Can any landlords out there give me some advice please?

[DanielleandBobby]

I'll try to keep this short. Recently divorced, sold marital home, now renting with DC. Am thinking of buying a 2-bed flat with my half of the equity (max £180k) and renting it out for a while until I know what's happening in the future. I want to future-proof too as I have virtually no pension and won't be able to afford to rent for ever. It'll be my retirement home.

I'm aware of the pros and cons of doing this, but I live in a tourist area which has a shortage of rented properties so hopefully won't have too much trouble renting it out. BUT, is this a mad idea, given I've never been a landlord before, and is it a mad idea to use up most of the equity on a property and have little left in savings?

The alternative is to keep the money in the bank but I'm worried that will start to trickle away if I keep renting. I've made an appointment to talk to an established letting agent next week to get their opinion, but thought I might have some luck here too. Thanks!

Can you afford to not have rent coming in if the tenants refuse to pay? Can you afford to completely refurbish your house if it gets trashed? Can you afford all the gas/elec teating yearly and all the maintenance that may come from the building as well?

Why don't you buy the place to live in yourself?

It is a steep learning curve renting out a property, and you can be unlucky and get a bad tenant that ends up costing you dear. I think if you can see it as a business, not get emotionally attached to the property and learn what you need to it is a fair investment. However, if you are using all your capital to invest in one property it is risky, and you may well be better investing the money in a spread of financial products.

Use a management company... They choose the tenants and get your rent!

If you can buy a 2 bed then live in it. Dc can share if needs be

Do you mean Airbnb or short term rent? renting out has costs and if you want the property back quickly, that may not happen, you may need to go to court to get your flat back.

In your situation Airbnb unless you re in a restricted area for this.

I rent out the house I used to live in. It's managed by a local agent - one woman business so it's very much in her interests to make sure the tenants are carefully selected and looked after. She deals with all aspects of the let, is contact point for tenant, ensure repairs are carried out etc. You still need to be registered as a Landlord and have appropriate insurance.

If you're in a touristy area, then holiday lets might be a more lucrative option, but they are also more work. If you're in Scotland you'd need a short term let licence.

As others have said, prioritise buying a property for yourself first. £180k is a decent amount of money in many areas and a substantial deposit everywhere if you can't buy what you want outright. Focus, if need be, on getting the best mortgage terms you can by boosting your credit rating.

I wouldn't, what if the tenants don't pay? What if something breaks? What if you need to go through court to evict them? What if they destroy the house?
If you don't have at least 5k sat there to back you in an emergency don't do it.

Doesn't guarantee the tenants won't trash the place and refuse to pay. And it is still taking a long time for eviction orders through the courts.

I became an accidental landlord during the pandemic and recently sold it.

Costs to consider: We had a managing agent who took a hefty chunk, I had to pay tax (I then went slightly over the higher taxpayer threshold which made it totally pointless) and there was about £1k of repairs every year (boiler/leaks whatever). Now a lot of councils are introducing license fees for LLs, there’s also various certificates that needed doing every year/few years and also there’s something about EPC ratings where within X number of years (can’t remember exact number) all rented properties will have to comply with the minimum banding.

Also when selling it you need to pay CGT on the profit you’ve made since you sold it.

Personally for me it wasn’t worth it. In your situation I’d wonder whether it would be better to invest in a property you can live in?

Thanks everyone for your different takes on my situation.
I can’t live in any flat I buy at the moment as I have two young adult DCs and it’d be far too small.

I’m also not working at the moment due to ill health over the last year or two so couldn’t get a mortgage right now, which is why I’m thinking of buying somewhere outright.

The idea that someone could trash my place hadn’t even occurred to me so I’ve got a lot of thinking to do.

Thanks everyone 🤗

Doesn’t LL insurance cover trashed houses, or is that just for voids and to help if they can’t pay?

I rent out a small flat I used to live in. Honestly it only worked once I treated it like a business, proper insurance, money aside for repairs, and a clear lease. I use TurboTenant to keep applications/tenants straight, but even with that there are still surprise costs every year. If this is your only pot of money I’d think twice before locking it all up in one place.

buying a property that appeals to you as your final home does not necessarily make it a good choice for a property to be let to tenants, holiday area or not.

