AIBU-property let

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I am extremely fortunate to have inherited a property many years ago. Initially, I lived in the property but when I met my husband we bought a property together, and I decided to let the inherited property.
I have always let the property for well below market value-enough to cover my expenses and a little profit, which is saved .
I am currently pregnant with our first child. The rental and the small profit will help cover costs during my maternity leave, and subsequently for the child's future.
The property is currently rented by a friend of a friend. Our agreement-which is all done officially via the letting agent- is due to expire. It was for 12m but renewable.
The rent is half that of similar priorities in the area and I'm happy with this as I feel I'm helping someone who would otherwise struggle (and I am very fortunate to have this property).
The issue is: the letting agent inspected the property last week and there's a number of issues, mainly due to the property being neglected by the tenant. For example, chipped kitchen cupboards, stained carpets, few broken floor tiles. Chipped plaster on the walls. There are other things. The letting agent's assessment is the property is not being looked after.
I am aware the tenant's partner, who also lives there, has been unwell (hospitalised) so I appreciate things slide and I can understand this.
However, I cannot help feel really irked by the fact I'm trying to do something good but it feels it's not reciprocated.
I have the chance to end the tenancy when it expires but I know the couple will struggle hugely without a half-price rental. I also feel very uncomfortable given his partner's ill health (she's currently not working).
AIBU to end the tenancy?

You can't let emotion get on the way of business.
Ultimately this is your asset. You don't need it to become a situation where it costs you money.

It is effectively costing me money now in that I could get double the current rent. However, it felt ok as I was helping someone in need whilst I was fortunate. It now feels like the repairs will also cost. I cannot shake off the feeling of leaving them in a difficult situation
.

There's no way I'd continue to rent a property to someone who was damaging it. Whatever their situation and health they should not be costing you money. Be business like and let them go at the end of the tenancy. Have it repaired and rent it out for the going rate which will make maternity leave a lot easier for you.

If they were really struggling to pay the going rate wouldn't they be entitled to Housing Benefit? If that's the case your generosity is just saving the government money.

End the tenancy.
Renovate the property to good standard.
Charge market rate.
Stop providing charity to strangers and financially secure your childs future.

This is (indirectly) about the quality of your life and your daughter. You’re not a charity, so end the tenancy and charge the market rate. Of course, this could adversely impact your friendship with the mutual friend, but hopefully not. To put it bluntly, the tenant has taken the piss.

I have no idea, I'm afraid. It's a very good point though-thank you

Wear and tear through normal use and materials ageing process is the landlord’s responsibility. Does the damage go beyond that?

I know this is all correct I just struggle with it. I've always believed if you are fortunate to be able to help others, you should. His partner being unwell (I've heard it's not good news) or making it really hard for me.

Housing benefit or the housing element of universal credit covers rent only up to the 30% cheapest rents in any area, not the ‘going’ rate.

This isn't obviously the OP’s problem but perhaps worth knowing?

Edit: Sorry, I’ve quoted the wrong post, it’s in response to the one about housing benefit.

Don’t find yourself in the position of my mums NDN who rented their house below market rate to the adult child of another neighbour. They lived there 10 years before being served notice to quit.

theyve left a lovely house in a nice area like a squatters hovel. It is filthy and neglected and will cost 1000s or weeks of labour to bring it up to a sellable standard.

no sympathy with the house owner in this case as they just kept taking the rent and left the tenants to it.

I would get rid now.

’No good deed ever goes unpunished’

What you’ve described sounds more like general wear and tear. If you want to start charging market rent then fine (and if you need the money to cover your maternity leave then it doesn’t sound like you can afford to be so charitable) but I wouldn’t end the tenancy because of a few chips.

I am told it's not just normal wear and tear but perhaps it is. Thinking about the chipped/damaged kitchen-to make this good, wouldn't be cheap. I fully accept my responsibility for fixtures however charging half market rate doesn't leave me the wriggle room to then pay without then making next to nothing profit wise.

I guess market rate is needed to cover repairs.

Tenant here of long standing in various properties over two decades and from what you say, that’s not natural wear and tear. Like I said, the tenant is a piss-taker.

When i was a child my uncle told me the best way to help the poor is not be one of them.

At a societal level your child is going to enter one of the least socially mobile societies in generations. If they are on the wrong side of the wealth gap their life will be hard and unpleasant.
You owe it to them to prioritise their financial security not that of a friend of a friend who is unappreciative and abusing your extreme generosity.

