To ask for your experience as a buy-to-let landlord?

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I'm thinking of buying a house or two and renting them out to hopefully fund my retirement in 15 years or so.

Would appreciate any advice or sharing of experience - good and bad!

As most of you know we still looking to buy. Its been a long hard road to get here. All the estate agents i see say nothing is on the market (at the bottom) as everyone is having a go at buy to let. If something does come on the market it goes to sealed bids to people to estate agents know. Theres no way out of the rent trap. We have a morgage set up. Desposit waiting (due to a sad loss) and not that fussy about type of house. I have ruled out flats after years of living in them. I want a garden. Doesnt have to be big, just some patch. By the way we have always got our full desposit back on rental flats as we keep them in perfect condition.

londonrach not sure it's your cup of tea but you might want to look at auctions as well

Londonrach I agree that it could be worth a look at auctions although unfortunately they are also haunted by professional LLs.

We are accidental LLs, like many LLs I know. Our tenants are people who wouldn't ever be able to buy a house - on benefits / students / overseas workers on short term contracts. We provide a valuable and essential service for them. BUT I agree there are issues with largescale LLs snapping up all the low price housing in particular areas. I don't agree with that at all but I'm not sure how you would legislate to get round it.

We are looking at auctions but they are scary, and trying to think outside the box. We even looking at a canal boat once...but we have some lovely oak 1930s furiture which my dh has lovelily restored and sadly they wouldnt fit and we still wouldnt get the garden we crave. We are an expert at window gardening. At the present time we have two fig trees, some chilly plants as well as herbs etc. im visiting estate agents daily and living on rightmove. I tell you one thing i dont know how anyway would do this more than once!

nadia with the venom that gets spat here I think 'stupid' is quite mild. I stand by my statements. I do of course get pissed off because I am a landlord. The house was not given to me by the fairies. I got the money by working, helped by not being 25 any more.

It appears to be deemed by many here to be immoral to be a landlord, but not immoral to work for a company selling mortgages. This strikes me as very hard of thinking.

neither is immoral of course. But I don't like being called immoral simply because of how I earn my money at this phase in my life. Hence my anger.

nonethless, nice to see reasoned comments such as yours. Being a landlord is a job and has to be done properly and legally. To do otherwise IS immoral and as you say, all those who defraud tenants should be dealt with harshly.

as an aside - in my neck of the woods many people are becoming landlords as cash buyers, because it is the only way to stop the cash being destroyed by inflation. An effect of low interest rates.

Biggest advantage a landlord has is that they can still get an interest only loan where as most homeowners have to have a repayment product. A landlord can get a mortage up to 75 years old where as most homeowners have to have their mortgage cleared by the time they are sixty five.

I think that the govement is right to remove tax relief on mortgages and I say this inspite of the fact I own two rental properties and such a policy does not favour me. I feel that tax relief should be removed completely rather than just for high rate tax payers. I want my children to be able to afford their first home. You cannot get tax relief on a loan to buy shares so why should you get tax relief to buy a buy to let.

Landlords who claim to make no money out of buy to let are talking shit. Lets be honest, its hard for a first time buy when properties go up in value in a year by more than what the average adult earns.

The only property I bought deliberately as a buy to let already had a tenant in it. Having a landlord sell his property to another landlord prevented someone from being made homeless. The tenant in question is an immigrant and cannot get a mortgage as his visa lasts less than five years. I think we do need a private rental market to cater for those with good jobs who are not in a position to buy.

Maybe there should be preferential rates of stamp duty to encourage potential landlords to buy a property that already has a tenant in situ. My poor tenant went through utter hell with lots of viewings from people who might want to buy his flat and anxiety about being made homeless. He was treated as absolute shit by both the estate agent and his landlord. No one told him what was happening or when the sale was going through. The indication that he had a new landlord was when I phoned him up to give him my contact details.

I feel that a certain proportion of new homes or right to buy homes should be sold with a covent that forbids them from being rented out on the private rental market. I feel that one way to do this would be to sell the lease hold to those with a right to buy rather than the freehold. That would enable a pool of properties for first time buyers to get their first foot on the market.

Property is not rising massively everywhere in the country though. Certainly, where I live, if I bought another house now I wouldn't be able to charge enough rent to make more than a couple of per cent on my capital.

reallytired if that was aimed at my comment that I don't make any money on my flat, I'm not talking shit, I dont! I will eventually I hope but at the moment it actually looses me money per annum. I could chuck out the current tenents and charge several hundred a month more, but that woukdnt sit well with me.

