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…

I don't know if it is a real asset for you if you are paying an interest only mortgage. Surely it's only an asset if it rises in prices relative to inflation. At present, it seems to be a liability!

@rainingsnoring I tend to agree with you, it's more of a liability than an asset at present. @Nchgal I think it would be worth getting some advice on what would be due tax-wise if you gift a mortgaged property to your children vs. selling it. You'll end up paying CGT either way but there may be other implications if you gift it.

I don't think you're whining btw, you made a decision when you moved in with your partner and tbh, I think it was sensible to hang onto your own property in case things didn't work out with him. As they have, now you need to decide on your best course of action going forward.

• Sage Homes (Affordable & Social Housing): This is Blackstone's largest UK housing entity. Blackstone has committed over £3.7 billion into Sage Homes, delivering more than 19,000 affordable and shared-ownership homes across England, with thousands more in its immediate pipeline. It has consistently been one of the largest providers of new affordable housing in the country. 1, 2]
• Leaf Living (Suburban Single-Family Rentals): Established in 2021 as a joint venture with Regis, Leaf Living focuses on newly built suburban houses for private rent. Blackstone rapidly scaled this by signing massive "forward-purchase" bulk deals, including a £580 million deal for 1,750 homes and a previous 2,800-home deal with developer Vistry. At its peak, the platform accumulated thousands of houses before Blackstone initiated a process to sell off portions of the portfolio (including an £866 million suburban block sold to pension funds)

Thanks for that info @ArtieChoke I see the rents required by Leaf Living for their properties are much higher than similar properties in the same areas. Re Sage, it is laughable they call shared ownership properties “affordable”. Sure the deposits are affordable and may be attractive to OP’s tenant, but not so much when you’re paying rent and towards a mortgage every month in addition to service charges.

Things really aren’t just so straightforward in real life.
I’m also an accidental landlord. My mother left me her 50% of the family home and my father owned the other 50%.
He didn’t want to sell, wasn’t ready to make the break even tho he’d bought and moved into a retirement flat, so we ended up letting it out against my better judgment.
He died last year and I want to sell but 6 months of IHT negotiations followed by 5 months of waiting for probate to date with no end in sight means I can do nothing.
I’m funding any repairs whilst racking up at least £500 of debt every month on his flat.
Being a landlord isn’t always what some people seem to think it is.

We are landlords - by plan. Our model is based on the mindset we wouldn’t rent out a house that we wouldn’t be prepared to live in - so our properties are warm, decorated nicely and we fix any problems immediately (we don’t employ agents). There is high demand for our properties and we are very fair with our pricing structure but the various new laws mean we will have to increase our rental prices before we would have chosen to. As a previous poster said, the government want rental accommodation to be owned by conglomerates who won’t share our mindset, are not sympathetic to the daily problems that often hit tenants and will make private rental almost impossible for those that need it.

Yes, the government should provide more social housing but that doesn’t seem to be happening anytime soon, does it? There are thousands of new homes being built in the town closest to us and none of them have even been earmarked as affordable.

There are agent fees, safety certificates, landlord insurance etc which are monthly costs that come out any profit (rent-mortgage) and that’s before any maintenance costs and tax.
Last couple of years there have been some big expenses like replacing a fence damaged by the storm, replacing a patio that became unsafe etc. These were in the £’000s so all profit wiped out and I had to pay out of my personal pocket.

So im not trying to maximise profit for myself but just to cover the costs so it is self sufficient. I’m sure that’s reasonable and not greedy.

I don’t think she’s on housing benefit but gets some money from the ex. She also works. No idea of her situation but if she was DSS I’m sure I would have been told about that by the agent on application.

After reading all of the opinions above I think I’d now rather sell the property than put her rent up any higher than it is, £2k a month is loads, even if it is market rate for the area.

I would even be happy to sell it to her at below market rate but I really don’t think she’s be able to afford it.

Some people on this thread suggesting I’m only out for myself, that I’m not really as caring as I make out, so fair enough you don’t know me, but I’m happy to remove myself as a landlord entirely and see how it goes for this tenant. She won’t get a better deal from anywhere else and that will not be my fault, and ultimately this is the whole point of my post.

Clearly haven’t read the full post.

Would you be happy to pay tax on a loss? Cos that is what is happening….

Its my decision if I no longer want to accept paying tax when making a loss so I have 2 choices:

1. sell and get out of the whole thing
2. stop making a loss.

The tax element hasn’t changed, I’ll always pay and be happy to pay tax on my earnings / profit. The point is there is no profit but the tax is still there.

If im whining about anything its this.

But as I’ve said for about the 5th time, this post is about how both options 1) and 2) will ultimately hurt the tenant.
This part is not me whining but stating fact.

That’s exactly why we sold up when it looked like labour were going to get in. We put our hard earned money into 3 properties plus buy to let mortgages. So glad we did. We were good landlords always allowing dogs so it was easy to find long staying tenants. One couple bought the property, the second couple stayed as it was another buy to let landlord. The third really struggled to find something so I gave her a glowing reference and advertised for her on nextdoor. Labour have no solution for tenants of landlords who are selling up in droves. I feel for both.