I am a landlord.
Like you I am currently letting my heart rule my head.

You are on a hiding to nothing and what you describe is not “fair wear and tear.”

Give notice, make good and re-let at market rate to re-coup your losses.

I self manage, charge below market rent and know, as last tax year, I won’t be making anything to realistically make landlording worthwhile. This is mainly down to how expensive it’s become to proactively maintain property post Brexit and Covid. Materials and labour are off the scale.

My lovely tenant family have been in-situ since 2015. We get on well. I don’t relish “the conversation” we need to have.

So, what to do?? Look at it this way …

Im probably going to give a long notice period this autumn so I can put house on market and get out of the game next spring.

Furthermore, if I sell with vacant possession I’ll still have council tax to pay (after a grace period) and standing charges for utilities. If it takes a while to sell, that will eat into the contingency fund for potential emergencies/new boiler/roof tiles/wear and tear etc. that I’ve saved.

Oh, and then there’s possibly a change of Government coming up. I think it’s time to get out? Sadly and I hate to say it, but It’s just not worth being a landlord anymore.

" I cannot shake off the feeling of leaving them in a difficult situation"

No one is holding a gun to your head - either get them out or let them stay, whatever you are comfortable with it is really your choice!!

Thank you for replying. Everything you say is correct.
I only make a little profit due the property being owned outright. If I sell, and put all the money in a savings account-even after tax-I'd still be significantly better off.

I guess I always thought renting a property was a good investment, and maybe it is at market rate. The outgoing for insurance, certificates, compliance-all absolutely necessary-must surely be putting off LLs.

Have you visited the property to view yourself? Did they leave a deposit, if damage goes beyond wear and tear you’re entitled to hold back deposit for repairs

Have you seen evidence of what the agent is saying? Is it as bad as they’ve said?

You said it’s many years since you inherited it - how long is it since the place has been a revamp?

I have a similar property and the last agent I use (I no longer use any) painted a horrific picture of utter neglect when in reality the place was fine. A little untidy, but fine.
However, the agent very nearly spooked me into getting rid of those tenants and letting them find new tenants (and charge me for it), vet new tenants (and charge me for it), set up new tenancies (and charge me for it) and put them on a higher rent (which would have allowed them to charge me more every month as they charged a %).

Also when was the last time they inspected it and what was the situation then? Have the agents taken their eye off the ball?

Renting out at below market rate only works if you budget in enough for full on repairs when necessary imo.

As a landlord, you're profiting off your own good luck and your tenant's bad luck. Everyone in the thread is advising you profit more from it, repeating the excuses they probably use for their self-regarding behavior.

By all means kick them out at the end of the tenancy and get more profitable tenants, but don't lie to yourself about it being "right" for anyone other than yourself. (Also bear in mind that it's a gamble at to whether the next tenants will be more destructive.)

We have a portfolio of rental properties which we are gradually selling due to the complete anti landlord tax and legislation. However, you need to toughen up and see it as an investment and maximise the return, and deal with neglectful tenants. It isn't great having friends or friends of friends. As for the rent, you are being extremely foolish only charging 50% of the market rate. We do on occasions not put the rent up and let it slide under market rates when we have very good tenants and they want it for the medium to long term. We see that the costs we would incur from resetting the property, they benefit from which they know and are ultimately. We don't need to but we think it works, but nothing like 50%!!

Be aware that your tenants will be very lucky to find somewhere else. Every property we have let recently has had a minimum of 30 potential tenants so we have had to weed out applicants to let a small pool view.

I agree you need to visit to see for yourself. The agents know you can get a lot more than you are currently, so their commission will be a lot more. Your friend of a friend/tenant probably hasn’t informed you of any issues in case you put the rent up. Carpets can be cleaned, chips on cupboards filled in, tiles replaced, but these costs should come out of your profit. My friend rents to students, they break things all the time and after all fees are paid, there’s hardly any profit.

Thank you for your reply.
I disagree with what you have said but respect a range of opinion hence posting on MN.

If the tenancy ends, I'll be selling rather than finding more profitable tenants.

I've tried to help out people for the last 16 years with below market-rate rental.

The property is in a good state. It's not show home (my own home isn't) but it's certainly isn't in any disrepair.

I suppose what I am learning is charging below rate leave little buffer for repairs when needed.
Lesson learned I guess