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?

Already on the register in Scotland. Not sure it's led to any more enforcement. It's awkward as it's Council areas, so I was paying for registration in different areas. I don't mind regulation, I meet all my obligations but it requires deep pockets & it would be great if the money raised was used to enforce standards.

Ta for the exemption note, I've not looked into it properly as I'm trying to sell that flat.

In response to a poster earlier: I doubt you mean ground source heat pumps. Unless you have a mansion with acres of grounds. Air source and better insulation might be a possibility. Or just improved insulation. None of these decisions are easy. Old houses tend to be expensive to bring up to modern standards.Solar panels take months to get approval from the electricity national grid. It’s a slow process. Plus a shortage of panels.

it’s also true that some areas have seen little by way of price increases. There’s not a huge profit waiting to be made everywhere. If you expect a profit, you must be in for the long haul. I made around 10% in 5 years on the house I just sold. Obviously much more overall as I had it for nearly 25 years. We might not see that growth in prices again.

Also, my agents found the best tenants in general. They did income checks and really helped the process run smoothly. I had one person in 25 years who was a shit. Impossible to tell in advance though. A good agent is a bonus and makes life easier with handymen on call etc.

I think the proposed legislation is putting people off being landlords. The cost of borrowing will kill it too. Housing associations won’t be keen to borrow either so housing stock to rent will continue to diminish. Houses cannot be put into pension pots so don’t have a rental property or two as a pension. Take the tax relief on pension contributions. That’s another reason why selling might be a good idea. Boost the pension!

I bailed as a landlord 18 months ago - partly due to separating and partly seeing the writing on the wall and erosion of the reasons to invest in it. I was landlord for 12 years. This is in Scotland.

I could see interest rates only going one way. I had already started feeling the reduction in tax breaks. I could see the increase in requirements for rental properties, from EPG to (finally) enforcing the Fire Regulations up here.
I also had experienced a few wobbles from tenants over paying through pandemic, and felt as we headed into increased living costs and more, I would endure more tenants struggling to pay rent.

In addition, I had endured an (7 year old) boiler splitting without warning and dumping hundreds of litres of water through the downstairs neighbours flat on new years eve...It cost a bloody fortune in money, tenant and neighbourly goodwill to get it sorted.

I had also had to wait for the Scottish 'cannot sell rental properties in pandemic' policy to end. And so was worried if Government had chosen to do this once, they could choose to inflict all sorts on landlords without regard for cost/investment/profit.

I had a property valued at £120k, only a capital growth of £6k over what I had put in initially. It was making 6.5% return, but that started shrinking when I budgeted for new windows, new kitchen, new bathroom and new/refreshed wooden flooring throughout, plus of course the new open outwards fire doors that the regulations were bringing in. I was looking at loosing all profit and capital growth. I sold for £122k.

I sold up, sadly not to the tenant who wanted to buy it (and mortgage payments were less than rent, but banks said 'no' post pandemic due to them being on furlough for a few months) but to a new landlord. That new landlord has already been in touch as in 18months they have had two tenants - and both are struggling to pay/being not very good. They wanted to know how I vetted mine and managed to have tenants stay for 2-3 years on average.

For me personally it is a weight off my mind and some weekends and evenings back. I did not use an agent (rural Perthshire, it was easier to do myself) and did a lot of decorating between tenants and basic maintenance myself. I was also having issues after my trustworthy plumber & electrician retired, and it was hard to find good replacements. I also saw more tenants in the block who had little respect for the property or neighbours - more so than in previous years. Perhaps me, but I always was of the opinion that if I or my family would not live there, it was not good enough for tenants. I worked hard to make sure it was a nice, well maintained and fair property for the rental price - and used to stress if I felt things were needing doing.

I should add: I have now bought a property for myself that I can really add value to, so out performing the BtL investment AND as interest rates have risen, I have just popped my savings into a fixed year bank account at 6.2%, so again outperforming the BtL without doing a thing.

This is where I'm at. I only one property, my house from when I met DH. Currently renting to a single mum friend of a friend below market rate. No way would I kick her out but if she chooses to go I'm selling.
Fixed rate ends 2025 so I suspect I'll have to sell then or I'd Be ploughing money into it every month!

