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  • FIRST POST
    • findingtaxtaxing
    • By findingtaxtaxing 8th Jan 18, 2:37 PM
    • 5Posts
    • 0Thanks
    findingtaxtaxing
    Is it a good time to be a landlord?
    • #1
    • 8th Jan 18, 2:37 PM
    Is it a good time to be a landlord? 8th Jan 18 at 2:37 PM
    Hi

    I have some money from an inheritance which I'm looking to invest (around £150k). I'd always thought that if I had the money I'd buy a small house and rent it out. I'm almost mortgage free in my own house. But a friend who is a landlord is looking to sell his house and has suggested now isn't a good time to be a landlord - I'd love to know what other people think.

    I know that house prices can go up as well as down but I always thought bricks and mortar was a reasonably safe bet. Savings accounts don't offer much return and I'm not big on risk taking so thought I'd avoid stocks and shares.

    Thanks for sharing your opinions with me. I have a child with additional needs who may not be able to work as an adult so this is for their future too.
    Last edited by findingtaxtaxing; 08-01-2018 at 2:38 PM. Reason: Removed line spaces
Page 2
    • 00ec25
    • By 00ec25 9th Jan 18, 12:01 AM
    • 5,778 Posts
    • 5,224 Thanks
    00ec25
    But as an investment houses are as safe as it gets pretty much. Name me a time in history when prices went down and stayed down? They always recover.

    Keep your nerve during recessions.
    Originally posted by NoNoDrama
    oh LOL. Lets see how CrashyTime replies to that
    • ThePants999
    • By ThePants999 9th Jan 18, 12:17 AM
    • 976 Posts
    • 1,135 Thanks
    ThePants999
    But as an investment houses are as safe as it gets pretty much. Name me a time in history when prices went down and stayed down? They always recover.

    Keep your nerve during recessions.
    Originally posted by NoNoDrama
    Stayed down over what time period? Even equities have "always recovered" if you give them long enough.

    http://www.macrotrends.net/2598/ftse-100-index-historical-chart-data
    • AnotherJoe
    • By AnotherJoe 9th Jan 18, 12:47 AM
    • 7,901 Posts
    • 8,494 Thanks
    AnotherJoe
    If you are not big on risk taking, then I would suggest this is not for you. There are risks all over with this idea; buying an unsuitable property, not understanding your market, assessing whether or not you have the skill set required to manage a property and an agent (who will need to be managed), being able to vet prospective tenants, managing it like a business, and having the mental and financial resources to cope when things don't always go to plan. When things are going ok, money can still be made, MrsDorian and I have 2 outright owned rentals making about 5%after costs but before tax. After another 7 years or so we plan to sell so there might be a bit of capital gain as well (also taxable). A lot for you to think about and not the path to easy riches that some folk think it is.Good luck.
    Originally posted by Dorian1958
    Add to that good advice, that this is the equivalent of putting your entire investment money into the shares of one single company which is very high risk and almost no investor would do that.

    You also cannot shelter your gains from tax in the same way that you can through an ISA or a pension,

    And lastly government is adding more and more regulation in this area. Regulation = cost and hassle

    I can also support the notion that using an agent does not reduce workload, my next door neighbour rented his house out for a few years whilst abroad and any time anything happened they called him to ask what to do, eg washing machine broke, should they call ina repair person or buy a new machine, if ut wasbrepair person then later theyíd call him to say quote was £x should they proceed or not, etc etc he might as well have done it all himself.
    Last edited by AnotherJoe; 09-01-2018 at 12:50 AM.
    • tlc678910
    • By tlc678910 9th Jan 18, 1:00 AM
    • 500 Posts
    • 889 Thanks
    tlc678910
    In many areas houses cost less than 2007. Our house has only now almost recovered it's value after 10+ years.
    http://www.bbc.co.uk/news/uk-england-41581824

    I think it is quite likely prices will dip with Brexit. If they dip and recover similarly to 2007 (another 10 years) our house will have gained no value over 20 years. This is probably unprecedented in history (a twenty year period without house price growth) but not necessarily a bad thing if it helps the next generation afford a home.

    I would be wary of buying property as a landlord right now as I don't think it's particularly worthwhile without house price growth. If your property value drops (Brexit?) it can take many years to recover and if you sell in the meantime you lose money. I don't think you need to be as concerned about the same worries if you were buying as a long term home as the value is less relevant - if you move other property is likely affected by the same movements in the market. Price drops can make it difficult to move at all if you are left with no equity of course.

