The joy of being a landlord

[bigmike20vt]

For many they have inherritted a property (usually from parental bereavement) and when faced with the reality of the housing / rental market they then choose to make it a rental property.

Not for family
Not for handing down
Not for giving a head-start

For Income.

i do not doubt you at all..... its a decision as an only child i will likely have to make as well - hopefully in the distant future. No idea what i will do then to be honest... probably sell, but if i do it wont be for any noble anti rental sentiment but just because it isnt worth the hassle (and i dont want to manage my family home that i lived in and my dad lived in since he was 3 and my mum since she moved in in the early 70s - they were a right to buy family just to really cheese you off ).....
people complain about slum landlords....... IF i did rent out that house i would likely be a landlord from hell.... but for the opposite reason, i would be far to precious over it.

 

[Sythe79]

Exactly, the £147 is only interest as shown by the tax relief calculation of £29.40 - whether or not that's interest only mortgage we don't know by the information given, but it's irrelevant since the renter wouldn't be able to buy their home on an interest only mortgage, so it would be a repayment one on the £120,000 value, say less 10% deposit, which works out at ~£600 / month.

Either way it's an interest only mortgage for dod so the renter isn't paying off his mortgage or he's only shown the interest amount, so the rent wouldn't be nearly 4 times the mortgage value.





Ok Karen

Yes I said that it's low, and probably interest only even so 520 would cover the mortgage on a 125k house. The point is interest only mortgages on buy to lets are an even bigger scam up there with sub letters.

 

[Bluecube]

Rather like the £1000's out of pocket he could be having to replace a boiler, or a bathroom, or the kitchen?

(OK I will concede, depending on property value, complexity of sale etc.. it could be a lot more costly to sell)

This also highlights the issue and complexity around such situations.

For every well intentioned LL or 2nd-home owner , there is unfortunately many more who are not holding into property/properties for family reasons and a desire to hand-down.

For many they have inherritted a property (usually from parental bereavement) and when faced with the reality of the housing / rental market they then choose to make it a rental property.

Not for family
Not for handing down
Not for giving a head-start

For Income.



Just to be clear, Those "portfolio" types are most certainly the ones who draw my ire the most tbh, as watching those shows you often see the "quality" of the workmanship on the refurb is often sorely lacking (usually all done by the person that bought it to rent out) and you just know it's gonna be another one of those "hovels" where everything's falling apart in 3 years time.

I do not begrudge a person wishing to hand-down an inherited property to their kids, I begrudge people who have 2nd properties for an "investment", for "income", for "my future pension".

There already exists many ways for people to invest without depriving others of the chance to own a home.

There already exists many ways for people to generate an income without depriving others of the chance to own a home.

There already exists a myriad of pension schemes for one to secure their finances in retirement without depriving others of the chance to own a home.

Believe me, it really is the "Portfolio" types you see on those shows that are the major problem, I 100% recognize that

What’s the point you’re trying to make? The rental market is screaming out for new properties due to a shortage in available rents. Due to the shortage, rents have increased. Yet you seem to be saying that all renters (no matter what their income) should just rush out and buy a house? But there aren’t any houses available to buy due to a shortage in housing stock… So once again, what is your point? Is it that overall in the UK there is a dire shortage of housing both for rent and to buy? If so what’s the solution? And it doesn’t involve ranting and whinging about landlords

 

[Devilman]

WOW £10K over 6 years.
I wonder how many yacht’s he’s bought.

Send me £200 a month for 6 years.

I mean, if it's nothing then you won't miss it right?

Don't be so stupid.

 

[Firestar_3x]

Send me £200 a month for 6 years.

I mean, if it's nothing then you won't miss it right?

Don't be so stupid.

What service are you providing?

 

[JonRGV250]

To be fair, he’s providing me rather a lot of amusement, not £200’s worth, but quite a bit.

 

[bigmike20vt]

as a thought exercise........ (and note i am trying to keep my responses civil and not get bogged down with pettiness, would be nice if we could all do that on all sides of the discussion)
are there any countries in the world which ban private rental properties? am sure there are some but every country i know of allow it. ***

so with that in mind what is so different in the uk which is meaning that landlords are causing a housing crisis but not elsewhere? (unless everywhere is in property crisis).

my point is..... if there are private landlords elsewhere and there are no problems then the cause of the issue in the uk - and i accept there IS a housing problem in the uk - is not private landlords but something else.

