Are you a landlord? How do you find it?

[RainCloudsInTheSky]

We may have an opportunity to be a landlord but we are cautious about it. Does it take up much of your time? We would probably pay for the fully managed option so hoping it wouldn’t take up too much?

we’ve had a chat with estate agents and feel like we are understanding what is expected. Insurance has been recommended and I am yet to see what the cost of this may be.

would you recommend? Or wouldn’t do again? Interested in anything

Thanks all. Lots to think about. I’m so undecided. I would have a small mortgage on it. Roughly a 5th of the value of it. It’s a flat. Not too old. It has a decent kitchen and bathroom and is a good size. Looks like once the mortgage is paid and fees we’d be left with approx £550. We have a small buffer for any urgent work that needed doing but would aim to put that £550 away for a few months to top it up a bit.

Boiler is in good shape and fairly new. Asked estate agent what would need doing and there wasn’t anything. We would give it a lick of paint though but no major outlay.

The thing I worry about is if it’s all going wrong and we need to sell but the market has crashed and we can’t sell until it picks up. If it goes well that that would be great but if not I will be upset that I’ve ‘wasted’ my inheritance and have loads of stress.

You need to keep in mind that you need a buffer big enough that if the boiler goes - and they always go in the middle of winter when you’re not expecting it - you can replace it right away.

Its not like your own house where you can wait until the end of the month and just layer up and boil the kettle.

Lots of landlords complain that tenants expect “better than I have in my own house - I had to go five weeks with no hot water” and forget that’s because they’re paying for a service.

Also if your tenant stops paying you still have to carry out repairs and doing things like the gas service. I had to replace the boiler whilst in the midst of eviction proceedings for the nightmare tenant I had. Fitting a shiny new boiler for the benefit of someone who owes you 10k (thanks to the agents fucking up the paperwork there was a delay in eviction proceedings) really sticks but you have to do it.

Without private landlords there'd be an awful lot of people homeless - some aren't in a position to buy and rely on the private market as there's so little social housing.

Be angry at the Government not building enough social housing rather than private landlords who fill the gap.

Another thing to keep in mind is the emotional side because it’s a place you’ve inherited.

People might not treat it like you would.

One of the things I found difficult was passing by and seeing things that my Nana would have been mortified about.
It was also hard when the tenants wanted to change things that my Grandad spent ages doing.

You have to be emotionally strong enough to separate the “that’s my home/Nana’s home” feelings from the fact that it is your tenants home while they are paying to live there.

Its your flat, but it’s their home.

Join the NRLA and get clued up. Dont just leave it to the agent as sometimes they get it wrong but it is you who are responsible!

You'll need to complete self assessment.

Expect to replace everything much more often than you would yourself. Carpets, kitchen, bathroom etc

Be prepared for bad tenants but hopefully you'll get good ones.

Ive been a landlord for around 13 years and it can be stressful but it can also be very smooth when everything goes well and year on year the asset is generally increasing in value.

doesn't take much time if fully managed by agents, but is a bit stressful if something eg leak happens and you need to give the go ahead. and if you have a crap agent who doesn't pick up the phone!
wouldn't recommend if for a leasehold property, with a huge mortgage. but if rental income comfortably covers the mortgage payments, it's freehold (so costs are controlled by you), and you don't need the money now, then it might be worth hanging on to as your emergency "pension". think long term.

Exactly. Private landlords have been selling up recently, so rental prices are going through the roof. Connect the dots.

It was the government's fault..they were trying to drive out landlords and were taxing them too much. But now have realised it's in their best interest to keep the landlords which is why they backtracked on the EPC thing. Without landlords, people who can't afford to buy a place of their own have no where to live. The council housing lists have become ridiculous from what everyone has said.

