The joy of being a landlord

The alternative being "go out of business"

A BTL landlord has a fairly straightforward business model. The money coming in from the renter must exceed the spend of the landlord, and if it doesn't, then there is no sustainable business.

It's not like a manufacturing company where increasing costs could potentially be offset with cheaper materials or methods.

If the cost of business goes up, the end price to the customer goes up directly, or the business is no longer profitable and ceases to be viable.

What alternative do you see?
Sadly there is an alternative that is being played out, rents can go up with no relation to cost, there is the "charge what the market will tolerate".

I agree with your fundamental point though, anyone imposing costs on a landlord is very naive if they think the LL will take the hit personally.

The government also a few hours ago confirmed to the BBC they wont be tracking rent increases in 2025 for housing benefits, to me thats a big fail, they were claiming to be the party on the side of tenants, the previous government raised it last year, then the current government freezes it. Also a bit sneaky if that wasnt read out in the budget, as its in its own article on the BBC website, with the BBC saying they were told by the government.
 
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Sadly there is an alternative that is being played out, rents can go up with no relation to cost, there is the "charge what the market will tolerate".

Indeed. I have witnessed it happen.

I agree with your fundamental point though, anyone imposing costs on a landlord is very naive if they think the LL will take the hit personally.

It seems a little unreasonable if the landlord must end up with a free house as the only viable business model requires passing all costs onto the tenant. I have known plenty of BTL landlord's, some with just a flat or two and some with numerous houses. Generally they seem to make enough to pay the mortgage off early and to my knowledge not one of them has ever then dropped the rent. It's usually a case of charging what the market will stand.

One retired guy has been getting out of the game and (that I know of) has sold off 3 of his rental properties over the last couple of years for prices ranging from £400K to £700K. Doubtless he has some tax to pay, but on the face of it he has made something like £1.5 Million from the sales, on top of the profits he made whilst renting out the houses.
 
One retired guy has been getting out of the game and (that I know of) has sold off 3 of his rental properties over the last couple of years for prices ranging from £400K to £700K. Doubtless he has some tax to pay, but on the face of it he has made something like £1.5 Million from the sales, on top of the profits he made whilst renting out the houses.
And?
Isn't that the idea to sell up and use the properties as a retirement fund or whatnot?
Good for him.
 
And?
Isn't that the idea to sell up and use the properties as a retirement fund or whatnot?
Good for him.

I suppose the issue is the argument being put forward that the BTL "business model" requires the landlord to pass all costs onto the tenant. Plus the tendency of landlords to also up the rent and charge what the market will stand, even when their costs aren't increasing.

Once the rent collected from the tenants has paid off the mortgage, the landlord continues charging what the market will stand (no drop in rent to reflect the drop in costs) and one day sells the property and cashes in.

You don't think that might all seem a tad unfair to the person being hit with the rent increases?
 
I suppose the issue is the argument being put forward that the BTL "business model" requires the landlord to pass all costs onto the tenant. Plus the tendency of landlords to also up the rent and charge what the market will stand, even when their costs aren't increasing.

Once the rent collected from the tenants has paid off the mortgage, the landlord continues charging what the market will stand (no drop in rent to reflect the drop in costs) and one day sells the property and cashes in.

You don't think that might all seem a tad unfair to the person being hit with the rent increases?

I can see the model where rent increases are loosely tied to inflation say using a model of the last five years and projection forward. To reduce rents because you as an individual landlord have finished your mortgage is probably over generous. To be able to provide a better service experience to your tenants at a market rent is maybe more appropriate. Fixing stuff and double glazing for example.
 
I suppose the issue is the argument being put forward that the BTL "business model" requires the landlord to pass all costs onto the tenant. Plus the tendency of landlords to also up the rent and charge what the market will stand, even when their costs aren't increasing.
“Requires the landlord to pass on all costs” eh, who’s said that?
Once the rent collected from the tenants has paid off the mortgage, the landlord continues charging what the market will stand (no drop in rent to reflect the drop in costs) and one day sells the property and cashes in.

You don't think that might all seem a tad unfair to the person being hit with the rent increases?
Nope, why would anyone drop the rent because their BTL mortgage is paid off?
As long as the tenant is looked after, all maintenance is up to date and any problems get sorted asap, then what’s the problem with charging market rate?
 
“Requires the landlord to pass on all costs” eh, who’s said that?

Nope, why would anyone drop the rent because their BTL mortgage is paid off?
As long as the tenant is looked after, all maintenance is up to date and any problems get sorted asap, then what’s the problem with charging market rate?
Exactly, the only comparison you might care about is could you get a better return elsewhere.
 
It's still boring because the disconnect some landlords have from reality means they can't seem to admit it, but again.

If you're paying 10-15% right off the top in management fees, maybe your business model is the problem.

If you're massively overleveraged and put very little capital in yourself, maybe your business model is the problem.

If you're paying out full costs every time something needs doing to your properties, maybe your business model is the problem.

If your industry relies on the best part of £20 billion subsidy every year from the government and taxpayers, maybe your business model is the problem.