***note not talkign about foreign investory buying houses and letting them sit empty... i dont doubt that is an issue but to me that is separate and should be dealt with different to rented out properties.

 

[Devilman]

What’s the point you’re trying to make? The rental market is screaming out for new properties due to a shortage in available rents. Due to the shortage, rents have increased. Yet you seem to be saying that all renters (no matter what their income) should just rush out and buy a house? But there aren’t any houses available to buy due to a shortage in housing stock… So once again, what is your point? Is it that overall in the UK there is a dire shortage of housing both for rent and to buy? If so what’s the solution? And it doesn’t involve ranting and whinging about landlords

At no point did I say anything remotely close to "all renters (no matter their income) should just rush out and buy a house". That is entirely fabricated by your own mind.

What I did say was that over time as more properties came onto the buyers market due to renting becoming less appealing / profitable, house prices would drop thus mortgages will become more obtainable to those who previously had been unable to, due to reduced overall lend and deposit size required (Though not directly interest / mortgage rates).

Yes, the rental market is screaming out for new properties due to a shortage of available rents.

I fail to see how the Housing Shortage in this country is solved by having yet more houses in the ownership of yet fewer people.? It seems like just another method of "reallocating" wealth upwards.

 

[Devilman]

as a thought exercise........ (and note i am trying to keep my responses civil and not get bogged down with pettiness, would be nice if we could all do that on all sides of the discussion)
are there any countries in the world which ban private rental properties? am sure there are some but every country i know of allow it. ***

so with that in mind what is so different in the uk which is meaning that landlords are causing a housing crisis but not elsewhere? (unless everywhere is in property crisis).

my point is..... if there are private landlords elsewhere and there are no problems then the cause of the issue in the uk - and i accept there IS a housing problem in the uk - is not private landlords but something else.

***note not talkign about foreign investory buying houses and letting them sit empty... i dont doubt that is an issue but to me that is separate and should be dealt with different to rented out properties.

I would need to read into it again as it's been a few years, but I recall from conversations with a Spanish friend that over there they had very strict legislation around rent cost, maximum rent rises and quite a host of "tenant protections" (and also LL protections I believe) that we simply do not have here.

I would even go as far as to say the "real problem" (imo) is not Rentals, or even Private Rentals. It's the shockingly poor regulation and legislation around it, coupled with a seemingly intentional (by multiple governments from all sides) effort made to limit housing supply to keep the property market forever rising.

I know in the case of Spain they had huge numbers of developments going on over the last 20+ years, however many have been mired in corruption and lawsuits.

I also recall her saying that for Spanish people it was pretty common to rent, often privately (rather than from local gov / municipality) and there really wasn't much of an emphasis made in Spain on the whole "own your own home" like we experience over here.

It could be in-part due to their greater protections (via legislation) that allows them to truly feel as though a rented property can be a "home" and not just a "temporary dwelling".

 

[bigmike20vt]

I would need to read into it again as it's been a few years, but I recall from conversations with a Spanish friend that over there they had very strict legislation around rent cost, maximum rent rises and quite a host of "tenant protections" (and also LL protections I believe) that we simply do not have here.

see if you were to debate about improving protections to good tenants from bad LLs and protecting good LLs from bad tenants.......... i could get on board with that. indeed because i consider myself a decent landlord and DONT put rent up much (or at all in over 5 years) I am confident i would win out if that happened (win in terms of be happier, less stressed and better off).

 

[dod]

Rent 520 mortgage payment 147 maybe he needs to implement a reading programme for you. Having said that it does seem low on a buy to let mortgage so maybe interest only which is worse.

It is interest only. Why that makes any difference I don't know. In the case of a C&I mortgage I'd just have set the rent higher to cover it. As it is I take the profit on a monthly basis and decide what I want to do with it. I may put it back into the equity or invest it elsewhere. This way it allows the rent to be lower if anything, there's less pressure to increase it.

People really need to stop blaming private landlords all the time.

