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!

Think yourselves lucky in England and Wales. In Scotland, rent controls are being brought in on top of all the licensing (two sets of for an HMO). Its just so expensive to even let out a property. We already effectively subsidise students at a Scottish university from our salary as the property often runs at a loss. We also provide our time free of charge, even when its totally unnecessary. The students themselves are paying 9k in fees while Scottish ones pay nothing.

Two sets of licensing - landlord registration and HMO. Annual HMO inspections at a cost of ??600 (have to take a day off work), annual fire inspection at cost, every year new made-up rules that only one certain company can comply with at great cost. Its usually a couple of thousand of unnecessary work each year. I'd rather spend the money on maintenance and redecoration.

And now rent controls - goodness knows what that will involve. Our rents are average for the area and the UK but we factor in the costs of the above, otherwise they could be lower. However no doubt it will involve yet more public officials poking about in private residences and made-up jobs and rules that they don't have in any other part of the world.

Do people think it might be more tax efficient to set up as a company?

Scremersford, HMOs are also regulated in England. And each council seems to have its own rules re HMOs which adds to the confusion.

Because of all the complexities involved in running an HMO, I personally wouldn't touch an HMO despite potentially good yields.
And it's not just the licensing, it's all kinds of issues involved.

A friend of mine is running a (difficult) HMO and she is now thinking of selling up and getting a couple of 1bed flats instead.
Yes, yields would be less but the hassle factor would be less too.
Also, the risk would be spread more evenly with multiple properties.

Generally, to minimise a risk associated with BTL in general, it is considered that a landlord ideally should hold several properties, say 5 plus.
This way, in case something goes wrong with one, or two of the units, the remaining well-performing units would tide the said landlord over.

Multiple (and smaller) units, as opposed to 1 large unit, also allow to plan the exit better with a view of minimising the capital gains tax liability (by selling in the course of different tax years and thus benefitting from personal capital gains allowance in each tax year).

Right mntters i want you all to cross your fingers as a rare house in our price range has come up and we viewing it saturday. Im really really hoping this time we will be lucky and we can over bid the btl lls that seem to snap everything up and get our first house. Image being free of the rent trap. We think only once a month a house comes on the market that hasnt be bought prior by a ll. fingers crossed xxx

By the way the Law Society has warned solicitors this week that more and more different laws in Wales in general are coming in and also that a new compulsory registration system for landlords is coming in.

Rules for landlords in England are already pretty complex. Landlords are expected to evict illegal immigrants.

kirinski thanks - very limited area and nowhere near me. I used to pay 15% south-west of London for a useless bunch who just ignored everything, and it was a big ARLA agent! I was effectively self-managing, the stupid bastards couldn't even manage to renew the house insurance as promised. Lesson learned.

I now self-manage with a rather good agent as guidance and assistance. I also have home emergency cover for the rental, so for those need-it-now things (boiler, toilet, water, electrics etc...) I've got 24 hour on-call and the first so-much of the bill covered. I think every landlord should do this, even if not on a Greek island we can all be ill or have family emergencies which are not the tenant's problem.

we also have rent controls; there is a ceiling for each type of property, charge more, no tenant. And yes, the area is pleasant to live in, has work, transport etc etc.

specialsubject
I so agree with you that we do in fact have rent controls already.
It's called competitive market. Price your property wrongly and 'enjoy' long voids and short lets.

Anything above 2 unrelated persons sharing is an HMO in Scotland. The rules also vary between local authorities and its very difficult to find out what they actually are - I know, because I've been doing it for a number of years but presumably new entrants to the market only find out once they get an inspection and a letter from the LA telling them what they need to do! But its excessive, at my last count there were over 50 different requirements. At one point, they wanted sprinkler systems installed in any HMO that was two floors or more. Some landlords installed it then they later removed the requirement. Equally, they want carpets down on all HMOs, months later they change their minds. Cookers have to be chained to the walls, in case a tenant pulls one on top of them. And so on. Latest wheeze is guard rails inside all windows two storeys or more from the ground.

I'd rather spend all this money on secondary glazing to make my tenant's sleeps better, a new kitchen and so on.

In fact I really want to sell up and buy somewhere else outside of Scotland, but the market is dead, so I'd be selling at much less than the price was 2 or 3 years ago. I will never buy in Scotland again. No-one seems to be discussing the growing property crisis there and the Government is behind the beat by passing more and more legislation which makes things worse (stamp duty increases recently).

No-one has any ideas what the proposed rent control legislation will involve, much less the Scottish Government itself. What has been published so far seems to indicate that the Scottish Government blames rising rents not on inflation and a British-wide trend, or a relatively healthy economy in certain towns or cities, but greedy landlords. They seem unaware that the market dictates a certain price. They also seem unaware that all the legislation they have passed in recent years has contributed to rental costs rising.