Yes, some people don't make money on it. My daughter didn't on the 2 years she had a buy to let (now she lives in it). others make it work. Yes, do look at the changes to interest rate relief. If you don't and won't pay 40% tax or will not have a mortgage on the property then don't worry (and people syaing buy to let is finished because of the tax changes are wrong in relation to all those landlords who don't opay 40% tax and all those who have no mortgage on the property - they are unaffected by the tax changes).

www.telegraph.co.uk/finance/property/11738311/House-prices-rise-but-the-autumn-will-be-the-true-test.html

Property had risen well above inflation in every area of the UK. Landlords make huge amounts of money. The appreciation and income from a rental property is income. You cannot just consider the rent. Even if you have a void period you are making money in the UK. My two flats have risen in value by more than what myself, my husband and two tenants have as taxable income in the same period. When considering the income of a rental property it is stupid to just look at an income tax return.

The yield of a flat increases over time. Market value for rents is soaring where I am. I could charge far more for my flats, but I don't because I have excellent tenants. Having rents below market value is to discourage them from leaving, it's a business decision. It is cheaper to have a good tenant paying below market value than to have a void period and all the setting up expenses of a new tenant.

Tax relief on buy to let mortgages is being phased out. The govement does not want lots of distressed sellers.

But if you just intend to make money on the increase in the value of your property, there is an argument for actually just buying a more expensive house to live in yourself.

That is the conclusion DH and I have come to. If we bought a property round here now then the only real money we would make would be on the rise in value. Much easier to put that money into a better house for us than go through the hassle of managing another rental.

It's not a business decision, I know the tenents they are friends, it's a moral decision.

I kept my flat when DH and I bought our first place together. I get a very decent rent from my tenant but I strongly believe I have an obligation to treat him fairly. It's his home. I avoid putting the rent up, I respond quickly to fix problems, I redecorate and otherwise don't give him any trouble.

I use a small local agency to find me new tenants as they handle deposit and paperwork and I manage it myself. My tenants do have a knack of having a crisis when I'm on holiday which can be a nightmare, but as long as you have good tradesmen you can contact in an emergency and enough financial buffer to pay for things then you can deal.

"But if you just intend to make money on the increase in the value of your property, there is an argument for actually just buying a more expensive house to live in yourself."

Certainly there are capital gains tax advantages to doing that. Unless you downside you have no way of getting at the money. You can buy a buy to let over 20 years with a repayment mortgage which you will own outright. At the end of twenty years you either have a nice pension or you can sell the property.

Real'yTired you could remortgage the house you lived in to release some equity?

Not saying it would be the best thing to do, obviously, but it is possible.

Ipad off top of my head things to consider on a rental

• Are you getting a BTL mortgage? What % can you put down? The more you can put down the better the rates Banks will offer. E.g HSBC were offering a 3% interest only rate if they only funded 60% of the mortgage. You can get some great deals if you look around. However be aware that Banks are a lot stricter on BTL now. They want to know you can afford the payments without a standing tenant before they lend. Also consider affordability should interest rates increase. On a side note I would recommend you try get a 6/7% return on the rental income based on your investment. Personally I can't see BoE hiking the base rate up that much in the near future. If they did they would see mass repossessions again. People have become accustomed to paying and living on low rates (money has been cheap for too long). I would say the majority of people (non BTL) would struggle with an instant 2% increase never mind anything more. When the BoE start to increase rates they will ease the increase to help people adjust. No way will they hike them up.

• Are you a cash buyer? Estate agents and sellers like cash buyers. They will ask you to prove you are a cash buyer (eg provide a bank statement). Once they have proof they will send you everything they think you may be interested in. They do this for everyone not just LL. If you complete a cash buy, you then have the option of dragging the equity out by getting a BTL mortgage after. The advantage is you can get a tenant in first before applying. Banks prefer it if you have a tenant already. Also sellers are more likely to accept an offer from a cash buyer. Quick sale and no worries regards buyer not getting a mortgage.

• Personally I would recommend you get a managing agent. Less hassle. They can complete all the checks on your behalf. Just be aware that some people fail out of no fault of their own. Although the tenants aren't told why they fail checks normally LL are told some information (eg LL refusal to provide reference due to previous eviction, excess damage, non payment etc.) so even though someone on paper may look like they can afford the property. They may have been evicted by previous LL for damaging the property or rent arrears etc. Estate agents normally take between 8-10% for a fully managed service. Make sure you go with a reputable company. I would also suggest you try finding your own workmen and get the estate agent to use them if required. People you can trust.

• you will need to ensure the property meets regulations (yearly gas / electric (optional) certificates, banisters right width, smoke alarms electrically wired in rather than battery etc.). Check with your local authority some now have some form of responsible LL scheme. They can help you ensure you meet regs.

• TAX you will be taxed on profits after costs (mortgage, insurance, repair work etc.). Bearing this in mind make sure you keep all receipts / statements. You will also be taxed based on earnings. (Eg if you don't work then the first £10K or so is tax free where as if you are a HRT earner you will be taxed at 40% and everything inbetween if that makes sense). Also be aware if the property is left empty for two or more years your council tax will be increased to 150%. This was introduced to get long term empty housing stock back on the market.