We have rentals, it doesn't take up much of our time in general but we maintain ours to a high standard which attracts decent tenants who tend to look after the properties. Also we allow pets because they tend to go be more not less considerate ioe. Only had one awful tenant in 15 years and they did leave and all was well again. Nothing is perfect.
We've just sold one to the tenants who were saving up to buy because we were retiring early and wanted a cash fund. We'll be selling the other ones as we get older because we won't want the maintenance then. Long term tenants already know that they will get first refusal and one couple have started to save now.
Electric and Gas appliances certificate.
Insurance and you need to let them know if it's ever empty.
You also have to pay council tax and water if empty.
We factor in refresh painting between tenants
New carpets every 7 or so years.
Bathrooms and kitchen were in good condition.
You need to know a good plumber and electrician or do fully managed imo.

I've been a landlord for around twenty years.

We bought the house about thirty years ago with a big redundancy payment and our savings. We bought it so my mum could move out of her council house and be free from its huge garden in her old age. When she died, my husband wanted us to rent it out, I wanted to sell it. Reluctantly, I became a landlord.

I use a letting agent so don't have to be up to date with all the regulations because the agents arrange all the safety checks and necessary stuff to be done.

The agents have been brilliant over the years. They have chosen my tenants well, I've never had a bad one. They inspect the property regularly and report back. They arrange for work to be done on the house promptly when the tenant flags something up and take payment out of the rental income. They don't tell me when it is a minor repair , as I have asked them to just go ahead. I want the tenants treated as I would wish to be treated. If it is an expensive repair job, they consult me first about the cost and I pay the repairs direct. The downside of this arrangement is that I don't know how much rental I will receive each month until I see the statement. Fortunately, we are not relying on the money.

Our turnover of tenants has been low because the rent is fair. Therefore, and because it is a nice house in a pleasant and convenient location, the tenants want to stay put. They are not on the lookout for a better deal elsewhere.

From the outset, I used an accountant to prepare my annual tax return. It's not a complicated return but I never wanted to do it myself. It gives me peace of mind that it's done properly. I just hand the paperwork to them once a year and sign whatever they give me.

I pay for landlord building insurance. The tenant insures their own contents.

The monthly rental is paid by the agent into an account which is soley for the rent and separate from my main bank account. The accountant told me to do this.

The agent provides me with copies of all the bills I have paid throughout the year, which the accountant needs to see, along with the agent's monthly statements and bills I have paid direct to tradesmen.

I don't know exactly what the tax rules are now but I know if I come to sell the house, I will lose a large part of its increase in market value to capital gains tax. So unless we need that money some day, we will probably leave to the kids in our wills.

@FelicityFlops If you don’t mind me asking, how many properties do you have to generate 10k monthly income? Are they flats, or rather houses?

OP, honestly, what's the attraction with BTL as a solid business proposition and way of making money? There's no doubt landlords who bought in the 90s made out like bandits, there was no skill in it, capital appreciation did all the work. Property prices simply won't increase like they have in the past, leaving you reliant on finding a decent yield and a hassle free property and tenants. Even with luck on your side, you've been given plenty of examples in this thread of the amount of work required.

Personally, I've done really well out of the stock market (plus dividend income rolling in), and my S&S account doesn't ring me up on Christmas Eve to complain the boiler has packed up etc etc. Even a basic savings accounts will return you 6% for doing nothing. In your situation I'd sell up, get some professional financial advice, and explore all the other solid financial avenues available to you.

We let out 2 properties snd I absolutely hate it. I really do.

but they belonged to DH before we married. He lived in one and the other was his parents.

I really CBA with the small problems, tax return, sorting out this and that. One home us enough and working full time.

but Dh is insisting that we keep them as insurance. One day we will sell and its for the kids. No huge income to be made after tax, managed let, insurance, maintenance. That’s why i don’t see its worth it month to month but as DH said, its our future.

Amateur landlords are a nightmare. Leave it to professionals,

We are looking at it as our pension for the future. Once the mortgage is paid off it should be quite a good monthly income. I also don’t want to sell it up as it was my Nan’s flat and has nice memories. Although I am aware that once all her stuff has gone and we’ve redecorated it probably won’t feel like her home anyway.