Another problem is finding tenants that can actually pass a credit check and provide a reference and be reasonably well behaved. I have one one bedroom property on one of these new out of town developments the Government is so keen to build en masse and the last tenant seemed reasonable but left behind a trail of debt which he had taken out in the period he lived there before doing a runner. Luxury cars mainly. Property has been empty for months because of inability of even an agency to find someone suitable. Yes, I can rent it cheaply to someone with no references or credit check, but its not worth the risk of having to evict from a damaged property. Again, I can't sell because other properties on the market with the same profile have been languishing for months.

One HMO tenant is a complete nightmare so far as she is a student and her parents have been back and forth with her. In fact I think they are living in the property with her. Constant complaints, they want room totally redecorated, new furniture and new carpets. I know there is no point because its clean, is in fact repainted (they don't like white) and carpets will be trashed within six months of an 18 year old living there. Just awful to deal with - I've had threats from them to come to my home and "sort it out" with me, unless I refund the rent and let her live there for free until its done to their requirements. Never had a single complaint before from a tenant in years of letting that property either, but I can't sleep at nights for worrying about this and whether I will be dragged into the complaints process which is the HMO scheme.

None of these things I was able to plan for when setting up my business. The goalposts have changed so much. While I expect some changes, there are literally changes every few months. You simply do not know what is coming next. For a while, I didn't even know if my properties would be located in the UK or the EU for the foreseeable future! The Government in Scotland seems obsessed with meddling with the property market, but they seem pretty unqualified in the field, so that worries me. I think they are quite likely to get it wrong and make a hash of it, but there is no real accountability, no comeback for them, while I have to fund their mistakes from my own salary. And that is not unlimited.

Scremer it's much better to market HMO's at postgrads / researchers rather than undergrads. Are you near a hospital / university? Both will have staff as well as students looking for fixed term accommodation.

HMO's are heavily regulated where we are too but are very profitable if you invest in the house and attract top calibre tenants. Having said that maybe yours in a complex house - ours is just a standard 2 storey house. And I have never heard of the cooker having to be chained to the wall, that's quite insane! It's like the episode of Community where the insurance guy tries to pull over a vending machine because 'every year 6 people die getting crushed by vending machines - and 5 of them are insurance evaluators!' :o

Jorah Scremer it's much better to market HMO's at postgrads / researchers rather than undergrads. Are you near a hospital / university? Both will have staff as well as students looking for fixed term accommodation.

Thanks but I've been running the HMOs for a number of years and never had a problem with a single tenant until now. Very good tenants, and fond memories of many of them. Every single one has been really nice to deal with, even if only 18 or 19 years old, and even when they make the odd mistake, that's to be expected. This one and her parents are in a whole different league.

Postgrads often prefer non-HMOs and/or have families. The problem is that that the Scottish Government has also changed the demographic of the type of student that studies, a lot of them live at home now or do not want to travel far, and that seems to produce a less independent 18 year old with parents that cannot bear to let go.

And I have never heard of the cooker having to be chained to the wall, that's quite insane! It's like the episode of Community where the insurance guy tries to pull over a vending machine because 'every year 6 people die getting crushed by vending machines - and 5 of them are insurance evaluators!'

To be fair, its only gas cookers...yes they do have to have a little metal chain coming out of their backs attaching them to a bracket supplied by a certain supplier at great cost, because one person once in a rental property in Scotland pulled a cooker down on top of themselves and suffered an injury. I don't even think it happened in an HMO!

We even have cupboards we have to keep permanently locked so our tenants cannot use them, because they would require a mains operated smoke alarm to be installed. And its not worth the cost for just a cupboard. I don't mean a box room, I mean a small cupboard, next to a hallway with 2 such smoke alarms installed. Its completely over the top.

Scremer a tenant like that student I would take absolute joy in evicting, even if it cost me money. Because sometimes people need a wake up call and frankly the satisfaction of that outweighs the cost.

The truth is we can all stumble on a bad tenant. I have one and the sooner she is out the better. Once she's gone I will warn every letting agent within a ten miles radius about her. Good luck to her finding her next few rentals.

Good luck londonrach. Let's hope it happens for you this time. Please report back.

I am not feeling very landlord-friendly just now, as at the moment I am trying to help DD and her partner who have just moved into their first shared rental post-uni. Several of the appliances provided by the landlady are not working, and she/her agency are ignoring polite requests to fix them. The flat was advertised as furnished, and in the tenancy agreement it states that it is the landlady's responsibility to maintain them. She has stated that they were working when she left the place (DD and her OP are the first tenants she's had). Maybe so, but they weren't working right from when DD moved in (and the place was empty for some time in between).

She's a first time landlord, who no doubt thinks renting out her flat is easy money, and that she has few actual responsibilities to fulfil her side of the contract. Meanwhile DD has spent a lot of time cleaning the place to an acceptable standard, and the rent is always paid on time etc.