 

[Sythe79]

as a thought exercise........ (and note i am trying to keep my responses civil and not get bogged down with pettiness, would be nice if we could all do that on all sides of the discussion)
are there any countries in the world which ban private rental properties? am sure there are some but every country i know of allow it. ***

so with that in mind what is so different in the uk which is meaning that landlords are causing a housing crisis but not elsewhere? (unless everywhere is in property crisis).

my point is..... if there are private landlords elsewhere and there are no problems then the cause of the issue in the uk - and i accept there IS a housing problem in the uk - is not private landlords but something else.

***note not talkign about foreign investory buying houses and letting them sit empty... i dont doubt that is an issue but to me that is separate and should be dealt with different to rented out properties.

It's a problem anywhere demand out strips supply, and that demand is a captive market. Yes the solution if there is one is governmental and no I don't in theory begrudge landlords per se. it's the utter delusion that they aren't part of the problem and benefiting from the situation at the exploitation of others.

No, you didn't create the situation (unless you're an MP) but don't cry if a large section of society sees you on par with scalpers and toilet paper hoarders at best.

For context my other half works with people getting people housed that are getting back to work, and it would at least be nice to hear one story at night of one of these good landlords, it never seems to happen tho' they must be all busy posting on forums about how hard it is

 

[Devilman]

see if you were to debate about improving protections to good tenants from bad LLs and protecting good LLs from bad tenants.......... i could get on board with that. indeed because i consider myself a decent landlord and DONT put rent up much (or at all in over 5 years) I am confident i would win out if that happened (win in terms of be happier, less stressed and better off).

Indeed I suspect in truth what I have been thinking / saying in the sense of "everyone deserves to own their own house" is perhaps actually more a sense of "everyone deserves a to have a place that is home" (as sappy as that sounds).

Not fear of having the rug pulled out from under them at a moments notice or because the "market rate" has reached a new astronomical high and if the LL kicks them out they can put the rent up £250pm.

Or not being able to redecorate / change aspects of the property (provided they were not damaging or detrimental if rented ofc)

Or just the feeling that "it's only temporary".

Unfortunately without a lot of reading-up I don't know enough of the Spanish Legislation(s) to be able to point at one as an example and say "this is one reason why people are not fussed about owning in Spain vs UK".

It does seem to be something that was "ingrained" into the British Public's psyke after WW2 that we should aim for and desire to own our own home one day and it's interesting when other cultures / countries find that odd (as my Spanish friend did)

*Edit* The thought has often occurred to me that rental costs for a property should be proportionally linked to it's projected average mortgage repayments over <x> period + some percentage for services and it to still be profitable, but hopefully preventing gouging of prices in areas with limited supply, as the "how much does it cost to live in this property" would be close enough that those renting are choosing to do so for reason(s) that are helpful / convenient to them, rather than having feel they have no alternative but to rent. Hopefully then in such circumstances the individuals / companies renting properties would therefore be more focused in the aspect of "it provides a service" and less "it provides an income / it's an investment"


Quite how that would be done I cannot be sure, but I do believe that the "cost to live in a property" (in terms of mortgage payments vs rent) should be addressed and regulated. If housing supply becomes short(er) in an area and house prices rise correspondingly, rent prices should naturally follow. The problem is we have far too much disparity between what it would cost (monthly) to pay a mortgage on a property is often significantly less than the rent which is being charged on it... far more than can be considered a "reasonable" profit margin.

 

[Quartz]

£200 profit per month, every month, for how long?

How do you think he's going to fund that £4000 energy conversion?

 

[Devilman]

How do you think he's going to fund that £4000 energy conversion?

By having his tenants pay for it through profit.

Then go on holiday with the other £10000 profit he still has.

 

[Firestar_3x]

By having his tenants pay for it through profit.

Then go on holiday with the other £10000 he still has.

Which the tenant will see major benefit from through reduced utility bills?

Should the landlord work for free? What about the cost of his time to sort out the above?

Spend 2/3hrs a month of your time and that £138 is gone.

 

[Efour]

Which the tenant will see major benefit from through reduced utility bills?

Should the landlord work for free? What about the cost of his time to sort out the above?

Spend 2/3hrs a month of your time and that £138 is gone.

70 quid an hour. Not bad for a side hustle.

 

[Devilman]

Which the tenant will see major benefit from through reduced utility bills?

Should the landlord work for free? What about the cost of his time to sort out the above?