You are a landlord, though. You made a deliberate and considered choice to rent your property to a tenant. How you arrange your own financial and tax affairs is irrelevant to whether or not you are a landlord.

I'm also a landlord. I rent out a property I bought to live in. A change of career within two years meant that I would have lost out financially had I sold it then. So I made the deliberate and considered choice, as you did, to become a landlord.

People who claim to be "accidental landlords" are attempting, for some reason, to distance themselves from the reality of what they do and the choices they've made.

Actual "accidental landlords" are those who find themselves landlords as a result of someone else's decision (usually because they've inherited a rental property) and give the tenant notice as soon as they can. If they decide to keep the property as a rental, then they are simply landlords.

You had a spare house and instead if selling, chose to be a landlord. It wasn't an accident.
Unplanned pregnancy Doesn't make an accidental Mum, they go around calling themselves Mums!

Just read your comment about the house being an investment for you. Did you know that an investment is supposed to make money, over time? Instead you chose to effectively lose money by charging her cheap rent for your investment.

The whole concept of interest only mortgages on rental properties is troublesome and part of the problem.
It means that the poorer ones are paying for capital gains of the better off ones, creating an even bigger discrepancy, while making the tenants vulnerable to risks which should be the owner's risks.

Just do what you have to do.

It started off as an investment. Investments go up as well as down. Some provide income and some do not. When they start becoming liabilities then you get out.

Yes as a tenant my rent is also going up I think it is due to letting agent costs rather than landlord. My landlord is mortgage free and owns many properties outright. It’s frustrating as the letting agents seems to work in the landlords favour rather than the tenants cutting costs with repairs rather than doing them properly so the same issues arise again. In your position I think you need to think carefully, if it’s supposed to earn you money then it needs to do that. As a single parent there may be housing benefit in place which is capped but sometimes there are adjustments to this depending on the personal circumstances. The government need to overhaul a few systems, social housing is only available if you are homeless or already in the system. First time buyer schemes only help younger people but what about the single parents trying to better themselves? As for child maintenance if it was a better system there would be less benefits being paid out.

This raises an interesting question , there is a strong possibility that this single mum of four who is currently paying £1850 a month to rent OP’s house may be in receipt of some government help via universal credit top up, although of course there is the possibility that she is a very high earner, which she would have to be to maintain this level of rent, bills and living costs for four children without any state help, baring in mind any child maintenance from her children’s father would not be included in UC entitlement calculations. So if this is the case surely the increase in the OP ‘s tax bill, which she will then pass on to the tenant, is likely to result in an increase in her UC entitlement as her housing costs have gone up, so ultimately it will cost the government more money for her to live in the house.

There are no winners here, the tenant is no better off, the landlord is no better off and the government, who have increased the tax, are no better off, as the costs are being picked up by the tax payer. What is this meant to achieve? and that’s without the added issue of increased taxes pushing more landlords into selling up, which reduces the amount of rental properties available, which ultimately increases rents. Note I am not a landlord or a tenant, just a taxpayer.

Yes landlord threads often go the same way with brickbats at the op but it’s a simple supply and price situation and tenants won’t find it easier.

11 million people rent privately, many students also live in Uni owned accommodation, there are masses of unsold flats and new-build now, trust me these big companies are not going to bail out "Jack 10 BTL"s" from Blackpool, a lot of small landlords will have to eat their own debt and Big Corp will be tiptoeing out the back door as demand and immigration falls and less people leave home until prices and rents come down, this is just portfolio dabbling from the big players, not a full scale commitment, it is easier for banks and other lenders to let the small landlord take all the responsibility for repairs etc. and take the risk on demand/prices falling, they still owe the debt at the end of the day.

With property you try to get out, once the market turns it is notoriously difficult to exit property without losses as it is the most illiquid of investments.

I think that she should reg with council after getting section 8 notice from you and she will be moved up list for council accommodation . gvt makes landlording not pay and now employee rights will make getting a job harder. they dont think.

You were perfectly clear and I understood exactly what you meant. The problem is, this is Mumsnet and as such, there are a large number of people who will slate anyone who dares to want to make, keep or save money, or anyone who wants to try and do the decent thing. You were never going to get a fair hearing here....

Meanwhile the bottom feeders who fail to do gsc and esc get away with it because there is still little enforcement. You couldn't make it up.

Landlording pays those that bought years ago, cheap flats and houses that they might have refurbished etc. Those that used loads of BTL debt to purchase in recent years not so much, they will have some severe financial difficulties going forward I think.

Op hasn't mentioned arrears?

It's no good pointing out reality OP, some people on MN are determined to insist the tenant is paying your mortgage despite the mortgage not reducing.

The same. I would happily live in any of my BTL homes. I wouldn't rent them out of they were substandard. Similar to you I have a waiting list and most months I'm asked if I have any more empty houses.