Is it worth being a landlord in the UK?

Stubod

jumperabv3 said:

Stubod said:

Personally if I had my time again I would have sold a property we inherited rather than rent it out.... (and touch wood our tenant has been really good so far...)   

If you were to sell your property instead of renting it out (with a good tenant so far, touch wood) - what would you have done with the funds from the sale? Where would have you invested them?

SIPPS, S&S ISA's, Premium Bonds, Increased Pension contributions.

AdrianC

The simple answer is - "It depends".

It's certainly not as straightforward as it used to be.

Perhaps it's best to change the mindset? It's not an investment. It's a business.

r0wly86

even if you don't make a profit on the rent, or even if you make a loss. By the end of the term of the mortgage you will own outright a large value asset.

Which then you could sell for a large lump sump, minus tax etc or you could continue renting and all the rental income goes to you rather than the bank.

tom9980

r0wly86 said:

even if you don't make a profit on the rent, or even if you make a loss. By the end of the term of the mortgage you will own outright a large value asset.

Which then you could sell for a large lump sump, minus tax etc or you could continue renting and all the rental income goes to you rather than the bank.

Capital gains tax is changing in April this is one of the major tax changes that further hit landlords and most people don't even know it's coming.

Crashy_Time

Nebulous2 said:

Apparently it isn’t as worthwhile as it used to be.......
https://www.theguardian.com/money/2020/feb/08/britains-buy-to-let-boom-is-over-we-should-rejoice

Very refreshing, spells it all out in plain language. Basically the banks milked people as the bubble inflated, for debt, and the government will milk the deflation of the bubble for tax - win win if you are a banker or the government, although the political/economic situation at the moment means that even banks and governments are under threat.

iampetesmith

The two reasons that our landlord packed it in and sold all his properties were the taxes and tenants not paying rent, leaving the properties a mess. We paid our rent and left the house clean, but he still had to wait an extra 3 months to get his keys back while our house purchase went through. He didn't mind though, he was still collecting rent on it until we left so I think he was grateful that we actually paid.

AdrianC

 r0wly86 said:

even if you don't make a profit on the rent, or even if you make a loss. By the end of the term of the mortgage you will own outright a large value asset

I think you might be forgetting the amount of mortgage interest you've paid...

Borrow £100k for 25 years at 3.5% average interest, on an interest-only mortgage, and you'll pay nearly £190k in interest. That £100k asset has just cost you £290k.
Even on a repayment mortgage, it's cost you £250k. And that's before taking the tax position into account.

Yes, the asset will have increased in value from the £100k purchase price. But by how much? Historically, it's been substantially more than the interest cost over the full term - £100k of average-increase house in 1995 will now be worth £422k - so there's a profit of £130k even on the interest-only. Great.
But over the last ten years...? £100k has turned into £144k. But the repayment mortgage has cost £60k, and only repaid £30k, so your capital has only grown £14k. That interest-only mortgage has cost £35k in interest alone, so <£9k in actual growth. Less the purchase and sale fees, of course. And what could you have done with that investment elsewhere...?

And that's SINCE the crash. If you'd bought just before the crash - let's say 2007 - then that £100k house is now £122k-worth. But you've spent £45k on interest on either of the mortgages...

markin

 But at least the tenant payed the interest.  The landlord can keep renting it for the next 30 years and the income grows with inflation, So many people have lost everything on stocks and pension funds, that's why they went to property.

number of buy-to-let landlords with multiple properties fell in 2017-18 to 157,000 from 159,000

Im shocked its so low really, its a drop in the ocean compared to the number that rent.

Around 5m households, or 21% of the total, are in private rented accommodation

Crashy_Time

https://propertyindustryeye.com/increasing-numbers-of-letting-agents-consider-giving-up-as-worries-weigh-on-the-sector/

bhjm

putting all your money in one investment lets say - 200.000£ is like buying shares for 200.000£ from just one company.

you can be lucky and make huge profits
or you can be unlucky and loose a lot of money.