I hate being a Landlord, but everyone tells me not to sell. Who is right?

cgfw201

We bought a 2 bed flat in London in 2016 with the help of an elderly relative funding the deposit. The house was circa £550k, went down a bit in value for a year or two, and is now worth £560k, approx (Zoopla estimate).

In 2019 by unexpected quirk of something else, we ended up moving back to the family farm which we are tenants of, and now live there. We've rented out the flat for the past 3 years since then. The rent where we now live is essentially a business expense.

The revenue we get from the rent on the flat covers the cost of our mortgage, but not a lot more once you take the income tax from the rental income out. Over the last 6 months we've had £3500 worth of electrical and gas work done on the flat, which whilst deductible tax-wise, is annoying to need to deal with, and expensive at the time. 

I hate owning the flat. I hate that another couple has to do 15 days work a month just to pay my own mortgage, I hate that any time of the day I could get a call to say there's an issue and I hate that it's financially pointless as far as I can tell.

My accountant says we should keep it, and family suggest the same. However all I see is stagnant or falling house prices, no profit from owning the house, and a lot of routes for losses. Not to mention the general stress of having it.

I'm tempted to sell it, stick all the money into a 4% saving account and have the money double over the next 20 years with none of the hassle. Is this that bad an idea?

theartfullodger

You hate it?   Either get out of the game or sort yourself out. Your decision, no ours 

Being a landlord isn't for everyone:. Requires financial and emotional reserves, thick skin, being comfortable that many people think you are a bar steward, comfortable tenant has the right to your actual home address, being subject to 100+ acts and regulations etc etc etc

Not as so many snake oil charlatans claim a get rich quick cunning plan

Why raise the matter here please?

Landlord since 2000.

Scorpio33

Is the mortgage on the flat repayment? If so, the rent you are charging is paying off that mortgage and building up equity.

Also, in terms of an investment, take a longer term view: would a return on a house be more or less than a saving account? Past history states that investment in houses are better. However, that does not necessarily mean that it could be the same in the future.

Also, for a tax perspective, you are in effect living rent free and the upkeep of the house (which you would have to pay if you lived there) is tax deductible.

So on paper, it does make sense to keep it and rent it (in my opinion).

However, you must weigh up the potential pros (in terms of money returns) vs the cons (stress, hassle and bother) of being a landlord.

Only you can do that calculation, as only you can put a value on the impact of being a landlord.

GDB2222

4% savings account with inflation at10% is hardly doubling in 20 years,  is it? 

ProDave

GDB2222 said:

4% savings account with inflation at10% is hardly doubling in 20 years,  is it? 

But house prices are not going to rise 10% per year at the moment, you will be pleased if they don't fall.  So where do you suggest one "invests" to get 10% plus per year at the moment?

cgfw201

Scorpio33 said:

Is the mortgage on the flat repayment? If so, the rent you are charging is paying off that mortgage and building up equity.

Also, in terms of an investment, take a longer term view: would a return on a house be more or less than a saving account? Past history states that investment in houses are better. However, that does not necessarily mean that it could be the same in the future.

Also, for a tax perspective, you are in effect living rent free and the upkeep of the house (which you would have to pay if you lived there) is tax deductible.

So on paper, it does make sense to keep it and rent it (in my opinion).

However, you must weigh up the potential pros (in terms of money returns) vs the cons (stress, hassle and bother) of being a landlord.

Only you can do that calculation, as only you can put a value on the impact of being a landlord.

Yeh it's a repayment mortgage, we've got 19 years of 25 left. 

I'm aware of the tax benefits, but they are limited. You have to spend the money in order to be able to deduct it. As far as I am aware, savings accounts don't need electrical surveys, new boilers and redecorating every couple of years. Also don't need to pay income tax on that revenue if using it essentially like a pension pot.

Re: other comments above. In 6 years, today's Zoopla estimate of the house is from -2% down to +5% increase vs the price we bought it at. If we'd bought 10 years previously it'd be totally different, but I do struggle to see how it's a particularly good investment in the current climate. 

Worth saying to clarify, we didn't ever buy with the intention of needing to sublet, just the way life worked out that we ended up in this situation. 

dannim12345

I think it’s up to you / who you own the property with - only you can decide. Being a landlord never appealed to me, I get property (long term) is a great investment but always struck me as a hassle / potential hassle. 

GDB2222

One option is index linked gilts. I should have said in my previous post. I just meant that a savings account for 20 years is not a great plan. 

housebuyer143

I hated every minute of it also. I sold mine and am done with it. 
It's your life.. If you hate it don't do it. 

sheramber

You don't need to persuade anyone on here.

It is your decision. If family think it is such a good idea then tell them you will sell them the flat and they can let it out.

Bendy_House

Hi cgfw.

What is your tenant like - decent folk who look after the place, pay their rent on time, and don't give any unreasonable trouble? Are they 'long-term' as far as you know? They are 'happy' there?

Yes, if you have a conscience, there might be lots of things to hate about being a LL, including guilt, misguided or not. But, rental properties are a fact of life that you have little control over. So, if you can continue to be a 'good' landlord, then power to your elbow.

Most of the 'moral' aspects you feel uncomfortable with, you have no control over - your tenants will be in a similar situation if you sold up. You can mitigate the guilt to some extent by being, as I said, a good LL, sorting out issues and concerns promptly.

The practical issues you hate - fixing things and stuff - you can consider to be normal upkeep on a property - which is exactly what it is. Yes, a new boiler or whatever might cost £X, but that value has not disappeared, but has made your property better, and ultimately more sellable. It is maintaining its intrinsic value.

I think a big thing for me would be the quality of the tenant - if they are good folk, then you be a good landlord. If they are a pita, then move on.

I know a couple of folk who I would consider to be 'good' LLs, and they both (now...) have tenants who are appreciative. One has a 4-bed house in London, and the one a'ole tenant who thought he ruled the roost (he was there from day one), broke numerous rules which he expected new tenants to adhere to, has finally been ousted. The other 3 tenants - and the replacement - are great. Ditto with a local LL I know who has a single mum living in their rented house at a notably smaller rent than average for these parts. But this tenant is brilliant, and the house immaculate. Both parties know they are fortunate with the arrangement.