To think many people become landlords because property feels safer than other forms of investing

[EconomicCuriosity]

I often see people say they became landlords “accidentally” and I know that genuinely happens in some cases. But I also get the impression that for many, property is chosen quite deliberately because it feels safer and more familiar than alternatives like pensions, the stock market or starting a business. Despite long-term evidence that diversified investing can be effective, bricks and mortar seem to be treated as the default way to grow wealth - often because it’s tangible, culturally encouraged and seen as low-risk. What troubles me is that property then gets treated purely as an investment product, with a focus on maximising returns while minimising costs, even though housing isn’t just an asset, it’s someone’s home.

AIBU to think this mindset explains a lot of the behaviour we see in the private rental sector?

The world of investment is very scary. Being a landlord is not for the heart fainted and still requires some investment in terms of research, it is much more acceptable than considering how best to invest funds.

The latter is likely to require trusting an expert, and most know how badly that can go. A property will always remain a physical building.

I am genuinely an accidental landlord. Moved overseas with work etc.

I can tell you it is the absolute shittest investment.

Can’t wait to sell after my fixed period ends to free up the cash to invest in literally anything else.

If you become an accidental landlord ie. renting out a house you own already it’s not surprising it’s a shit investment. Finding a property to rent out that makes good returns is hard work but there is still really good money to be made.

For me I prefer to invest in property as I know how to make money from it whereas I don’t know what I’m doing with shares. I think you’re right though that lots of people rent out properties as they like the idea of it.

I’m a landlord and it definitely feels like a safe and easy way of making money for me. It’s a business at the end of the day so of course it’s about maximising returns/minimising costs. I still make sure my houses are maintained though because as you say, they are someone’s home, but also because I could end up with huge costs if I didn’t maintain them.

It depends. Sure if you own a bunch of flats outright and are making cold hard profit on every penny of rent then you are probably doing ok. But if you have a mortgage to pay with increasing interest rates that you can't claim tax against and you losing control through renters reform then it's probably not that great. Not to mention price of repairs, licences etc.

I don't think it's a great time to be a landlord and the number selling is testament to this. Rental is changing too with build to rent and go living pushing out small time landlords. Anyone with a bit of cash is surely putting it into isas rather than risking this?

for now the property bubble has burst- unless you are in it for the long term.

Yu are asking two different questions.

"AIBU to think many people become Landlords because property feels safer than other forms of investing?" Of course they do. So obviously YANBU. I've know several people who have bought a home to let out whilst they worked abroad or were in jobs where they moved about regularly (for example the military) or they worked in jobs with a tied cottage ( I know one ghillie and a few Vicars / Ministers) so they have a house either to retire in to or to sell to buy one to retire in to. Makes a lot of sense, because whatever is happening in the housing market at the time they need a home, will be the same for the one they own and the one they want to move in to. This seems a pretty obvious thing to me, not sure why it is even worth starting a thread about.

But

"AIBU to think this mindset explains a lot of the behaviour we see in the private rental sector?"

You'll need to expand upon for us to be able to know what it is you want answering.

It was definitely safer before the meddling of this Labour government that’s for sure . I
bought a small BTL towards my pension as I didn’t want all my eggs in one basket. It was never going to make me rich but now I’d be lucky to break even .

I think there is a generational shift. Property was for some a great investment but not so much in recent years. The vast majority of my friends have money in S&S

Partly a lot of people aren't taught about investing, so assume it is a good option.

Also a lot of investments don't easily allow you to borrow money to invest. But you can borrow money for a BTL.