I really feel as though the law is biased in favour of landlords, as tenants are not allowed to stop paying rent, break the contract etc., while the landlord seems to be getting away with it. I think landlords should be regulated more heavily, maybe licensed as I believe they are in Scotland?

Though obviously landlord posters will probably not agree!

landlords are not allowed to break the contract either.

just because your landlord is definitively crap, doesn't mean all landlords are - any more than the crap tenants mentioned here (Especially the Scottish example) are representative.

so, what to do: (and as a landlord I have had agencies ignore me too, THEY are unregulated and THAT is what needs to change) - write proper letters sent by recorded delivery, stating what is to happen and when. Copy to both agency and landlord. Demand a meeting to demonstrate the problems.

doesn't matter if the items were working, they aren't now.

of course your daughter pays the rent on time, to do otherwise would be theft. She is not getting an acceptable service and it is time to get serious.

gas safe cert? Deposit protected?

Thanks, specialsubject. Yes she has taken the steps recommended by Shelter, and sent off the first in a series of four letters, (to landlady and cc'd to letting agents), requesting repairs are made. If the landlady continues to ignore, though, it progresses to DD arranging and paying for repairs herself, and deducing costs from the rent.

That is what we are a bit worried about though, as the template letter from Shelter seems to reference serious matters that are part of the fabric of the building, and could harm a tenant's health. Whereas non-working appliances are a different case obviously. DD modified the letter accordingly. But then, it is clearly set out in their Tenancy Agreement that the landlady is responsible. So, because of this discrepancy, we are a bit worried that DD might not be following correct procedure, and may not be entitled to eventually deduct the cost of repairs from the rent, if it comes to that. Even though it seems completely unfair.

It is absolutely impossible to get through on Shelter's advice line to double check this.

Yes, they have a gas safety certificate and the deposit is protected.

If only there was a way of matching up all the crap tenants with crap landlords. They deserve each other!

Special is right - the agents are a real issue. I had big problems with the agent not passing on minor problems with the property and they also failed to notice the tenant had defaulted on the rent. I can't understand how they are so unregulated.

What are the appliances? That might be the first starting point. Eg if no cooker or microwave then that is very serious as is no heating. if a ??20 toaster is broken it may be simpler just to go out and buy another one.

ignoring tenants is just unspeakable. I hope there aren't any heating/water problems!

in the interests of pragmatism - would your daughter consider replacing whatever is faulty? She then owns the new one and takes it with her when she leaves.

Lol at the idea of private sector rent prices being a free market. You fuckers are benefiting from ??12bn a year of public money in the form of housing benefit due to rents being so out of whack with what people are earning - people only qualify for housing benefit if their rent is more than two-thirds of their income.

'You fuckers' Cruikshank? What, all of us? If my tenant is getting HB, I'm not seeing any of it.

It's not a free market if the prices are being artificially propped up by state top-ups to the tune of ??12bn a year.

And what do you suggest as an alternative cruikshank? Tenants paying only ??200 per month in rent and not claiming HB? HB has many problems, biggest of which is it allows those on benefits to live somewhere they could never afford to live if they were paying their full rent without benefits.

That may be the case in your area but in my area there is a wide spread of housing. My problem tenant left a decent house to move into my house because she liked the area better and wanted to get her kids into the local school. Why she then failed to pay her rent and is now being evicted is beyond me Even the agent said that she won't get a nicer house in the area at the price she was supposed to be paying for it.

Her rent (had she paid it) would have covered the mortgage and agent's fees. That's it. And yes, there will hopefully be a longterm increase in the house price but I am making exactly no profit on the house at the present time. And based on her unwillingness to pay her rent, I don't think this tenant would qualify for a mortgage somehow. Banks aren't very sympathetic to people who'd rather go clothes shopping every weekend instead of paying mortgages. Maybe that's where all that 'public money' is going. I'm not seeing any of it!

HB only covers rent up to the bottom third centile of any given area and as I said those who qualify for it have to be paying more than two-thirds of their income on rent, so the tenants who claim it aren't living in the lap of luxury. The only reason it is being given out is because rents are unaffordable. The only solution I can see to it is to cap rents, otherwise that magic bottom third centile is going to go up and up and the HB bill will go up and up. It's not a free market. Landlords aren't charging 'what the market will allow' - they are charging what the state will subsidise them for. All of that lovely public money going into propping up private property empires is not a good thing.

And just to pre-empt all the whining bollocks about 'None of my tenants claim HB' etc (like you'd know anyway, half the time), I am talking about landlords as a group, as a social demographic as you will. They are costing the country ??12 bn a year.

Out of curiosity if housing benefit was scrapped completely do you believe rents would fall. Certainly that is an argue meant being used for the benefits cap for non working families.

There is a range of different types of tenants. A holiday let in Cornwall is different to a flat in London or a student house in Manchester. It would be interesting to know what proportion of rental households are on housing benefit.