The joy of being a landlord

[Angst]

Not necessarily true. I spent money (albeit small fry) improving my rental property and ended up selling it for less than I’d bought it for 15 years later.

You also can’t look at the value of the property in that way. If a landlord spends £3000 today upgrading the central heating system, it’s of no use right now to the landlord if that increases the property value sometime in the future; the landlord needs to recoup those costs today.

As with any investment thats a risk you have to take i guess. However even though you sold it for less than you bought it for the tenants still paid off the capital on the mortgage for you? This is kind of where i get stuck on this whole thing, the tenants pay the landlords mortgage in full and then also seem to have pay more ontop for the upkeep of the property. If the tenant is essentially paying someone elses mortgage for them why should they then also be expected to pay eztra on their monthly payments to cover maintenance like a new boiler etc.
At that point what service value is actually been provided? Its just the tenant paying to buy and maintain someone more fortunates house. Whereas if it was regulated to the point the tenant is paying your full mortgage for you but the service you are adding is maintenance of the property then thats a fair exchange.

 

[mrochester]

As with any investment thats a risk you have to take i guess. However even though you sold it for less than you bought it for the tenants still paid off the capital on the mortgage for you? This is kind of where i get stuck on this whole thing, the tenants pay the landlords mortgage in full and then also seem to have pay more ontop for the upkeep of the property. If the tenant is essentially paying someone elses mortgage for them why should they then also be expected to pay for maintenance like a new boiler aswell.
At that point what service is actually been provided? Its just the tenant paying to buy and maintain someone more fortunates house. Whereas if it was regulated to the point the tenant is paying your full mortgage for you but the service you are adding is maintenance of the property then thats a fair exchange.

The tenant ultimately pays for all those costs as they are the customer. The tenant might not pay directly for the new boiler, but the cost of the new boiler to the landlord might mean the landlord has to put up the rent.

Yes private rental is basically someone paying to buy a property on behalf of the landlord (unless the landlord owns the property outright).

The solution to that is social housing built by the government. Another solution would be for the government to buy all private rentals at market rate and then rent them out themselves. 2 birds 1 stone then (gets rid of private landlords and establishes a huge supply of social housing).

If we want property to be a societal good, we need to nationalise renting.

 

[dlockers]

Or you know private rents could just not be so absurdly high in comparison to mortgages. It is crazy that rent prices are expected to both pay off a landlors mortgage capital and provide a monthly profit on top.

They aren't Most BTLs are interest only.

 

[Noakesy85]

Unless you remortgaged recently it was almost impossible not to make a profit with previous interest rates. Or is it a repayment mortgage and you do actually make a profit?

I was living in the property until about 8 years ago. I was then posted to Cyprus so instead of selling my house i rented it out. Because of my situation we were given consent to let on our residential mortgage by the lender which gave us residential rates for 1 year. after that the rates became Buy To Let rates. for the first 4 or 5 years we made about £50 profit a month (after LA fees etc). Since then with rate increases and being tied into contracts that profit has faded and has now become a slight loss.

Once we have the property back I'll need to get everything (gas/electric/water/CT etc) back into my name before the Lender will remove the Consent To Let marker allowing me to remortgage. We're still undecided if we move back into the property or sell it.

 

[ci_newman]

I think after factoring in all costs (which included a 2.1% mortgage) I basically broke even on a property I rented out for £500pcm. The benefit to me was someone else was paying off the capital for me, but I only realised that when I sold the property (and it basically made up for selling it for less than I bought it).

It's misleading to say you made no profit on the rent when it is paying your capital for you though. After you sold it, what was the profit you made considering your initial deposit / investment?

(Note I'm neither for or against private landlords, just curious to see the actual figures)

 

[bigmike20vt]

Nowhere did i state that it shouldnt be profitable just that it should be regulated to be priced reasonably. Also why should the tenant pay the full cost for the maintenance of the landlords asset? Any improvements the landlord makes to benefit the tenants ultimately benefits the landlord by increasing the value of their asset. If property devalued over time in this country then this is a fairr argument but it doesnt, overtime the value of property increases and any money the landlord spends modernisign the property increases it further.

the white goods of the stuff in said property and needs replacing devalues however...... It would be far easier renting out unfurnished but the people who tend to live in our flat are the sort who just need a place fairly short term either on short science contracts or training positions at addenbrookes hospital etc and want it semi furnished.....