Why would she choose to go? She’s probably getting a bargain. You also have all the rules to comply with.

Was this in reply to me?
I suppose she is getting a bargain compared to market rates but market rates are ridiculous so 🤷🏻‍♀️ all rules and laws are properly complied with except deposit protection because I didn't take a deposit.

I imagine if she moved in with someone like a boyfriend etc, bought her own place, got a new job or moved home closer to family. She's said they're far away. I've explained that the rent can stay where it is until 2025 then I might need to review so she's got a long warning.

@onthefence23 . Sorry I forgot to tag earlier. I didn’t see myself and house as a social service. You will have to be clear about when you want her to go and comply with the regulations. These might have changed by 2025 so a long tenancy is a risk in my view.

@TizerorFizz I struggle to see it as a good thing to profit off someone's need to live. The whole thing made me uncomfortable lol which is weird because I am cutthroat at work although now I think you were responding to another poster in a V similar situation!! I'll be following all legalities and factoring in the possible need to formally evict!

I think a lot of people will get out though for various reasons. Yes as PP said some don't have mortgages but the legal and tax stipulations are becoming more and more stringent so it's not passive income at all!

@onthefence23 : "I'll be following all legalities and factoring in the possible need to formally evict!"

Do make sure that you know what these legal requirements are long before you need them. Having just reviewed all the factors related to serving a S21 (notice for tenant to leave/ landlord to repossess) I was quite shocked to discover how tiny legalities could mean it was invalid (e.g. do you have evidence that a EPC was given, did you provide the specific particulars required about the deposit scheme etc). In reality most tenants will leave without too much fuss if you give them sufficient notice and have a decent relationship with them, but if things get difficult having all the correct legal 'ducks in a row' is essential!

I’ve lost the plot about who I was responding to! However if anyone feels uncomfortable about being a landlord, don’t be one. For most it’s to make a profit. Either by capital gain or rental income. Once you get neither you are only providing a service and spending more than you earn. Most cannot do that. In life or business, spending more than you earn is problematic. I have DDs. I’m not here to provide a service to others at a cut price. I sold the properties and they have that money. I charged a fair price but I never had mortgages. I don’t feel obliged to be a social landlord.

@onthefence23 I just don't get that point of view. Don't house builders do this? Or banks? Or estate agents? Don't all businesses exist because they make a profit out of providing something that other people need? If I didn't provide my tenants with a house, where would they live?

I didn't say I don't make a profit I said it wasn't market rent.
There's mortgage/ agent fees / insurance etc and then I have an amount set aside for maintenance and a surplus. That was my point. It doesn't need to be market rent to do that. Maybe I explained myself badly! So to my mind this works for both me and the lady with her kids living there.

I don't intend to stay operating in this business. I moved to another city to be with Dh but at the time it was fairly new and didn't want to sell for a while only had two tenants who've both been great.

Given that your tenant is causing problems, I think you should start the process of removing her. Then you can either put the house on the market or get a better tenant in, which shouldn't be hard with the current lack of rental houses.

She isn't at all likely to leave while her rent remains significantly below market rate. So I'd start by increasing her rent. You mentioned that you can't do this before January, but you could informally tell her now that the rent will be going up to £x in January. That gives her time to figure out how to raise the money if possible, or hopefully to find another property.

We had tenants who created the same sort of problems as yours. We hoped that the rent increase would prompt them to move out. It didn't, but the additional money did help defray the extra costs they were causing and made it easier to tolerate their behaviour.

Additionally or instead, you could offer her a substantial payment if she moves out by a specific date. That won't help if she simply has nowhere to go, but if you offer enough money then maybe she can swing it.

I have to do a quick check in with the LLs in this thread to ask whether the distinct lack of rental properties in the market we keep being told about at the moment is real. Or, rather, are there actually tenants out there prepared to rent at whatever mortgage rates LLs are now having to charge?

I have been in the unfortunate position of looking for rentals between spring and summer in 21, 22 and this year too.