Housing isn't a free market and the fact that a broken system has meant it didn't matter how bad your 'business model' was for the last 20 years you still made money doesn't mean you should be protected forever.
 
“Requires the landlord to pass on all costs” eh, who’s said that?

There are various comments to the effect that government actions resulting in cost increases for landlords will be passed onto their tenants. For example:

The alternative being "go out of business"

A BTL landlord has a fairly straightforward business model. The money coming in from the renter must exceed the spend of the landlord, and if it doesn't, then there is no sustainable business
.

It's not like a manufacturing company where increasing costs could potentially be offset with cheaper materials or methods.

If the cost of business goes up, the end price to the customer goes up directly, or the business is no longer profitable and ceases to be viable.

What alternative do you see?

Nope, why would anyone drop the rent because their BTL mortgage is paid off?
As long as the tenant is looked after, all maintenance is up to date and any problems get sorted asap, then what’s the problem with charging market rate?

I'm not saying that they would. But that market rate may be an eye wateringly high figure driven in part by landlords passing on previous cost increases to their tenants. Plus there seems to be an element of denial regarding the valuable asset the landlord ends up with.

My original observation:

The BTL landlord's mantra. Regardless of the question, the answer is "Put up the rent".
 
First off, I didn’t say you were confused, read it again.
What Lopez said was the money coming from the tenant must exceed the spend of the LL, which is correct for it to work, as with any business.
No one has said or suggested “all costs” must be passed on, only you.
I couldn’t possibly pass all my costs on or the rent would be prohibitive.
 
There are various comments to the effect that government actions resulting in cost increases for landlords will be passed onto their tenants. For example:





I'm not saying that they would. But that market rate may be an eye wateringly high figure driven in part by landlords passing on previous cost increases to their tenants. Plus there seems to be an element of denial regarding the valuable asset the landlord ends up with.

My original observation:
Landlords can't really "pass on costs" to tenants, LLs can only look at local market rate and charge a similar price, tenants are paying higher rents because other tenants are paying higher rents.

It's supply and demand, costs are going up for LL's (for example yields are around 4-5%, BTL mortgages are also 4-5% AND you still get taxed on the income before cost of lending), so LL's are selling, less houses for rent, more tenants, prices go up.

If LLing was something worth getting in to now then there would be increased supply and lower rents.
 
There are various comments to the effect that government actions resulting in cost increases for landlords will be passed onto their tenants. For example:





I'm not saying that they would. But that market rate may be an eye wateringly high figure driven in part by landlords passing on previous cost increases to their tenants. Plus there seems to be an element of denial regarding the valuable asset the landlord ends up with.

My original observation:

The market rate due to supply and demand is basically set by the worst performer in the market place.

Its working basically in the opposite direction to how the rest of the economy works in that the worst performers are forced out and the better ones are copied and emulated.

The worst performer in BTL sets their price and creates the market price that anyone else will match over time.
Due to the shortages of property in the UK someone will be desperate enough to pay that price and boom, thats the market price.
 
@Mr Badger, are somehow confusing what @Lopéz said previously when you mentioned business model?

First off, I didn’t say you were confused, read it again.
What Lopez said was the money coming from the tenant must exceed the spend of the LL, which is correct for it to work, as with any business.
No one has said or suggested “all costs” must be passed on, only you.
I couldn’t possibly pass all my costs on or the rent would be prohibitive.

You are tying yourself in knots. My original point was based on the reaction to the budget of BTL landlords (not just on here) that increased costs would be passed on to their tenants.

The spend of the landlord is made up of the total costs that they pay.

You state that "the money coming from the tenant must exceed the spend of the LL" but also that "No one has said or suggested “all costs” must be passed on".

If you can't see the contradiction there, then I think we are done.

Also your comparison "the money coming from the tenant must exceed the spend of the LL, which is correct for it to work, as with any business." is arguably flawed. Being a Buy To Let landlord is not the same as a typical business that survives based on making a profit (or at least not losing money) on its turnover. A Buy To Let landlord uses the income to purchase an asset. After (say) 25 years of breaking even a business may have nothing to show for it, whereas a BTL landlord will have gained a house.
 
The market rate due to supply and demand is basically set by the worst performer in the market place.

Its working basically in the opposite direction to how the rest of the economy works in that the worst performers are forced out and the better ones are copied and emulated.

The worst performer in BTL sets their price and creates the market price that anyone else will match over time.
Due to the shortages of property in the UK someone will be desperate enough to pay that price and boom, thats the market price.

I live in Bristol, where demand definitely outstrips supply and rents can be positively shocking.
 
Could be worse. My dads just forwarded me this email he's received about one of his flats. Hopefully it gives him the push to actually sell it!

Good morning,

I hope you are keeping well.

We are getting reports from the directors of Spinnings Management Limited about anti social behaviour which they say seems to be coming from apt 23.

Reports include smoking of cannabis in the building, and last night a large group of people in the grounds, midnight to 3am making noise and at one point riding a motorbike on the lawns.

If this happens again they are talking about calling the police so it might be better, if this is coming from your apartment, that you take steps to ensure there are no repeat incidents.
 
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