• Insurance you can get great standalone policies with companies like Direct Line but be aware that they will only insurer an empty property for 60 days. They normally want a tenant before offering a BTL policy. I would recommend you get the tenant damage extensions and I agree with the poster who recommended a loss of rental income policy in case the tenant stops paying. A normal BTL policy is about £15 per month and another £15 per month for loss of rental (based on a three bed through terrace). Your Bank will want you to have a BTL insurance policy as part of any mortgage agreement.

• I would avoid buying flats. They are a nightmare in my opinion. You have no control of other people maintaining their agreements.

• Then hope you get a good Tennet that wants to stay long term and not trash your property. I like to think people want to stay in and respect a well maintained property. Not always but you can but hope.

I agree with those that say MN is not the best place to post a question like this. I talk from experience . Some posters really take exception to LLs to the point one has followed me months later onto a thread that had nothing to do with rentals. Bit weird but that's life. I wouldn't be surprised if someone didn't pop on and start banging on about "property empires"!

I along with the majority of people can't stand rogue landlords. They give everyone in the business a bad reputation the same way rogue builders give people in construction a bad reputation. As for people that think LL are immoral well I guess the people selling their properties or agents facilitating the process are all immoral too.

Good luck with whatever you choose to do Ipaid

I've been a landlady for 8 years now. My tips are:

1. Find a good (ie hardworking and honest) agent. Do not use any agent that is willing to override the tenant's rights to please you - they will be shysters.
2. Accept that, despite there bring an agent,there will be a lot of work for you.
3. Do your maths. Where I am it is pretty difficult to make a return short-term and treat tenants fairly. It is only possible at all cause of the low interest rates (though obviously the long term return is getting the mortgage paid). Figure in periods of vacancy, repair bills, costs of complying with legislation, insurance, taxes, agents fees, and the cost of the occasional bad tenant (high).

Pick a letting agent that is ARLA registered. At least they will have passed some exams and have some clue what they are doing. Buy to let does make money but it's does require ongoing work. You need to provide a good service to keep good tenants.

do be aware that ARLA does not equal competence - I have used ARLA agents with offices full of people who can't do simple admin tasks.

also re smoke alarms - compulsory after October (and daft not to have them anyway) But do not need to be mains wired unless property built after 1992 or let is HMO.

A bad agent is worst than a bad tenant. Yes, I have had bad experiences with ARLA agents, but at least there is some form of come back. I had an idiot who gave my tenant advice that could have potentially killed her and wrecked the boiler.

I suggest you have rent collection only and avoid agencies that are part of large chains. If you are looking for a buy to let letting agents will often show you flats where there is a tenant in situ. Its worth talking to a future tenant to ask them what a letting agent is like from a tenant's point of view. If you have any friends who rent locally its worth asking them whether they are pleased with their letting agent. A good letting agent will stand up for the tenant.

I rent out a flat I used to live in. I got the money as inheritance and property is the safest way to invest it.

I use a reputable agent and attend to issues quickly. I often find my tenants expect a lot more than I do in my own home when it comes to maintenance.

Even though the flat is in London, I've actually found most prospective tenants will negotiate the rent down. I would love for them to stay long term but a lot of London tenants seem to move around by choice. Especially young professionals. Maybe it's different if your property is a family house but mine seems to attract young couples or two friends sharing. Most of my tenants have recently moved to London and would not be in the position to buy anyway so I really don't feel I'm taking away a flat from prospective owners at all.

I get a reasonable income from it but there are always maintenance costs and fees to the agent and so on, and I've had void periods when I lost money on it.

Tinkly, that was our view. Sold 2 buy to let flats (by the way at 50% less than we paid for them so don't believe anyone on the flat saying buying a property is always a one way bet and you are guarantee capital value no matter when you sell) and put the money from them and our last house into our home which rose a lot in value and is not subject to capital gains tax and is nice to live in and no hassle of tenants any more.

I agree that interest rates may well not rise very soon but I have paid 12% in my time so don't assume they will never reach those levels again.

ReallyTired you've mentioned twice up thread that loans to buy shares with are not tax free. This is untrue if you are a professional share dealer; such borrowing is a business expense.

I do not agree with the tax changes; you are being asked to pay tax on money you haven't earned. Which other business is asked to do this? And it will affect 20% tax payers. If your mortgage makes up the bulk of your income, you currently pay tax on a tiny amount. In future, you will pay full tax on the whole amount with a small 20% rebate on the interest portion. A real life example: rental income 30k, interest accounts for 15k. Under current rules, you pay tax on 15k, I.e. The amount you have physically in the bank. Under new rules, you'll get a 20% credit on £15k =3k, and then you pay tax on the remainder = 27k, and you still have to pay 15k in interest.

For large portfolios, this could mean a net trading loss and bankruptcy. Good news for tenants living those properties, eh?