    Tlc
    • Toooldforthisagain
    • By Toooldforthisagain 9th Jan 18, 11:37 AM
    • 36 Posts
    • 55 Thanks
    Toooldforthisagain
    I have inherited my mum's house and she expressed the wish that I rented it rather than sold, so I have become a landlord by accident
    I am going to go down the full management route as in all honesty its painful to be involved in my childhood home
    If you canít look on the bright side,
    I will sit with you in the dark
    • Pixie5740
    • By Pixie5740 9th Jan 18, 11:41 AM
    • 11,348 Posts
    • 15,964 Thanks
    Pixie5740
    I have inherited my mum's house and she expressed the wish that I rented it rather than sold, so I have become a landlord by accident
    I am going to go down the full management route as in all honesty its painful to be involved in my childhood home
    Originally posted by Toooldforthisagain
    How does one "accidentally" become a landlord? Surely it is a conscious decision on your part. If it's too painful to let your childhood home then sell it. It's yours now you can do what you like with it.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Comms69
    • By Comms69 9th Jan 18, 11:43 AM
    • 1,797 Posts
    • 1,632 Thanks
    Comms69
    I have inherited my mum's house and she expressed the wish that I rented it rather than sold, so I have become a landlord by accident
    I am going to go down the full management route as in all honesty its painful to be involved in my childhood home
    Originally posted by Toooldforthisagain
    It'll be worse if a tenant trashes it.


    Never let with sentimental value, it will only lead to heartache
    • Toooldforthisagain
    • By Toooldforthisagain 9th Jan 18, 11:47 AM
    • 36 Posts
    • 55 Thanks
    Toooldforthisagain
    My mums wished were that the house is to be rented and not sold, hence the phrase Accidental Lamdlord, I did not go out and purposely buy a house to let out.

    I am emotionally involved with the house as it was my home for my whole childhood and my mum lived there for over 40 years. That is why I am letting some one else manage it as I still cant get used to going through the front door and mum not being there
    If you canít look on the bright side,
    I will sit with you in the dark
    • need an answer
    • By need an answer 9th Jan 18, 11:57 AM
    • 111 Posts
    • 114 Thanks
    need an answer
    My mums wished were that the house is to be rented and not sold, hence the phrase Accidental Lamdlord, I did not go out and purposely buy a house to let out.

    I am emotionally involved with the house as it was my home for my whole childhood and my mum lived there for over 40 years. That is why I am letting some one else manage it as I still cant get used to going through the front door and mum not being there
    Originally posted by Toooldforthisagain
    5 years ago I was in your position, and understand what you are feeling.
    However you do need to come to terms with the property becoming a rental and start to detach yourself from it.
    Once you rent it out either self managing or via an agent it becomes someone elses home.
    Yes you gain an income from it but unless you take steps to make it work for you in the way you want it to,you wont move on and forward.
    For us it was a renovation of the house,updating to create a living space for someone else and in that process removing some of the old home feel.
    5 years on,I'm not fully detached from it but I do see it in a very different way from the place I grew up.
    I have gone on to invest in other BTL's and buying something that you have no attachment to previously is so much easier.
    I would even suggest that if you want to respect your mum's wishes of her house becoming a rental property,sell it and invest the return into a couple of smaller units that you have no attachment to.It will still give you the income without the sentimental attachment.
    It is quite difficult sometimes respecting someones wishes but also doing your own thing and I often think that maybe previous generations passed things on especially property with the words or sentiment that "you would always have an income from it as a rental". This of course transpires differently now with all the regulations that you need to comply to as a LL. It probably isn't a scenario that was thought about by your mother when she expressed her wishes to you.

    Good luck with your venture,I hope you have chosen a good LA who will hopefully match you with tenants who will enjoy your property going forward.
    Last edited by need an answer; 09-01-2018 at 12:22 PM.
    in S T F 9
    out S 2 T 1 F 3

    2017 -32

    2018 Wombling entrant No: 5 £6.37
    • Comms69
    • By Comms69 9th Jan 18, 12:02 PM
    • 1,797 Posts
    • 1,632 Thanks
    Comms69
    My mums wished were that the house is to be rented and not sold, hence the phrase Accidental Lamdlord, I did not go out and purposely buy a house to let out.

