Buying to let

[THR1]

Hey, just putting it out there, but if people can afford to acquire a second property and are using the rent from it to pay a mortgage on their own home or increase profits/create a nest-egg, it seems unreasonable to pass on mortgage inflation to tenants, who only have one temporary home. It's not their fault mortgages are going up - at least split the difference with them!

A second property, whichever way you look at it, is a middle-class "luxury" and should demand fair rent prices and promote less greed. Buy-to-let is a risky business, but the landlord takes the risk and should not expect to put up rental prices on a whim or to charge extortionate prices for no service improvement (as per most business models).

I speak as a second property owner, who charges their tenant only 2/3 the geographic expectation because the tenant is on benefits. She looks after the house beautifully for a 1/3 reduction and her (local government-generated) rent is reliable. Any income at all is a lot more than most people have right now, and if you can't sustain a second mortgage comfortably without burgeoning your tenants with your costs, surrender it and put your money into something else.

Mumsnet seem to have a disproportionate amount of landlords who don't increase rents for years on end.

Strange beasts - I haven't seen one in real life out there.

Apologies @Kabalagala - for some reason I thought you’d quoted me in your post hence me quoting you in my reply.

Believe me, I wish I had … it meant the gap between what our tenants paid us, and rents when they were looking for their new place was much bigger than it would have been; and ultimately that made their next search much harder.

I had thought not increasing their rent during Covid was helping them out (and of course it was), but it’s not something I would do again (not that we’ll rent out again).

Around 15% - depending on what we actually get for the property and based on a valuation 4 years ago.

After factoring in Capital Gains etc, it’s not a huge amount of profit, no - and as I said, we were relatively fortunate in having no huge expenses while tenanted.

Obviously if we’d bought the house simply as an investment, we’d have been looking for a higher yield.

l’ ve actually overstated profits in my post too. The house is now void (we didn’t want to market while the tenants were in as we didn’t want to disturb them with viewings), so we’r now paying mortgage (obviously) and full council tax which will eat into that 10k odd.

It really isn’t, always, the money spinner some make it out to be.

My btl isn't a second home, it's my only property. It's already being rented out under £900 pm, 3 bed semi, under a hour on mainline to get into Central London, drive, garage. I don't feel I'm ripping anyone off. I can't control how other landlords behave. I don't put the rent up yearly. I'd be amazed if there are buckets of better offers out there. But I'm totally pissed off with the narrative that I'm squeezing the fuck out of my tennants. Tell me, can you get a mortgage on a three bed semi, drive, garage in under a hours train commute, station five minutes walk from your house into central London. If you could secure a mortgage on that for under £875 a month id be very impressed. It's £150 pcm more than it was 17 years ago!

The danger of renting your house out at 2/3 of market rate is that when i need the roof back over my kids heads, my tennants would struggle to get a house at that rate. They would be looking at a flat. Or maybe a bedsit. Because, you know, inflation. Not becsuse my BMW needs the goldplating renewed.

Absolutely. I don’t deny it - there was significant benefit in us being able to do it. It meant we could move to our forever home and I absolutely don’t take it for granted. You’re quite right to point out that there are benefits other than financial to be had.

But the initial point I was making is that the monetary benefit (which wasn’t our primary driver) isn’t quite as much - in all cases - as some would think.

You've completely omitted the capital gain from your calculation though?

I think it's interesting that people trying to minimise what they've gained from being a landlord always forget to mention the capital gain, despite the fact that it's often sizable. In your case it's 15%, but that still makes a big difference to the calculation above.

After capital gains tax, the capital gain (since renting the property out) will be around £20k

I wouldn't say that's an enormous amount for 4 years... but you're right, I excluded it from the figures I stated initially.

