means blame higher education policy for a shortage of student housing, but it's got far more to do with increasing demand than reduced supply.

I completely agree. I have had many horrendous years of renting and what starts off all lovely and rosy inevitably turns sour with landlords bodging things up, or just not doing anything and then deciding to keep the deposit even after you have looked after and cleaned the property before vacating.

But after 20 years of being trapped in the renting sector we have finally managed to escape!! We have a shared ownership house..only a 2 bed but it's affordable. The only issue is the rent does increase by over £100 per year but I accept it could be so much worse.

Yes I always react quickly to requests for maintenance etc and I have a good management company (which gets nearly 15% commission!) who are proactive. I know that this may not be the experience for all tenants!

Landlord here (and not looking for sympathy either). Currently subsidising my properties to the tune of £1k a month, but in 15 years have never made any money, and lost £60k on one property.

I try and be a good landlord and would happily get rid of all my properties, but they are all flats in blocks where there is cladding/fire safety issues so I can't sell them. I put rents up for the first time ever this year, and I've had some tenants for a long time, but I didn't raise the rent more than 4% on any of them. Increasing costs aren't my tenants problem, they're mine.

I did sell a property last year I'd had for 12 years, and sold it for £1k more than I brought it for. And made about £500 a year off it for the time I had it. Thems the breaks.

I don't know how people with mortgages on rental property make any money on it to be honest.

For those who have a buy to let mortgage even if they don’t make so much money now on rent they still end up with a considerable asset paid for by rent over the years.

Buy to let mortgages only became widely available in the 1990s after government changes to banking lending regulations. They benefit the few who can raise deposits at the expense of many as contributes to pushing up house prices

If all buy to let landlords sold tomorrow there would be insufficient rentals. What govt need to do is build more social housing and so buy to let market can slowly decrease. A really enlightened govt would also give money to councils to buy buy-to-let’s when sold and convert to social housing. Govt pay so much in housing benefit to private landlords they would get the money back eventually and people would have affordable, secure housing. However, govts up until now haven’t wanted to slow down our inflated housing market.

2But after 20 years of being trapped in the renting sector we have finally managed to escape!! We have a shared ownership house..only a 2 bed but it's affordable. The only issue is the rent does increase by over £100 per year but I accept it could be so much worse."

Hopefully you don't find shared ownership to be the worst of both worlds........

If you are an accidental landlord and have one property with a 25% mortgage, then the money in a building society is going to earn you more in interest without the work of letting the property out, paying agents fees, paying for certificates, insurance etc Therefore landlords will sell up and place their money in amore efficient way of returns

Some people saying it won’t help people looking to rent - Surely if more LLs are selling up and property for sale supply increases then prices will fall and more FTBs will be able to buy their own home. That will improve the availability of rental properties because the FTBs will free up accommodation as they are commonly in rental properties? Am I missing something as it seems like good news?

I own so no skin in the game really. I rented in my 20’s through a few landlords and it was fine. I think there will always be a strong rental market of young adults who are happy to share and want to be central.

I do think there needs to be a lot of investment into affordable housing. People need security of tenure when they have dc etc. Also it makes no sense for the government to pay vast amounts of money to private landlords through housing benefits/ housing element of UC far better for them to invest that money in their own housing stock.

I don’t resent the fact my landlord profited off me. It’s a business not a charity

As an HMO owner, I pay all the bills for the house out of the rent the tenants pay. When I have a non-paying tenant I still have to pay all those bills, and I’m not allowed to do anything that would negatively impact them, such as changing the wifi password or cancelling the cleaner. Took 9 months to get rid of the last one and I couldn’t get anything out of him through the courts as he declared himself bankrupt. £450 per month for an en suite room in a fully refurbished house including all bills and a cleaner once a fortnight, and all maintenance, repairs and furniture replacement done promptly - I’m not making a huge profit, but I’m only making one at all because I don’t have a mortgage.

I’m not really seeing a lot of HMOs on rightmove at the mo, although there was definitely a bit of a flood of them last summer. I guess some landlords anticipated the interest rate rises and decided to get out while property prices were high.

I recently decided to sell my main home and have moved into what was once my rental property. I see no real upside in owning BTLs any more. It must be one of the few businesses which is taxed on earnings rather than profit. Coupled with GCT, it's no longer compelling for your average "accidental landlord".
My tenants were paying £1k per week. There is now such a dearth of high quality rental properties in the area that they have moved to a property and seen a rental increase of 30%. They told me that they had no bargaining power whatsoever as 5 other families also offered on it.

I understand to an extent why George Osborne made the decision he did wrt tax implications on BTLs but it seems he didn't think about the most basic economic theory ie reduced supply and static demand = higher rents.

My former tenants are high earners, they can afford the hike but ultimately there needs to be more public housing built to house the vulnerable.

Prices will never go that low.

If you earn £30k like my tenant and can get a mortgage for £120k and maybe have a 20% deposit you can spend £150k. First time buyer homes like my BTL are worth £300k. They’d have to drop £150k for them to buy it. That will not happen.

Instead rents will just climb due to shortages of property.

It's not about immediate profit though, meaning the income vs expenses if you have a mortgage. It's the long term investment. If you own outright you will make a profit. If not you may make a loss but you will gain equity and the house will probably gain value so when you sell it you will profit. A lot.

Government should have restricted rental prices a long time ago.

I'm not a landlord btw!

Poor landlords! My tiny violin weeps.

Not here though since landlords buy u everything so FTB's like my niece and nephew cannot get on the bottom rung.

Hope it's true and then FTB's can buy the bottom again. Probably more to do with interest rates going up and some have taken out big mortgages to buy lots of properties to rent out for a killing,,,,,

@PermanentlyinUAT

Tenants paying £1000 a week in rent - what the heck and where was this property. Ridiculous amount of money for a landlord who basically does very little for it.