Any Landlords sold or selling up? Can't decide what to do...

[LLamaLandlord]

Been a LL for over ten years and I like to think I've been fair and responsible. I've had a couple of excellent tenants, but my current one is causing me stress. It's hard to describe without give identifying detail, but it's just lots on on-going low level stuff, lack of respect for the property and lying about things. She is also very rude and aggressive in all her emails, messages etc.

I'm just wondering if perhaps it's time to sell up? The potential legislation coming in next year will make everything much more difficult if I leave it and as DH pointed out, I could now get the same income by putting the cash in a savings account at the moment, without any of the uncertainty or hassle!
I'm aware it might take months before she leaves anyway, which would mean I might get the house back to sell for next spring if I'm lucky!

Any landlords grappling with similar decision-making and around to share their thoughts?

I’ve sold up that’s cheap housing in a nice house with dishwasher, washing machine microwave etc gone for 4 students. They’ll have to pay at least double for similar housing in purpose built accommodation.

What was your key reason? Did you have a mortgage on the property (I don't, so that's not the key driver)?

If you can get the same return in a safer environment then I'd say go for it. Obviously you'd miss out on capital gains but I really can't see you getting any of those for the next few years.

I sold up a few years back when they changed tax rules. No regrets, and I'd be in so much trouble now, would feel very sorry for tenants struggling to pay and end up subsidising them.

I'm waiting to see what the epc changes are. If its mandatory C we can't meet that cost with remortgaging so would sell up. We have had almost two decades anyway so mass selling up of landlords wouldn't put us into negative equity. It's too much uncertainty now and I wouldn't enter the market if it was post 2010.

So basically I'd sell up if I was you. We bought ours for reason, to get on the property ladder as we are tennants too but it's served its purpose and I'm constantly worrying I have overlooked some new legislation. If I had stressful tennants I'd run a mile now. Luckily mine are very happy and very secure. I'd nor re let if they moved even for a 50% increase in rent.

Our current tenant is great and we don’t want to put her in the position of house-hunting for herself and her young children during such a difficult time for renters; but if she chooses to move out we’ll probably sell not re-let. Mortgage rates are one factor but to be honest the bigger one is I don’t want to do it any more, it feels like there is a new requirement every few months and lots of them aren’t even about providing decent housing. I’m more than happy to protect deposits, and carry out gas safety type checks which assure safety, but the there is more and more that is admin focussed and sometimes quite invasive. My absolute pet hate is the requirement to check immigration status. Adding in the tax changes and wider economic situation and I think I just want to get any equity out and stick it in an ISA where it’s safer and I don’t have anything much to do.

Sale on mine completed in March after Tenants gave notice and moved out in November.

I was an accidental landlord, so never very enthusiastic about the whole thing and then Drakeford (I'm in Wales) kept moving the goal posts, over and over again with no end in sight. So I got out while I could.

Sadly I missed out on the post lockdown house price boom and had to drop the price quite low to shift it quick, but it needed to go quickly as my mortgage was increasing so much each quarter.

The equity is now sat in an isa (which due to sale going through in March I was able to max out two years worth of isa allowance in a matter of weeks) gaining interest ready for when our fixed rate ends, in 2 years, on our home.

What is your net yield?

We sold up a long time ago mainly because of the tax changes, but the final straw for me was a reasonably good tenant leaving damage that couldn’t be recovered from the deposit and was expensive to rectify (damage to carpets and a wooden floor, where you need to get the whole carpet/floor replaced but can only claim for the small part actually damaged).

I think it depends a lot on your finances really. If you have old, hard to upgrade stock, are highly leveraged and interest only - its probably best to exit stage left asap. As many seem to be realising. If your lightly, or not at all, mortguaged the yields are healthy enough and likley to stay that way. If your close to retirement and planning on using the sale to bolster your pension - then also now, rather than in 2 or 3 years, might be a better time to cash in. Everyone's circumstances and plans are a little different. Personally I'm in it for another 15 or so years but my properties are not residential.

Only about 4% now, which with no prospect of capital growth is pointless!

However rent is about £200 pm below market rate, so if I relet it with a new tenant it could be 4.5%.
But as others have said, I'm just too worried about keeping on top of the constant legislative changes and this tenant has shown me how fragile that 4% yield is when there is extensive damage to white goods, flooring etc.

I guess one of my concerns is that if she goes quickly I'll likely have an empty property for many months as it would be best to market it for sale in the new year/ spring. However if she contests it/ stays as long as possible and I have to go to court it may be spring until she moves out anyway.

We always said we'd keep it until kids were young adults/ leaving home and DH retires, which is basically next year.

On balance I think you should sell.

Hmm, yes, I think that's probably what I already think too. The next question is about timing and how long I think it will take to get possession of the house back.

We're selling our single rented property. The main reason* being the upcoming legislation and the need to spend a lot of money to upgrade the EPC to a grade C (if possible - it's an older property). It's Hobsons choice really, we simply do not have the money to spend on the alterations that would be needed and the income the rental generates is not enough to cover this expense in a reasonable (ie medium term) timeframe.

It's a real pity as we have good, current Tenants who are set to lose their home once we sell, they are unhappy about this and we feel unhappy that we are having to put them in this situation, which is no fault of their own. However, I would like to state that we feel the Government has put us in this position and we have no choice ourselves.

The property is lovely, it is well maintained, we are good landlords, we have lived in it ourselves. The only issue is that it has an EPC rating of E currently (as does our current home by the way).