    I am emotionally involved with the house as it was my home for my whole childhood and my mum lived there for over 40 years. That is why I am letting some one else manage it as I still cant get used to going through the front door and mum not being there
    Originally posted by Toooldforthisagain


    The term accidental landlord - implies ineptitude and risk (both to your tenants and to you). Ultimately YOU are responsible for everything. Now normally that's a financial risk, but at the extreme end - should you be negligent and your tenants get injured or die - you could be looking at criminal offences.
    • need an answer
    • By need an answer 9th Jan 18, 12:10 PM
    • 111 Posts
    • 114 Thanks
    need an answer
    I can understand the term accidental Landlord a little like a career move you didn't actually choose but took the job to see what happened or to fill a gap whilst you needed money.

    Some people end up doing well from the move and enjoy it,others will just put up with it until such time that its time to move on.

    Just don't end up stuck with something that really isn't working for you,either as a LL or as a career move!
    That is where regrets can manifest.
    in S T F 9
    out S 2 T 1 F 3

    2017 -32

    2018 Wombling entrant No: 5 £6.37
    • Stubod
    • By Stubod 9th Jan 18, 1:54 PM
    • 445 Posts
    • 296 Thanks
    Stubod
    I also became an "accidental" LL as I was left a property in a will and did not need the money at the time but fancied the idea of "maintaining" the value of the property.

    I decided to go the rental route, and I did decide to use an agent (fully managed, they charge 10%). But as per some of the above posts they have caused more problems than they have resolved that resulted in me threatening to change them for another agent mid tenancy. In the end I agreed to a "rebate" of 1 months fees and some compensation to cover my costs so I am staying with them and will see if the service improves.

    So far the tenant has proved to be reliable, but I must admit the returns are not great, (about 4%), and these could be wiped out if there is a major problem, (eg new boiler). Again my main objective is to hope that the rent covers all our costs and provides some "profit", while hopefully the house will increase in value until such time as I need to sell it.

    Would I go into LL if we had not "inherited"....probably not....but that's just me...

    But then again if you watch "homes Under the Hammer" the returns seem to be a no brainer...
    Last edited by Stubod; 09-01-2018 at 5:06 PM.
    • FBaby
    • By FBaby 9th Jan 18, 2:00 PM
    • 16,293 Posts
    • 40,571 Thanks
    FBaby
    Think of it as a business, not an investment.
    I am into it in totally the opposite mindset, for the investment and in no way for the business which is pain and no gain!

    The investment I would think very much depends when you live. I almost sold the property 10 years ago. That would have been the worse decision as the house almost doubled in value (with some refurbishment). Also looking at it as future pension income.
    • Toooldforthisagain
    • By Toooldforthisagain 9th Jan 18, 2:13 PM
    • 36 Posts
    • 55 Thanks
    Toooldforthisagain
    But then again if you watch "hoes Under the Hammer" the returns seem to be a no brainer...
    Originally posted by Stubod
    I know its a typo but it did make me smile
    If you canít look on the bright side,
    I will sit with you in the dark
    • Crashy Time
    • By Crashy Time 9th Jan 18, 3:08 PM
    • 5,377 Posts
    • 2,236 Thanks
    Crashy Time
    In many areas houses cost less than 2007. Our house has only now almost recovered it's value after 10+ years.
    http://www.bbc.co.uk/news/uk-england-41581824

    I think it is quite likely prices will dip with Brexit. If they dip and recover similarly to 2007 (another 10 years) our house will have gained no value over 20 years. This is probably unprecedented in history (a twenty year period without house price growth) but not necessarily a bad thing if it helps the next generation afford a home.

    I would be wary of buying property as a landlord right now as I don't think it's particularly worthwhile without house price growth. If your property value drops (Brexit?) it can take many years to recover and if you sell in the meantime you lose money. I don't think you need to be as concerned about the same worries if you were buying as a long term home as the value is less relevant - if you move other property is likely affected by the same movements in the market. Price drops can make it difficult to move at all if you are left with no equity of course.

    Tlc
    Originally posted by tlc678910

    Oh LOL. Lets see how the "Price Police" respond to that!
    • Corona
    • By Corona 9th Jan 18, 3:55 PM
    • 834 Posts
    • 786 Thanks
    Corona
    I rent out a property that I inherited, with advice from a good friend who has been a landlord for nearly 30 years, so I'll pass on her excellent advice, if you decide to go down this route:

    The choice of property is paramount; some are just more "lettable" than others, and less trouble to maintain. So, find yourself a good letting agency (via a recommendation is best) and use their expertise in choosing the actual property. They know what the majority of letters are looking for.

