Has anyone been a long distance landlord?

[Shesellsseashellsh]

my FIL has very kindly said that he would like to give us a house that he currently rents out. The house is a few hours from where we live. He rents it out for below market rate - c.£500 a month (worth £800+). We would want to continue renting it out for below market rate to pay forward some of the property luck we’ve had ourselves to the hard working and reliable long-standing tenants.
Can anyone give me a sense how much work it entails to be a landlord from afar if you have reliable tenants? We could use a local property management agency. I just want to check that I’m not being naive in assuming it should be quite straightforward. Our other option would be to sell the property, and either buy something more local as an investment or put some £ in a pension fund. Thank you!

We bought a rental in a city about 40 miles from where we live and it was fully managed. We never needed to visit until just before we sold, when we gave it a final check. It was a fairly new flat. I did end up getting my own guy to change the electric heater though as I didn’t trust the contractors that the agents used, they kept going back and charging us for it.

That said, there are easier and probably better returns to be had by not letting property. We get a better (and completely risk and hassle free) return from selling the properties and putting the equity into savings accounts as interest rates are so high at the moment. I’m also cynical about all the changes that the government have introduced in the last 10 years or so. It made me realise how little control I had over my investments, and how you can’t predict or plan for the future when the goalposts keep being changed.

I wouldn’t be recommending being a landlord right now. There’s a lot of responsibility and risk- especially if you’re only getting half the market rent. I might consider it again in the future if they reverse some of the daft restrictions and tax rises.

But in answer to your question, yes you can manage a property remotely (probably easier if it’s in good condition etc).

I moved out of my home for work for a few years and used a letting agent to manage everything. No way would I have wanted to do it myself; more than worth the money.

Was very fortunate to have excellent (and lovely) tenants who stayed for years and for most of that time the agents were owner-managed and about 20 yards from the house, so ideal.

We rent out an inherited property that’s a couple of hours away. It’s fully managed but there are always things that need doing (maintenance, gas check, electric checks, inspections, insurance, taxes) so there’s generally something every month that we have to deal with. With all the new regulations that are coming in we are now looking to sell. Your dad would be better off selling the property himself and gifting you some money instead. Maybe he could offer it to the current tenants at a reduced rate if you want to pay it forward.

Same here. If you have decent tenants and are willing to do your share as landlord, no reason it can't work.

Don't assume the letting agents will have any basic level of competence though - ours didn't, kept reporting that the tenants hadn't paid their rent when they had.

Read up and consider what you'll do in various circumstances though

Thanks so much all - super helpful, and lots to mull over. Looks like I'd better read up on all the government hoops we'd need to jump through so we can make an informed decision. I also need to get some advice on capital gains tax, as if capital gains tax would be due on the transfer, we'd need to sell the house in any case. I really appreciate you all taking the time to respond

@Shesellsseashellsh I am short of time but thought to add my perspective.

-Key is what type of tenants you have and if they can be at home on a day someone needs to come and check their boiler etc. Otherwise, you will need to have an Agent on full management (costs money) if you yourself cannot randomly attend appointments within a week or so.

-Then the house itself needs to be in good condition- although I replaced a carpet while my long standing tenants where in. Mine is also rented at below the market. My tenants are lovely and the wife was at home for 2 years although she now has a part time job.
-For Gas- I have a full maintenance with British Gas, so I already have all trades person I need if anything needs to be looked at, and I just need to arrange it with them- usually while on phone with the trade person.
I even managed to deal with a big job while abroad for 5 months just using WhatsApp.

It can be stressful for you are new to it, so be prepared to take it as it comes- been renting mine out for over 10 years now whilst holding down a demanding job-then- but I chose my tenants well and kept rent below the market. My other tenants are also okish but were a bit demanding during the first 12 months but I made myself available in anticipation. They are now settled and it is smooth sailing- I also have trades people there and I always offer to attend, but of course they say they will be at home. Tenants generally like their privacy so I mainly only go to do yearly visits (which are really inspections).

Be very very careful financially. Make sure that you 100% understand the taxation implications plus any impact on any benefits you may receive.

There are a lot of legal obligations to being a landlord which cost money and £500 per month rent will quickly be diminished with insurance, gas safety certificate, EICR, agents fees, tax and most of all repairs. At that level of rental income it will take a long time to have the funds to replace a boiler or kitchen but if it needs doing, it has to be done. Charging under market rent can also be problematic but does depend on the situation. I would say at £500 rent you'd have a massive liability on your hands and you'd be better off selling and sticking the money in a fixed term bond.

I agree about £500 being too low. I also consider anything below 800 to be too low to be worth it unless no mortgage.

Mine only works because although £400 below market it is still £1500 on a flat worth £400K with a small mortgage. The other is on over £3k.

However, the 2nd one only works as it coincided with my desire to reduce the demand on my day job so only work on and off, because I can, so I earn a pittance from day job now and some of it is dividend which is taxed differently, as wanted to retire early and travel the world more. I would have been annihilated on tax had I added the second one whilst earning properly. I have paid more than enough tax already from my day job.

If you are long distance then I would strongly recommend that you get an estate agent/property management company to manage the property.
It will be less hassle for you as you’ll probably find yourself driving back and forth having to do repairs and that. These such companies will have a bank of tradesmen that can do the work.

Would it not be easier though to sell that property and buy another BTL property nearer to home?

Is your FIL aware that if he gives the property to his son, he will be liable for capital gains tax? HMRC consider it a disposal at market value & he will need to report the “gain” and pay the tax in the same way he would, had he actually sold it

I was for a few years - rented my house out and rented in my new town, with c 4 hours between the two. Tenants were lovely and steady but when anything went wrong it was a bit of nightmare - we didn't have reliable builders etc of our own so agency did it and charged through the nose. When I decided to settle in the new town I was pleased to sell it so I could buy here tbh. I wouldn't ever be a long distance landlord again.

We rented out our house in the UK when we lived in Australia. We used an agency to look after everything for us. We also gave them permission to use trades up to a certain amount without waiting to get in touch with us due to the time difference. We also had a policy in place to cover the boiler, gas appliances, fridge freezer, radiators etc. we also told the agency just to instruct safety inspections when they were due. Their usual policy was to email a reminder and ask permission to instruct.