I have never had as many properties hit my inbox that we could live in as I have during the last fortnight. I have also never in all that time seen any hit my inbox because they have been discounted*. I have had several dozen of those too.

It's making me wonder whether rentals are now so unaffordable that people are finding other types of accommodation; moving in with parents, negotiating hard to stay put, and idk what else.

*Mainly comprising of folks asking 20% more for rent in May then putting it down in July, big properties with poor energy efficiency and properties that haven't been refurbished for 30 + years

I only have a snapshot of the rental market when I need to find a new tenant. My place is in the SE, commutable and in an excellent school catchment area, and my place was let within 24 hrs of me handing it over (post refurb) to the lettings agent.

There was then a bidding war between 2 families. The recently divorced mum with 2 kids got the house… I’ve been in her shoes and someone gave me the chance when I’d been in her situation. I wanted to pay it forward.

That was last October.

My houses always let really quickly. One issue was never getting time to do much maintenance! We tried! Tens Tenants were always happy though. At the moment there are not enough rentals. We had modern 2 beds. Always popular here.

Evicted a tenant finally in March cost 3k. Had to decorate, recarpet, replace fire alarms and extractor fan they'd smashed up. Cost £3.5k. so a whole years rent lost. Went on Rightmove yesterday. We've still one house with a lovely tenant will sell that when she leaves. Also we're in Wales to do another course and renew licence £300. I'm done.

The effects can be quite local. What you describe with landlords in your area asking high rents and then having to reduce may be a local phenomenon.

Something similar happened in my area with house sales. It seemed that everyone was putting houses on the market for too much. Would-be sellers had a look at what "everyone else" was asking and priced their houses accordingly, failing to notice that those houses were not actually achieving anywhere near the asking price. Estate agents were contributing to the problem by telling vendors what they wanted to hear.

Or maybe what you've seen is desperate landlords trying to put the price up enough to cover their mortgage, then realising that isn't working and being forced to reduce to a more realistic price. Decades ago, I went to look at a very scruffy house being rented for rather too much money. My housemate and I observed to the landlord that there were better houses to be had for that price. He responded that he had to charge that amount to cover his mortgage, and that he couldn't afford to do the repairs and redecorating which the house so badly needed. I doubt any other prospective tenants found THAT a persuasive argument!!!

Where I live, rental prices have increased, but not astronomically. It's roughly in line with inflation. However, anywhere halfway decent gets snapped up instantaneously. Landlords are being very fussy about who they will take, and tenants who don't look like a safe bet just can't find anywhere at all. Lots of tenants are using their connections (e.g. social media) to try to find a property, because the usual routes aren't working for them. I am a bit surprised that landlords are not (yet?) taking advantage of the situation by charging huge rents.

Presumably if you up the rent and they don’t pay you end up with a section 8 situation and still have to go to court/bailiffs for possession if they won’t move out?

My housemate and I observed to the landlord that there were better houses to be had for that price. He responded that he had to charge that amount to cover his mortgage
It clearly hadn't occurred to him that he might not get any takers and he'd end up with no money at all to cover his mortgage 🤷

We ended up as “accidental” landlords for a few years then sold. Had we kept it until now we would have made a lot on the capital growth. However I’m still glad we sold up.

At that time we made little profit over the mortgage/fees (and that was before the tax changes) but more importantly there seemed to be a string of problems caused by tenants which became stressful and expensive to deal with. In the end they managed to cause such a significant accident due to their negligence we had insurer funded repair work done (which they claimed was our fault but blatantly theirs) which felt a good time to sell, and paid down our own mortgage with the equity. It was such a relief to get rid of the worry of what would happen next.

Exactly. The advantage to increasing the rent only comes if the tenant is in a position to pay it and cares about their credit rating or landlord reference, in which case they will pay or look for a different property.

If those things don't apply, eviction will take a long time. Taking them to court over unpaid rent achieves little, since you'll never see the money even after there is a judgement against them.

Not selling but we have paused buying for now. Luckily I can do all my own work so costs are hugely reduced.

Can't find anywhere usually means 'can't find anywhere they can afford'...