Also this perception that a tenant is paying off the LL is odd because most btl properties that are rented out not owned outright by LL are bought interest only, so LL is not paying off mortgage. They also as poster up thread stated have to pay minimum deposit of 25 percent and banks/building societies charge LL a slightly higher interest rate than an owner occupier. As a LL most of my profit will come from capital growth. I put rent up a small amount each year say £10 before this year because that is what tenants have told me they prefer, small jumps rather than a bigger jump every 4 years or so. My tenants don't hate me. I have been invited to 3 weddings and I am a Godmother to one child who has just a single Mum with no family in this country. I did her shopping several times and even got her loo rolls and paracetamol during pandemic when she got Covid when they were like gold dust, during first lockdown. I agreed she could have a month off rent when she was on furlough, as she was quite ill. I remain on good terms with past tenants. Not all LL are evil. In fact very few are. I keep houses in excellent repair because maintenance cost are written off against my tax bill. I charge a little under market rent because I am picky about my tenants. I pick those I think I will get on with as well as passing affordability checks. I don't ever advertise I have a long waiting list for my properties. My current tenants often ask for a house for family and friends. I look after my properties myself so don't use an agent. I have a small team I use for repair/maintenance and because I give them a fair bit of work they attend to me quickly. I have been a LL for 18 years and some of my tenants have remained with me for up to 10 years. A few rented a 2 bed then after a couple of children moved across to a 3 bedroom. Quite a few have rented for four or five years then gone on to buy. I am delighted for them. I always give a bottle of champagne if tenants get married, or buy a house and flowers and voucher for new baby especially if they are single Mums or don't have family in this country. I make a profit and if I did not I would sell up but not an outrageous profit. I have also on rare occasions agreed to accept half rent for up to 2 month's when a tenant lost his job and then he got another job as it was easier than other options and he was a good tenant.

But four years isn't a serious run at BTL. It's barely a hobby dabble. Anything property related is a minimum 10-20 year investment unless you're gambling on a bubble.

What was the plan behind buy-rent-sell in just four years?

We didn’t buy-rent-sell… (or at least we didn’t buy simply to rent. It was our home for several years first). We let to buy.

Our plan wasn’t to do it as an investment/make a lot a money (thank God!) - it was done to allow us to move.

Most landlords in this country are greedy parasites as far as I am concerned.

It seems other EU countries have a better and more regulated rental market and it is common for people to rent rather than buy because there is a decent level of security in doing so.

Here we pretty much have people, landlords and estate agents, who exploit those who are not able to afford a house or who are desperate for a roof over their head because only ''profit'' matters.

I have never seen so much discrimination, greed and dodgy practices than in the rental sector. It truly is an appalling situation.

Yes, there are decent landlords but the majority are not.

Buy to let mortgages distorted the housing market, pushed house prices up and removed opportunities for people who want to buy a home rather than an ''investment'' to afford a house.

No one is going to put their hand up to take the hit - landlords or tenants - each group will want the other to pay it and landlords are ultimately in charge, so we all know how it goes.

Your post is misdirected, OP. The government need to crack down on multiple property ownership to solve this.

@caringcarer I'm sure it makes you feel good inside to be a good landlord and I don't doubt that you are. You are still in a position of immense privilege to own multiple properties.

The fact is, you are not helping the rental market by owning multiple properties. You are ultimately contributing to the housing crisis, whichever way you want to frame it. You're doing it for self interest, which is OK, but admit that's what it is. Don't frame yourself as some sort of saint for being a good landlord. You're still ultimately contributing to a broken housing system.

It would be much better if we had a system whereby the state owned those properties and could sell them at affordable rates to young people who need to get a foot on the property ladder.

Ah, ok. I was confused, I thought you'd included Stamp Duty in the costs earlier, but I think that was a different poster. Which would only be included in the buy-rent-sell scenario.

You're a very different situation to the typical BTL landlord that was being discussed. The rogues are the minimum equity stake landlords daisy-chaining interest-only mortgages that fancy themselves as property tycoons.

@hannahcolobus I'm not making less profit. I'll be raising the rent or selling before i do that. I thought that was clear.

And your nonsense about not being house's for people to buy is just utter nonsense. Not everyone can afford to or wants to buy. If this were the case why is there a critical shortage of rental properties compared to demand. They're people who are not wanting to buy...

If this were the case why is there a critical shortage of rental properties compared to demand
Right to by. Reduce the supply by moving social housing into the private market and prohibit public sector reinvestment of the funds in replacement property.

Amateur BTL landlords aren't the solution to the property crisis.

There is a critical shortage of houses to rent but no shortage of houses to buy. What does that tell you? That btl LL do not stop people buying a house of their own. Plenty of houses to buy out there. Lack of income multipliers stop people buying plus lack of large enough deposit and also a poor credit record.

@hannahcolobus it's really not the landlords problem that people have to pay for their housing to erm live. It's a basic cost of living and whether renting or buying you have to pay for it.

I don't get why you think its a landlords fault. I stayed living at home until i saved enough for a deposit. If people want to move out, that's their choice but the reality is if they can't afford to save and pay rent, the answer isn't to stop people renting out properties.