Rents are going up and tenants are the ones that suffer

[Nchgal]

I’m an accidental landlord. I’m not looking for pity, just want to share my perspective.

Not all landlords are bad or rich and this 4% tax plus the increase in mortgage rates will leave me no choice but to increase rent by £150 per month (!) OR sell up. Either way this is bad news for the tenant.

I’m currently charging £150 BELOW market rate for my tenant as she is a single mum of 4. I’ve been making a loss for the last few years and absorbing it as I can afford to but this 4% and higher mortgage rates will push me over the edge. I cannot absorb anymore, I have my own kids to feed.

House is just outside of London. Interest Only Mortgage. When I remortgage I sometimes struggle to even qualify for a BTL as they want the rent to be 125% the monthly payment. I’m dreading the next remortgage as rates are now above 5%.

Tenant has been in place for a long time, kids are school aged and settled. Having to move will cause them great disruption and anywhere else in the area will cost them £150-200 more at least.

I’m a good landlord, I fix things straight away, properly not bodged job. Tenant had bad credit and a pet but I accepted anyway given her situation (this was before renters rights). They will struggle to find somewhere else.

I really don’t want to make anyone homeless or hungry but I’ve been left with a horrible choice.

I don’t think Labour have thought this through…

Didn’t see it as a business hence no plan.

I had a house, partner had a house. One moved in with the other, so we ended up with a spare house. Wasn’t a good time to sell plus had spent a lot on stamp duty and money making it nice so decided to rent it for a bit to recover some of those costs. Realised it was nice to have an extra income stream so why get rid of it? We paid all the taxes on the income.

Could have sold it, taken the money and put it into a bank to earn interest. Regret that now.

Yes which is why I’ve absorbed the loss for so long but I do have a mortgage and that rises by 1% at the next remortgage so that is just too much with this additional tax

Realised it was nice to have an extra income stream but you said you weren't making an income!

I’ve been making a loss for the last few years and absorbing it

Which is it?

Is it not calculated on the rent she actually pays, up to a certain limit?

It is capped at 24% tax on your net profits between purchase price and sale price. You can deduct all your upgrades/renos, an extra £3k/yr, all the costs of buying and selling it… before capital gains % is applied to the net profit. You get to keep untaxed all the equity the single mum of 4 built up by paying your mortgage for you.

Deciding not to sell because you do not want to pay a fair tax on your net profit from a house by London while acting like a maytr to society is hypocrisy. Being a landlord is a business, you owe tax on your profit at a lower rate than a sole trader plumber/electrician/gas engineer who is actually working for the money and not having a single mum of 4 pay their mortgage loan off for them.

Plenty are accidental landlords

Yes, but that limit is two fold, 1, the max allowed (which is 90% of the average private rent,) and the earnings. She'll be eligible for whichever is the lower amount. So if she already gets the max allowed, it won't go up when her rent goes up. And housing benefit (or local housing allowance) doesn't keep up with rents in reality.

Could have sold it, taken the money and put it into a bank to earn interest. Regret that now.

No you do not. You did not sell because bank interest was below 1% for ages while the London house has likely doubled in value over the past 15yrs. You did not sell because you knew you would make WAY more money hanging on to it.

If you really regretted not selling it, you would not be against selling it now when interest rates are no longer at historic lows.

You cannot be an accidental landlord unless there is some kind of will provision or legal entailment preventing the sale of a house you inherit, while allowing a tenant.

I WAS making an income before all the changes came in. Income has slowly reduced since 2017 and the last few years it’s been a loss.

I wish I sold it in 2020

I said above I wanted to keep the house for my kids so the CGT is not because I don’t want to pay tax but it’s a massive hit in one go so reinforces the idea of holding onto it until there is a better time to sell, like when rates go down or if one of us is not working.

My landlord obviously knew it was coming 2 weeks ago as he put my hmo room up by £55 a month. I now paying 630 for an ensuite room in a 6 bedroom house. I think its extortionate.