Do the calculations, how much can you get in interest on the lump sum and how much more or less would you get in rent after all fees and allowance for maintenance etc on your btl. Then it's a question of how much you think house prices might go up or down over however many years you intend to rent it out.

Remember if you keep the money in savings no more than £85k in any one banking group to have full FSCS protection. Look for high rate monthly income accounts, if the income is important.

A lot of people seem to be getting out of renting due to the rules on being a landlord becoming more difficult and the rights of tenants becoming onerous.

Seems crazy to buy a place to rent out when you rent yourself tbh.

I suggest you look into putting our money into safe investments. Have a look at AJBell website, it's been recommended by Which for many years. They have many investment products for all levels of risk. You should be able to get a 5% annual return with their low risk funds. Please do educate yourself. Lots of people don't trust equity because it sounds terribly complicated and financial services do not have a good reputation. Which is why it is important to educated yourself. There are many good resources out there. Ask fellow Mumsnetters. I would not buy to let under the circumstances the country is in right now

@Kosenrufugirl is right. Everything she said.

I wouldn't become a landlord now, it has become more difficult and expensive.
Could you consider moving to a cheaper area where 180K would get you a reasonable sized house? They exist! Then you could live in it.

I’ve had a rental for years - one bed flat. Never had a problem with it being empty more than a month or two between tenants. Sometimes had good tenants who stayed a few years. Sometimes they leave in a year. Never had anyone withhold rent or trash the place. I try and pick nice people.

I don’t use an agent as they take a massive chunk of the rent. I advertise it on Open Rent so it goes on Rightmove. I show people around myself and choose the person I think is most financially solvent and who I like best. I use Open Rent tenant referencing service to check them out. I pay for this myself - it’s not much. If there’s an issue ask for a guarantor or move onto someone else. Ive had someone from overseas who couldn’t provide the information required as they just arrived, so I asked for proof of employment and proof of bank funds and took a punt. They were great.

Then admin wise you need to -
Sign a contract - copied from online and adapted
Sign an itinerary - list of what’s in flat and condition
You need landlords insurance
They give you a deposit which you must register with the Tenancy Deposit Scheme.
Notify utilities you are no longer responsible for bills, give readings and pass details over.

It sounds a lot but if you research it well and you are organised it’s all do-able.

Forgot to say choose a flat with low ground rent and service charge as you need to pay this not the tenant. It is tax deductible. Oh yes and you need to do a tax return so keep,a record of everything you spend.

House on my road managed by a professional management company, tenant evicted for non payment of rent and utilities, taken months with all the legal rules in place now and apparently been left in a right state. Let's put it this way, I've never seen any rubbish put out for the bin men in a year😳that's months of rent loss and the cost of of renovating it before a new tenant can be found.

I'd recommend £50,000 in premium bonds (I have a relative has this and wins most months) and the rest invested in nice safe savings accounts🙂

I sold a long term rental in feb, had lovely tenants for over 12 years paying a low rent as they looked after house, previously had drug dealers and mafia...evictions, house wrecked etc...it can go well but can be a horror show..the agency placed the dealers and mafia so i took over management...agencies dont care who they place....also get all the insurances...rent guarantee and eviction policies..we had all those and claimed twice and got paid out....never got contents as too dear so lost about 8k in damages...i dont think i would do a rental again...have invested the money and getting 4% and no stress plus lots of new regulations now and harder to evict, can take upto 2 years go through courts.!!

I say go for it as it’s a great way to invest, have an income and secure a pension. But do get landlord insurance. I use simply business. They cover you for damage and unpaid rent. Check on council tax for Airbnb properties. If it’s long term lets, it’s up to the tenants to pay. Devon, Cornwall and Wales all have very different council tax rules on Airbnb properties so it’s worth checking where you are. Buying a rentals property is pretty much always a good idea though, esp in a holiday area

I'm an experienced LL with a portfolio.of 12 houses. I'd always recommend buying a home for yourself first. I don't see the point of renting a house for you to live in yourself whilst letting put a flat you bought. Why not just buy a property and live in it? If you claim benefits you wont be able to claim housing benefit on the rental house you live in whilst owning a property you let out.