There are a huge number of people who dont want long term homes but just want a place whilst they do a 3 year placement / apprenticeship before moving on. These are employed people (or students) so why landlords should be expected just to suck it up if a tenant refuses to pay or trashes the place i just dont get it.

obviously different areas and different properties are different but i am just talking about the kind of places like our flat that we rent out. ultimately hopefully our lad can move into it in the future. (if he can afford the rent )

 

[mrochester]

It's misleading to say you made no profit on the rent when it is paying your capital for you though. After you sold it, what was the profit you made considering your initial deposit / investment?

(Note I'm neither for or against private landlords, just curious to see the actual figures)

Off the top of my head I think the capital was being reduced by about £350pcm or so (although I can’t remember exactly). Over a 4 year rental that’s £16,800. I bought the property for £106k and sold it for £98k so without factoring in any of the costs to buy and sell I came out £8800 ahead after 15 years of ownership.

It cost me £1k to buy the property and £2k to sell it. I replaced the boiler for £2k during my ownership and made other improvements (new bathroom and downstairs toilet) so I doubt I got much change from the £8800.

If I hadn’t rented the property out for those 4 years I would be at an even bigger loss.

 

[ci_newman]

Off the top of my head I think the capital was being reduced by about £350pcm or so (although I can’t remember exactly). Over a 4 year rental that’s £16,800. I bought the property for £106k and sold it for £98k so without factoring in any of the costs to buy and sell I came out £8800 ahead after 15 years of ownership.

It cost me £1k to buy the property and £2k to sell it. I replaced the boiler for £2k during my ownership and made other improvements (new bathroom and downstairs toilet) so I doubt I got much change from the £8800.

If I hadn’t rented the property out for those 4 years I would be at an even bigger loss.

I'm not sure it's fair to compare your 4 years of renting profit against 15 years of ownership though (and that's not getting into whether you bought the new bathroom and boiler when you lived in it either).

So that would be an average return of £2200/year factoring in the depreciation.

I think you're fairly unique in seeing the house value dropping over 15 years too, which is very much not the norm

 

[mrochester]

I'm not sure it's fair to compare your 4 years of renting profit against 15 years of ownership though (and that's not getting into whether you bought the new bathroom and boiler when you lived in it either).

So that would be an average return of £2200/year factoring in the depreciation.

I think you're fairly unique in seeing the house value dropping over 15 years too, which is very much not the norm

The point really is that you cannot take a broad brush approach to private rental regulation because there are so many different circumstances. If I’d been forced to install solar panels, for instance, I would have had to increase the rent quite substantially to cover that cost because I certainly didn’t have £10,000 just lying around! The rent would have had to have been much higher in the first place for me to have built up that sort of money.

 

[bigmike20vt]

It's misleading to say you made no profit on the rent when it is paying your capital for you though. After you sold it, what was the profit you made considering your initial deposit / investment?

(Note I'm neither for or against private landlords, just curious to see the actual figures)

what a lot here are refusing to take into account is that a property is worth 6 figures....... renting out earn decent money otherwise thanks to inflation it is automatically losing money.

We have a flat, its worth about £250k, maybe £300k. if we sold up (forgetting the huge tax bill for a second) just by putting 100k in premium bonds for my wife and i and then 40k a year in an isa and the rest in a high interest bank account.......... it would earn around £14k per year...... given we charge half of that a year inc furnishings/white goods (because contrary to folk on here we dont massively profiteer) we are absolutely banking on some appreciation of the asset. this IS the gamble as without that then we earn less by renting out than just creaming off the interest off the money which is risk free.

also dont forget maintanence on the flat is also over £1k per year. the more i think about it the more i see it isn't worth it and we probably should get shut. i don't believe our tenants would like that.

of course we could play the game and use the flat as an asset against other properties and get ourselves a nice big portfolio on interest only..........now isnt the time to do that however even if we wanted to.

 

[ci_newman]

The point really is that you cannot take a broad brush approach to private rental regulation because there are so many different circumstances. If I’d been forced to install solar panels, for instance, I would have had to increase the rent quite substantially to cover that cost.

As I said earlier, I'm neither pro or anti private landlords. I was just curious about the actual figures when landlords say they make no money from their rentals

 

[ci_newman]

what a lot here are refusing to take into account is that a property is worth 6 figures....... renting out earn decent money otherwise thanks to inflation it is automatically losing money.