    As you're new to this business, definitely have an agent to manage it for the first few years, after they've found a tenant, done the references, done the contract, transferred the bills into their names, etc. They will collect the rent, take their fee and then pass the rest to you. They are also first call for any problems. You can set a limit to the amount of repairs you're willing for them to just get on and do it (for me, I've got a limit of £100 - so anything under that, they just do it; although they usually send me a courtesy email to tell me what's going on). They have a large team of contractors they can call on, who usually get things done very quickly (far more quickly than I could). They also do a 6 month inspection. If you find they're useless, just find another one (check your contract). After you've done this for a few years, you may then feel comfortable enough to just use agents to find tenants/do the contracts, and you can do everything-else yourself.

    The dizzy days of BTL profits where mortgages could be claimed as a business expense are long gone, so you need to work it all out carefully, to decide if it's worth it.

    Don't forget that you'll need to work out what kind of property you can afford; how much rent it's likely to get; the cost of getting it ready to rent out (including all the safety stuff like gas and electric safety certificates, smoke alarms, etc), ongoing insurance cost, the cost of any void periods/tenants not paying/replacements & repairs, taking over the payment of utility bills between tenants, etc.

    The overall value of the property may go up (or down - who knows) and if it goes up, you may need to pay capital gains tax when you sell it.

    Oh yes, and you'll need to do a Tax Self Assessment every year (oh joy).

    Also - why not visit a few IFAs (again, recommendations are best) and talk to them about your atttitude to risk and how much they estimate you could earn on that money if they invested it. At least then, you would know what the alternatives are?

    Good luck with your decision.
    • Corona
    • By Corona 9th Jan 18, 4:01 PM
    • 834 Posts
    • 786 Thanks
    Corona
    5 years ago I was in your position, and understand what you are feeling.
    However you do need to come to terms with the property becoming a rental and start to detach yourself from it.
    Once you rent it out either self managing or via an agent it becomes someone elses home.
    Yes you gain an income from it but unless you take steps to make it work for you in the way you want it to,you wont move on and forward.
    For us it was a renovation of the house,updating to create a living space for someone else and in that process removing some of the old home feel.
    5 years on,I'm not fully detached from it but I do see it in a very different way from the place I grew up.
    I have gone on to invest in other BTL's and buying something that you have no attachment to previously is so much easier.
    I would even suggest that if you want to respect your mum's wishes of her house becoming a rental property,sell it and invest the return into a couple of smaller units that you have no attachment to.It will still give you the income without the sentimental attachment.
    It is quite difficult sometimes respecting someones wishes but also doing your own thing and I often think that maybe previous generations passed things on especially property with the words or sentiment that "you would always have an income from it as a rental". This of course transpires differently now with all the regulations that you need to comply to as a LL. It probably isn't a scenario that was thought about by your mother when she expressed her wishes to you.

    Good luck with your venture,I hope you have chosen a good LA who will hopefully match you with tenants who will enjoy your property going forward.
    Originally posted by need an answer
    Like you, I inherited the property - I didn't live there myself but it was the house where both my parents died, so not great memories. I too found it helpful to have the house completely redecorated (neutral walls; oatmeal carpet, neutral flooring in the kitchen and bathroom, new curtains, new light fittings) so it feels much more light and contemporary. They died 4 years ago and it's getting easier to see it more as MINE than theirs, and having an agent to manage it has also helped to create emotional distance.
    • Crashy Time
    • By Crashy Time 9th Jan 18, 4:52 PM
    • 5,377 Posts
    • 2,236 Thanks
    Crashy Time
    https://www.property118.com/section-24-forced/92078/
    • Crashy Time
    • By Crashy Time 9th Jan 18, 4:59 PM
    • 5,377 Posts
    • 2,236 Thanks
    Crashy Time
    Make sure you don`t rent to a burger joint.


    http://www.bbc.co.uk/news/business-42625716
    • ileven1225
    • By ileven1225 9th Jan 18, 7:52 PM
    • 9 Posts
    • 3 Thanks
    ileven1225
    Now is not a good time, particularly if you are in the 40% tax bracket and it will only get worse next year.


    The tax increases for landlords, just don't make it worthwhile anymore. I make a profit on my flat, but with the government taking 40% for tax and the remainder to pay off the mortgage (you can only deduct mortgage interest), I'm actually cash poor each year for having the BTL and have to subsidize the flat.
    Originally posted by Simon11
    That's right, if you under or near the 40% income bracket, the additional rental income will give you very small profit, giving that you are not a professional full time landlord. Next year will be worse, as the relief of the taxable rental income will be reduced and it would be reduced to zero in 2020!

    However, if you would like to do something for long term investment, plus you do your research well, I think landlord is still a good option.
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