I would love a monthly income of £500 which would increase as time went on. I would love the fact that by the time we retire we would have over £1000 a month coming in and would really help alongside our pensions which are quite small. Also love the fact that if the kids ever needed help to buy, which I’m sure they will, we could sell and give them a massive chunk. Or they could move in to the flat for minimal rent while they save. So many options for the future.

Surely all landlords start off as amateur landlords 🤣 Also that’s why we’d go for the fully managed option as the estate agent wouldn’t be an amateur.

Have you factored in the loss of tax relief on mortgage interest if you are a higher rate tax payer? You'd only get 20% not 40/45

Also that’s why we’d go for the fully managed option as the estate agent wouldn’t be an amateur.

No... they lack the enthusiasm...
Seriously, some agents are good and some are worse than useless.

Don't expect to make a profit for a year or 2 if you have mortgage. By the time you have bought the heating, electric and maybe the EPC up to regulations, redecorated and paid the agents fee and paid for running repairs depending on how much the tenant expects you to do there might not be much rent left.
I've sold up now, only 1 of 6 houses went to another landlord and 1 went to the sitting tenants.

I am a landlord of a property I used to live in. It’s generally been fine - good tenants and no major maintenance issues. But it can be your luck.

nothing wrong with renting property- I started renting my place while renting elsewhere. Lots of people want to rent at some periods of their lives.

We aren’t higher earners. At all!

Hi,
Something to consider (although it's a bit of a mind bender so I'm not sure what's best myself) but......

You have mentioned that you have a mortgage of your own. You expect this flat to bring in £550 each month (is that after repairs and maintenance? If you have used your tax free allowance working you will have 20% tax to pay on that taking the amount of income each month down to £440.

Now if we just imagine that your own mortgage is £440 each month... selling and using the equity to pay off your own mortgage you can have the same extra income without tenant issues, insurance, gas and electric checks, repair issues etc. No capital gains to pay as the property you live in is exempt.

The unknown quantity is potentially losing out on a capital gain but also swerving a possible (in the short to medium term capital loss) if house prices fall.

Now let's imagine your mortgage is £1000 each month and that there is enough equity in the inherited property to pay it off. You could pay it off - having the advantage of no tax to pay paying your own mortgage rather than a rental on which paying down the mortgage with rent received is taxable. If you are motivated to own a rental as a future investment for a pension/children's deposit you could divert the £1000 you were paying on a mortgage straight to savings bonds (at a time when interest rates are good and the outlook for house prices are uncertain. You will be saving 12k each year plus the compounding interest so after 4 years (in a savings account with a % interest rate) you will have much more than the 48k you have put away. As your savings grow when you have 25% of the purchase price saved, plus stamp duty (which will be higher rate), plus a buffer you could choose to buy a rental or you might think - we have saved 50k in 4 years and can save over 50k in the next 4 years (with compounding interest) and decide not to bother with property for niw and keep saving.

Interesting thought and nice problem to have.

Takes up very little time to be honest. Most of it is done by other people e.g. Gas Safety check-one text mesg, invoice emailed-paid, done.

The only thing that takes up a LOT of time is nightmare tenants-I have largely avoided this by doing my own checks with forms downloaded from the NRLA as application forms, visiting them in their current home, guarantor if I feel is required, trusting gut instincts.

I'd never, ever use an agency. I want to meet that person and see who is going to be living in my house. Tenant turnovers do take up time but if you get good ones they tend to stay a long time anyway. Most other matters (repairs, checks etc) just involve telephone calls to the gas engineer/electrician etc.

Agree with @Mendingslowly bad tenants will put you off for life. I get a leasing agent to advertise the properties for lease and they do the credit checks and make up the lease to be sure that's all done right but I do the viewings myself, I think you get a much better feel for people meeting them face to face than just being handed a pile of applications

I for one cannot wait till I stop renting out my property. I won't be able to sell it though as I read capital gains tax relief is reducing every year and the amount of tax you have to pay if you sell your buy to let is crazy. 20% tax or potentially more if you are a high earner.
Only way to pay less than that is to live at the property yourself which is what I will have to do eventually.