We have a flat, its worth about £250k, maybe £300k. if we sold up (forgetting the huge tax bill for a second) just by putting 100k in premium bonds for my wife and i and then 40k a year in an isa and the rest in a high interest bank account.......... it would earn around £14k per year...... given we charge half of that a year inc furnishings/white goods (because contrary to folk on here we dont massively profiteer) we are absolutely banking on some appreciation of the asset. this IS the gamble as without that then we earn less by renting out than just creaming off the interest off the money which is risk free.

also dont forget maintanence on the flat is also over £1k per year. the more i think about it the more i see it isn't worth it and we probably should get shut. i don't believe our tenants would like that.

Those returns from an ISA and premium bonds are very much a recent occurrence though with the sharp increases of interest rate.

What was the gain from when you bought it until today? (probably much more than the 5% interest rates)

 

[mrochester]

As I said earlier, I'm neither pro or anti private landlords. I was just curious about the actual figures when landlords say they make no money from their rentals

Some landlords will make loads of money, some will make some money, some will break even and some will lose money.

 

[bigmike20vt]

Those returns from an ISA and premium bonds are very much a recent occurrence though with the sharp increases of interest rate.

What was the gain from when you bought it until today? (probably much more than the 5% interest rates)

genuinely dont know as renting out is not really our business its just a side thing to keep it till the lad needs it rather than sell and take the tax it.
also it doesnt matter what it was when my wife bought it as it was her home... surely what matters is its value since we started letting it out? which we started doing that maybe 10 years ago...... i think in that time it has maybe gone up 50k iirc it was worth about £220k but i am guessing TBH

but again dont forget the £1k maintanence per year, the tax, then we had to cover a bad tenant who buggered off after not paying rent for almost 6 months - out of the country so no comback, another one who trashed the place, and all the other usual repairs and replacements.

i am not complaining, its holding its own, but its not this massive money printing machine that some claim landlords are all running. (i dont doubt we could make more tho so in that sense we are terrible landlords from a business POV... but even so i do think its ok to expect a little profit and indeed that is what we get, its a win win imo .)

the funny thing is - and i am telling the truth on this - its threads like this which make me realise how much more money i could be making and almost encourage me to start looking into what the going rate for a large (bordering on massive) 1 bed flat a 10-15min bike ride from cambridge city centre should be and adjusting accordingly

 

[ci_newman]

genuinely dont know as renting out is not really our business its just a side thing to keep it till the lad needs it rather than sell and take the tax it.
also it doesnt matter what it was when my wife bought it as it was her home... surely what matters is its value since we started letting it out? which we started doing that maybe 10 years ago...... i think in that time it has maybe gone up 50k iirc it was worth about £220k but i am guessing TBH

but again dont forget the £1k maintanence PA, then we had to cover a bad tenant who buggered off after not paying rent for almost 6 months - out of the country so no comback, another one who trashed the place, and all the other usual repairs and replacements.

i am not complaining, its holding its own, but its not this massive money printing machine that some claim landlords are all running. (i dont doubt we could make more tho so in that sense we are terrible landlords from a business POV... but even so i do think its ok to expect a little profit and indeed that is what we get, its a win win imo .)

As I said earlier, I'm neither pro or anti private landlords. I was just curious about the actual figures when landlords say they make no money from their rentals

Yes you're right, figures should focus on values / costs at the point of starting to rent.

 

[Murphy]

Maybe not the thread for it but, shock of my life the other day. Just found out my LL wants to put my rent up by 63%.

 

[EvilRob]

Maybe not the thread for it but, shock of my life the other day. Just found out my LL wants to put my rent up by 63%.

Ouch, that is rough. Not surprising though My in laws LL tried to put up their rent recently before their fixed term even expired because "my mortgage has gone up"

 

[Allnamestaken]

We’ve been here before, just a few months ago. Whine, whine, get rid of evil scum landlords, bitch, complain.

Landlords sell up, rental stock decreases

Whine, whine, cost of rent sky high as there’s no rental properties available, bitch, complain.

The record is stuck…

Right… cost of rent being high is because of landlords being fed up, yes we should be so thankful they’ve decided to rent to us.


What a **** take.

 

[StriderX]

I'd rather have a monopoly landlord than tens of thousands of uppity middle-classers thinking they have a business seeking rent from people less fortunate then they.

Good riddance.

 

[EvilRob]

I'd rather have a monopoly landlord than tens of thousands of uppity middle-classers thinking they have a business seeking rent from people less fortunate then they.

Good riddance.

Agree. Let's do what we always do - screw the middle class and help the wealthy get wealthier!