We have already installed loft installation, replaced the boiler last year for an efficient one and have installed energy efficient lighting. It is a Victorian house, single stone wall (ie no possibility of cavity wall insulation), it is a listed building in conservation area (so we are not allowed take out the existing windows and replace them with energy efficient pvc double glazing (nor would we actually, that would be vandalism), though we have installed the interior 2nd panes, not as good, but the best possible compromise).

The requirement for a blanket raising of the EPC standard to a C takes in no consideration for the property nor the practicality and "real need" to do so. It makes no distinction from a "rogue landlord" extorting someone for somewhere sub-standard and for someone renting out a lovely home, equally as nice as there own, where the tenant's don't want the work done either (if they were staying, as it would cause to much disruption - they have said this).

Finally on the EPC rating, there is no uniformity, what one surveyor may grade a property is frequently different to how another surveyor would grade it. There are no set rules or norms, it is too subjective.

*Secondary reasons for selling are (i) the tax changes that are reducing the profitability, (ii) increasing mortgage costs, (iii) not wanting the continued responsibility as we get older & (iv) the future removal of the flexibility to get the property back via a "no fault" S.21 notice.

Not a LL, a tenant who keeps a keen eye on EPC related stuff after getting burned in a terrible house that cost a king's ransom to heat.

I don't think the proposal to make all rented homes an EPC C is possible, and at some point the government will twig and realise that the cost of building works, plumbing, boilers, insulation has risen by so much money that it's no longer feasible for LLs to upgrade to a C and we're going to end up with barely any rentals as a result.

I saw an exemption certificate the other day on a house. House looked to be about 100 years old. It was fully electric; UFH, electric hot water. Around 1800 square foot, I'd guess. They've obviously updated the cost per kwh calcs in the latest tables the EPC assessors use (which they do NOT seem to do annually) because the estimated annual energy cost to run this house was £5k a year from a kwh usage of about 29,000 for both heating and HW.

So, guess what? Because the cost of works of getting it from a G to an E were more than £3,500, it was just granted an exemption certificate.

So, now, a house that's too expensive to heat is legally being rented out.

I think that's the way it will continue to go in the future; how it will all end, I really don't know. I don't think the government will be able to afford to help LLs continue to make energy efficiency changes at today's costs, but a blanket ban on anything below a C is also really not feasible and the costs of upgrading systems is completely out of control.

@tom5431 Have you considered selling with a sitting tenant, or do you think that just reduces the sales potential too much? I guess there can't be too many landlords buying into the sector right now?

@KievLoverTwo Yes, I think you're probably right. I also think the Renters Reform legislation is just going to get kicked down the road again and may even disappear/ be delayed if there is a Labour govt in 2025. It hasn't been tabled in parliament for this session before summer, so it will be Autumn again before it even begins to get discussed.

I thought it just had its second reading?

@LLamaLandlord We were exactly like you.

We had two houses we let out. We sold one in 2018 and gave money to DD1 as a deposit for a flat. No mortgage on either. Second house was sold (completed) 6 weeks ago and money invested at 5%. You can now get more! This money will go to DD2 when she is ready.

So, we took various things into account. House 1: DD1 needed the money snd tenants were leaving anyway. No brainer to sell. CGT was paid!!! No avoiding it!

House 2: Agent issued 2 months notice. Tenants left end of last October but I felt bad about it. It took a while to sell mainly due to buyers losing their sale as mortgage rates became higher. The kitchen and bathroom needed upgrading as house was 35 years old and showing its age. Was C rating as we had a new boiler and double glazing. We could not recoup money on improvements via rent and no more capital
growth expected. Therefore we sold at a competitive price. Great location though. Yet more CGT to pay!

Getting the property back was a major concern regarding decision to sell. Worry about future maintenance costs was another. We had owned it for 25 years with no mortgage so we called time on being a landlord. You might have to put up with it being empty. Ours was for 7 months! Of course if you get a quick sale to a first time buyer it should be quicker. My recent sale was a tiny house so we were amazed it went to a second time buyer. But a sale is a sale!!

No, apparently it wasn't tabled. At least that's what this blog says:
https://theindependentlandlord.com/renters-reform-timetable/

and this:

In particular, the “second implementation date”, which will abolish Section 21 and bring in the new laws for existing tenancies, is now unlikely to happen before Autumn 2025 at the earliest, but more likely in 2026. Assuming the Bill does reappear in the autumn…

siiiiiiiigh

Thanks for sharing. Yes, sounds similar. I don't know why I am agonising about this, especially as the tenant hasn't been especially nice to us or the house!😂

I can't decide the best time to give her notice, as I obviously don't know how long it will take to get her to move. However, I can't help thinking sooner rather than later, as her property choices will probably shrink over the next few months.

I guess I may need to suck up a 4+ month void and then put it on the market early next year. I can't imagine Nov/Dec would be a good time to be marketing a property.

It is on the market at the moment with the tenants still in situ - if we get an offer for a sale with sitting tenants then of course we would consider that, else we'll issue a S.21 once we have a firm offer.

I’d sell. The days of being a landlord being an easy gig are long gone. Sold a couple of years back and it’s been worth it for the lack of stress! Also meant we could sell (obvs had to pay CGT) and put a chunk into our current property. The danger now for the government is with so many LLs packing it in, soon people will have nowhere left to go! Rents are already sky high (way higher than mortgages in some cases) and they’ll only go even higher as demand increases.

Ah OK. I can't imagine anyone being interested in buying mine before the tenant leaves as it's filthy and cluttered and I don't think she would let anyone in for viewing! Sigh.

We're on the market, trying to sell with a sitting tenant. No offers in four months.