Is it a good time to be a landlord?

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...

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

Stubod wrote: »

But then again if you watch "hoes Under the Hammer" the returns seem to be a no brainer...

I know its a typo but it did make me smile :rotfl:

Crashy_Time

tlc678910 wrote: »

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

Oh LOL. Lets see how the "Price Police" respond to that!

[Deleted User]

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.

[Deleted User]

need_an_answer wrote: »

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.

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

https://www.property118.com/section-24-forced/92078/

Crashy_Time

Make sure you don`t rent to a burger joint.


http://www.bbc.co.uk/news/business-42625716

ileven1225

Simon11 wrote: »

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.

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.

Crashy_Time

ileven1225 wrote: »

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.

Low debt/cash rich landlords will do OK as the less economically clued up landlords offload property in the next few years.