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.

@caringcarer
Totally agree. I think for some reason people like to blame "greedy landlords" as why they can't afford to buy when the facts would show very clearly its not the case.

Plenty of houses in all price brackets to.buy near me, but almost nothing to rent. The anti landlord brigade won't be happy until they've destroyed the PRS entirely and they can't find a rental.home at all.

*No, I won't be looking to lose money on my investment when the interest rates on my BTL mortgage go up because I am not a charity.

Interest rates go up, fact of life. That does not mean that landlords are yet again cash cows and should be expected to make a loss to house their tenants.*

And people wonder why BTL landlords are hated so much. Why do you think you should have a totally protected investment? If you want that, put your money in a 2.5% savings account. You did a BTL so you could make significantly more than that, and as we all know - investments can go up or down.

Holding hand up - apologies, have read your other post about the circumstances of your rented out house.

@hannahcolobus when did I ever ask for sympathy?

It's a fact that there is a critical shortage of rental properties thanks to the government's continued attack on the sector thanks to people like you "advising them"

I could raise the rent by 30% and I would still have no issue finding tenants, but as long as I can keep the rent at its current levels I will. I also have a mortgage with a 3 year fix which isn't due to renew for 2.5 years, so I suspect when I do come to renew, things will have calmed down somewhat.

Btl landlords are a symptom of a broken housing system not the cause. If you really cared about making life better for tenants you'd lobby the government to invest in social housing.

@snowballer np. I come on these threads to try and show people not all landlords are evil, and discuss facts. Unfortunately it's quite an emotive issue and the press are doing a great job so far of blaming landlords for all society's issues instead of the government.

The sad fact is the vast majority of issues currently facing the sector were caused entirely by this government's policies.

For most landlords in tge private rental sector there are very narrow profit margins.
Mortgage interest costs are largely taxable minus a 20% credit - section 24.

Eg, a 3 bed house at £1000mth rent
Mortgage payment £600, £120 tax credit
£520 profit
Less agency fees, insurance, maintenance costs, repairs contingency ie new boiler etc.
Lucky if making £100 pure income per month.

Therefore most landlords are in for long-term capital appreciation for a pension

I'm fully aware that most landlords using debt to finance their property(s) are making very little profit. Quite a few are open about it on this thread as they are IRL. The days of massive capital appreciation are over too.

So what I always find bemusing, is if the returns are so low, why bother? Why not invest your money in more profitable ways? I've always invested in the stock market successfully over the long term, while productively investing in businesses. My investments don't ring me up to say there's a leak, the boilers broken or my house has just been trashed. BTL is the last thing I'd want to do, and at those returns it's a mugs game surely?

I keep my btl houses for several reasons

1. To give me additional income to top up pension.
2. Over the longer term I believe house prices will continue to appreciate.
3. I want to leave them toy children.
4. They are home to the tenants who live in them. Some of my tenants have been living in one of my houses for 12 years. There children were born there. They are good tenants and pay rent on time and keep house in good condition. Where I live in West Midlands the social housing list is a mile long. Even with 2 children, as both parents work it is unlikely they would be given social housing. They would be put in temporary accommodation. I have a good relationship with my tenants and I would not sell up and leave them homeless.

What @caringcarer said. I didn't intend to do this, it was originally my home, that I couldn't sell thanks to negative equity following a divorce. But now I do, and have done so for 10 years and look forward to having a half decent pension since its highly unlikely my other ones will be any good.

I also won't kick out my tenants who are lovely decent people with young children and whom I don't charge full market rates.

Despite what some people are desperate for you to believe, not all landlords are arseholes.

@hannahcolobus
Because these landlords often overlook the other benefits from owning multiple properties that they seem to keep rather quiet about when they’re pulling the ‘woe is me’ act!

Any chance you could provide any source or facts to back up your generic "these landlords" statement.

Of course we don't overlook the benefits. We wouldn't be doing it otherwise. That doesn't make it any easier or mean we can't be honest about the reality. That doesn't make it a 'woe is me' act. It's just the facts. Most rentals aren't making a lot of profit day to day. Most landlords are in it for the long term pension. That's nothing new.

@hann

Because these landlords often overlook the other benefits from owning multiple properties that they seem to keep rather quiet about when they’re pulling the ‘woe is me’ act!

@hannahcolobus - While, granted, some BTLers who bought in the 90s have made out like bandits, but from my personal experience (and looking at MN, Property Tribes, Land Lord Zone forums etc) the "woe is me act" is very real, they're making nothing? It appears a lot people go into buy to let with little financial acumen of how complex buy to let is. A property is a tangible familiar asset, whereas the stock market is viewed as volatile and somehow complicated. I've always taken the opposite view.

Posters upthread are saying pension and retirement are motivations, but retirement and BTL is an oxymoron, its a whole load of hassle I wouldn't want at any time of life! Anyone can invest in property via the stock market, ETFs and REITs, and they don't give you any grief.

While BTL can make money, it strikes me as a very complicated and stressful way of doing it, when you can get better results elsewhere 🤷‍♀️

I sincerely hope you're wrong on point 2. and homes do not continue to appreciate in value, as that will heap even more misery on people locked out of the housing market or struggling to upsize.

Fortunately prices are going in reverse which is welcome news.

I agree it does beg the question of why they don’t get rid of them.

CGT

But the CGT will come out of the sale price. It's not like they get a bill with no means to pay it.

If the house hasn't gone up in value, no CGT will be due.

@hannahcolobus I'm in complete agreement with you. Trading the stock market is a click of a button and easy to stay ahead of market changes. Getting out of BTL and second properties is like turning an oil tanker, such a slow clunky investment.

The government has an exocet missile with "tax cash cow" written on it and it's been aimed at BTL since George Osborne changed the way landlords could be taxed. Nothing is going to improve for BTL.

Likewise, quit moaning about it and accept the endless hassle and tax take, or get out, and do something more financially prudent.

I think BTL attracts the least savvy/sensible investors. People see it as easy to do, because the concept of rent is easier to grasp than other types of investment.

And because they thought it was going to be a guaranteed money spinner, any slight detriment plays into the "woe is me" nonsense. They convince themselves they're hard done by.

@TomTraubertsBlues The refinancing trap can very easily mean a Landlord doesn't have the means to pay the CGT.

www.taxinsider.co.uk/the-landlord-borrowing-tax-trap

Ah, well they only have themselves to blame.

@hannahcolobus, I have money invested in stock markets too. At the moment commodities which are doing quite well, especially Shell. I like to have a spread of my btl portfolio of properties and stocks and also a few shares. I have been a LL for almost 18 years and don't find it hard. I manage 7 of my properties myself and only 1 is managed by EA as I live too far away. 6 are close to where I live, within 3 miles and I have a team of tradesmen who look after the properties for me. When a tenant moves in they tend to stay for many years. I don't advertise and I have a waiting list. My tenants often ask for a house for family members or friends. If I was as uch a terrible LL I doubt they do would do that. I have been invited to several weddings of tenants and I am even a Godmother to one girl. I know you find this very hard to believe but not everyone hates their LL.