Personally I prefer Vanguard S&P500 index funds in an ISA. They have done far better than any buy to let. plus my S&P500 fund isn't going to phone me up at 11pm to tell me the toilet is blocked!! (You could use an agent but then the returns would be even lower)

I’m an accidental landlord and have quite a lot invested in s&s. The property is a pain in the bum and the yield is shocking. I’m only hanging on to it as an older relative might need to move into it for a while. I’d have done much better selling it and investing. I guess it’s safe yes, but not doing well for me financially.

i suspect people have seen the historic gains in property prices, triggered by the Lawson Boom, and thought the pattern would just continue. So they've bought BTL property without considering the downsides (repairs, void periods and bad tenants) because they were mesmerised by reports in the tabloid press about how much money could be made, for very little effort. From what I see, the landlords making a good return, have multiple properties - so a short void period doesn't matter, buy new builds and sell at the 10-12 year mark, before they need major repairs, new kitchens or bathrooms, that way they can charge premium prices and make maximum profit.I don't really buy the "accidental landlord" thing, I agree some people have property rented out because they have a use for it in the future, that's not an accident it's a deliberate decision. Likewise letting a property rather than selling and investing elsewhere is a deliberate decision.

I think I’m an accidental landlord. Inherited it when a family member died and expected to hold onto it as another family member will want to move into it at some point in the future. Renting it in the interim with meagre returns after maintenance, tax, management fees etc. It’s a very low value rural property.

I’m an accidental landlord. I inherited the property about 15 years ago. Initially the rent was making a nice contribution to my income but not so much now, especially as the Freehold managing agent is incompetent. I’m desperate to sell it and invest the money elsewhere but I have a very short lease and am waiting for new legislation to kick in which should make lease extension cheaper. 🤞

I'm not an accidental landlord but I didn't deliberately set out to be one.

I'd had my own flat for 5 years when (now) DH and I decided to live together. It was important to me that our joint home really was joint and I didn't want to give up the financial security of already owning my own home.

We bought our family home together and I rent out the flat. It's worked well for over 20 years now. It was a good decision for me.

I became a landlord when I moved to my husband property. For 16 years, I got little profit from it. I paid the mortgage mainly through the income of my FT job. The mortgage is now paid off, I'm now recieving a pension and self employed so paying much less tax. It seems a decent and secure investment as the house is in a sought after area and the type of property that is in high demand and very little supply.

i suspect people have seen the historic gains in property prices, triggered by the Lawson Boom, and thought the pattern would just continue. So they've bought BTL property without considering the downsides (repairs, void periods and bad tenants) because they were mesmerised by reports in the tabloid press about how much money could be made, for very little effort

For a long time it was easy money but the landscape is very different now

Most people I know who are landlords also invest in the stock market (equities and fixed income) so they would see property as part of an overall diversification strategy. It's a predictable monthly income and if you bought earlier in the cycle and have now paid off, there are advantages to it (tbh if you can buy for cash now and have a portfolio it's probably still worth it).

Same! A few months after I bought my flat I got offered a really good position abroad.
over 10 yrs later now I still live abroad, I subsidize the rental as doesn’t cover all outgoings, the flat value is less than I bought it - it’s the worst ‘investment’ you can imagine.

@EconomicCuriosity , no. We became landlords because we were self employed and wanted to retire one day with a decent income, my dad had been nagging us for years to invest in pensions but he and my mother had great final salary pensions which weren’t open to us and we felt uncomfortable with how much income we might be able to have. One property eventually led to seven. We have always treated our tenants with the utmost respect, we live very close to our properties and our tenants are able to contact us 24/7 365. They have rung us in the middle of the night and while we’re away on holiday regularly, there is never a time we are not on call, we aim to deal with any concerns swiftly and always have. Our properties have remained well maintained, decorated regularly with new flooring, kitchens and bathrooms on a much more regular basis than we have ever had in our own home. We had expected to keep them for life but now we are done, the fear of fines for minor unintentional errors is too much and we will as we can sell up. Our retirement income will drastically reduce but we feel that’s the price we have to pay for peace of mind. It’s likely I imagine that because all of our properties are one bedroom they will be purchased by corporate landlords with none of our personal service and care but with only an eye on their profit. I think there is an awful lot of misconceptions around landlords like us, when we’re mostly gone perhaps some people will realise we were not all monsters.