Also she hasn’t paid the mortage for me because it’s an interest only mortgage. The mortgage balance has been unchanged for the last 10 years.
Yes I made a bit of money at some point in those 10 years but 1) I paid all taxes on that additional income and 2) that income compensates me for tying my money up for 10 year and taking that risk, as with any investment

This is the problem I have with the OP's comments too.
She is trying to portray this as concern for the tenant and comments about being a good LL but, she actually doesn't want to pay CGT on her profit and thinks that LLs should be incentivised to sell.

It's up to you what you do but this post doesn't make sense. You appear to think that you can make more profit if you hold the house for longer and therefore do not want to pay the CGT.

Thank you for all your input. You’ve helped me see that maybe selling up isn’t a bad idea.

This will mean that I have to evict a single mum with 4 school age kids tho. So either way the tenant is screwed, which was my point in the first place.

Oddly (believe it or not) I’ve actually not thought about “making a profit” on the disposal of the property because the plan was never to dispose of it and just gift it to my kids so they wouldn’t have to go through the impossible task of trying to buy a place when they are older. It was more about saving money than making money.

If I cared more about making money I would have sold a long time ago (2020) when house prices were at a high and before all the regs against landlords were fully in force. I would have sold before losses kicked in. I’ve been holding on with a loss for as long as possible but now I cannot take any more so I’m not left with a choice - both of which are bad for the tenant.

I think I’ve not been clear and therefore misunderstood.
in an ideal world I would not sell. I want to keep the second home.
I have no problem paying CGT but I really don’t want to sell, not to avoid CGT but to keep the house as an asset for my kids.
My point on incentivisation is more that to get people who really don’t want to sell to let go of their asset. The quickest way to do that would be incentivisation (it’s a broader point, not just about my personal situation). Same with anything, if you want it quick you pay more. So it’s more about timing. If the government wants to suddenly flood the market with a supply of houses, lower CGT slightly and everyone will sell up. The tax revenue would be the same as sales volumes would be higher.
Same with what is happening with houses right now. Market is stagnant, no one willing to reduce their sales price so no one is moving.

You've made a mistake by not paying down on the capital over the last 10 years. Hence now why you're screwed with the interest rate hike.

Interest only mortgages still need to have the capital paid off, had you done this, you wouldn't be forced to sell.

I pay a lot of tax on the property which is why I make a loss. Any money I make (I.e. the diff between the rent I receive and the mortgage I pay with that money) is eaten up by maintenance, insurance, regulation and taxes. So the income tax is no different to those sole traders. It’s not at a lower rate. In fact it pushes me into a higher tax bracket cos it’s added to my employment income.

What is different to those sole trader plumbers, electricians etc that “work for the money” is that my property is an investment and not a business, therefore it makes money and pays tax in a completely different way. Both pay tax on income, but my investment has an additional capital gain.

When I entered the market most people were advised to go interest only to make things cleaner. Yes I regret that now completely.

How much longer until your children could use the property themselves?

Fair enough if these are your thoughts. Unfortunately, I think you have based this on a 'business plan' that is out dated. It worked perfectly for people, probably those older than you, who bought in the 1990s. If you bought a lot later, taking an interest only mortgage wasn't sensible. Now that market is falling it's even less sensible!
I do think it was clear by late 2020, certainly by 2021 which was the wind was blowing, ie that interest rates were going to rise and also that governments were increasing taxes on small LLs. As you say, it would have been smarter to act then. If you have made a decision to sell now, I think that is the smartest option that you have available now. Choose a realistic price though or it won't sell.

But is this house actually an asset at present? Will it be an asset long term? You have to weigh these things up.
I fully understand what you mean about incentives. However, I don't know if the government has any sort of plan, never mind a plan to 'suddenly flood the market with a supply of houses'. Also, if changes are to be made to the tax system, this one is hardly a priority. There are so many more pressing problems with the tax system!
I don't think that's correct about the sales market. Lots of people are reducing their asking prices, although I believe there are less transactions overall. I posted this elsewhere. It shows prices changes in the last 12 months. Prices are falling in most places, particularly London/SE/SW and also East and East Midlands.
brickview.ai/reports/september-2026