Spend 2/3hrs a month of your time and that £138 is gone.

As per my post above to @bigmike20vt , No i do not expect them to work for free, nor have I remotely insinuated as such. I said what they charge vs what they spend should be better regulated.

Using the example previously, if you made £200pm clear profit on a Rent of £520 you have a 39% profit margin. For those trying to compare Housing and Landlords to Food and Farmers / Supermarkets... Show me what Farmer is making a 39% profit margin on his "essential resource" ?

Even if you start "properly accounting for future expenditure" (such as boiler replacements, bathroom replacements etc..) and put a percentage of that away each month / year to cover it, you're still making a pretty tidy profit margin compared to Farmers, for example.

(Obviously the above line is less relevant if you're managing dozens of properties and are working full-time doing that, it was more aimed at those with single / small number of properties and still in employment or early retirement)


*Edit* Furthermore.. on a property that has a "cost" of £150pm the tenants pay a whopping 246% more.

Yes I know this is very simplistic way to look at it and yes I know it doesn't take into account the costs associated if the "tenants" owned the property themselves (repairs, upgrades etc..)

But surely you can see what I am getting at here? How has it become acceptable for anyone to charge another person 246%+ more than what something is costing them and not think it seems wrong?

 

[dod]

By having his tenants pay for it through profit.

Are you saying that a private landlord shouldn't be entitled to make any money at all? If not, what's reasonable?

If you are saying there should be no profit you're not going to solve the housing problem. Even if there was a mass sale of properties and prices collapsed people are not all of a sudden going to have £10-50K for a deposit but they still have to live somewhere? Councils don't have the money to fund building programmes so what's your realistic solution?

Did I start doing it to make money, absolutely. I'm not ashamed of that and make no apologies for it. Am I fed up of the hassle and lack of any meaningful return? Again, absolutely. If I could sell I would and I can guarantee that that tenant would be significantly worse off. My rent is lower than the local market, hasn't increased for years and she would face an increase with still no realistic means of buying that house.

As per my post above to @bigmike20vt , No i do not expect them to work for free, nor have I remotely insinuated as such. I said what they charge vs what they spend should be better regulated.

Using the example previously, if you made £200pm clear profit on a Rent of £520 you have a 39% profit margin. For those trying to compare Housing and Landlords to Food and Farmers / Supermarkets... Show me what Farmer is making a 39% profit margin on his "essential resource" ?

Even if you start "properly accounting for future expenditure" (such as boiler replacements, bathroom replacements etc..) and put a percentage of that away each month / year to cover it, you're still making a pretty tidy profit margin compared to Farmers, for example.

(Obviously the above line is less relevant if you're managing dozens of properties and are working full-time doing that, it was more aimed at those with single / small number of properties and still in employment or early retirement)

Okay, take it further, bathroom was about £3500, flooring about £2000 so that's another £5500, say £92 a month. Assuming all those costs come equally, which they don't, I've been left with a profit of about £100 a month without any of the other costs which have had to be met over the years (legal/survey/washing machines (repairs and replacement) /tumble dryer. etc) I could make roughly the same, or more, with the money in the bank or other investments. Maybe I should be asking for subsidies, you know, just like the farmers?

I'm sick and tired of PL's all being tarred with the same brush. Yes, there do seem to be many who are unscrupulous but there are just as many providing a valuable service for people who either can't purchase, or don't want to.

 

[Bluecube]

What I did say was that over time as more properties came onto the buyers market due to renting becoming less appealing / profitable, house prices would drop thus mortgages will become more obtainable to those who previously had been unable to, due to reduced overall lend and deposit size required (Though not directly interest / mortgage rates).

Yes, the rental market is screaming out for new properties due to a shortage of available rents.

I fail to see how the Housing Shortage in this country is solved by having yet more houses in the ownership of yet fewer people.? It seems like just another method of "reallocating" wealth upwards.

You're delusional if you think that house prices will drop due to landlords selling up. You've completely missed the fact that there aren't enough houses in the UK whether for rental or to purchase. That's why the price of housing both to rent and purchase has increased.

So once again, what is the point you're trying to make? Are you really trying to say that the Government is the problem by refusing to deal with the housing crisis, a crisis that has been in the making for over 20 years yet nothing has been done?