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

cgfw201

Bendy_House said:

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.

Yeh, tenants are great. We had one couple for 2 years, and a new couple since January. Rent on time every month, they keep the place in good order and are no hassle in themselves. Likewise, we've always done everything needed from our side. No issues there. 

I think part of the problem I'm having at the moment is that the first set of tenants were basically silent for 2 years, so no minor issues were noticed or reported, so the new tenants are finding 2 years worth of issues  in their first few months.

Schwarzwald

 

 

Entire posts seems to suggest to me you are not really dealing with this professionally and don’t seem to fully understand the economics of it all.

 

Zoopla estimates are nonsense.

Even if house prices were flat, you are building equity as your mortgage decreases as received rent seems to fully cover your mortgage payments (unless it is interest only).

Flat property prices in London since 2016 is hard to believe, unless there were flat-specific issues.

4% interest in a savings account are just nominal, not real after inflation.

You clearly missed the peak of the market to sell, so wanting to sell now is again not really professional.

Being a LL for 2 years was fine for you, now that you have to put in some work you are getting annoyed.

Being a LL is hard work, if you don’t want to get the random tenant calls, have the property managed by EAs.

3.5k maintenance over last 2-3 years in total, say 1k annualized is nothing for a 560k property.

 

I think you need to make up your mind what you want to get out of this experience: putting in the work to manage this asset and make a gain ideally, or free up your time and peace of mind.

Don’t ask your tax advisor and your family, its your time and your wallet. Being a LL is a grown up thing, you should be able to take that decision yourself. If you cant take it yourself, being a LL probably not the right role in any case.

Gycraig

Have a look at how much your mortgage is gonna jump to when your fixed term is up and take it from there, If you don’t like them spending 15 days of there wages to pay your rent you won’t like how much your gonna need to increase it to soon. 

If you don’t like being a landlord, the returns aren’t amazing, and you don’t think prices are gonna rise it’s a bit of a no brainer really 

[Deleted User]

I agree 100% with your sentiments.
Yes, selling will cause some short term financial pain (GCT, fees etc) but you'll have no worries and no moral dilemma.
You can put the funds to work elsewhere, potentially sheltered from taxes.

Personally, I think it's a crazy time to be a btl investor (particularly if looking to buy), the risk / reward, tax implications and overall effort doesn't add up to me. At this moment there are easier alternatives to get similar returns.
I'm fully aware that some landlords and property speculators have a very different view.

lika_86

I certainly wouldn't sell while your tenants are happy to stay there. If they tell you they're going then that's another matter. If you do decide to sell (whether now or at a point in the future), do consider offering your tenants the chance to buy it from you if they want.

IronWolf

It's not that best time to sell to be honest, but if you hate it then start planning to do so say when your tenant serves notice.

At the end of the day, there's more to life than making optimal financial decisions (and no one knows if BTL is currently the best investment). You have capital tied up in the flat that you can make returns from elsewhere, so it's not like you're getting free money. Do whatever makes you comfortable.

diystarter7

OP, as you "hate" being a landlord and 'hate' is a very strong word, just get out of it and if you can, donate the profits you have made over the years to good causes. The windfall you get when buying the flat, give that away as well if you can and hopefully that will make you better. It is your property, your money and most of all, your choice. Whatever you decide, I just hope you are in a better place.

LegallyLandlord

cgfw201 said:

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).

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?

 
I say this as a fellow landlord...

If you hate it, and you make barely any money, then don't do it!  Sure you might miss out on capital growth, but flats aren't necessarily the best investment for that.

It's hard being a landlord, and with the upcoming Renters' Reforms and the necessity to upgrade to EPC C, it's not going to get easier.

I bought a flat in 2015 and lived in it for 4 years, before letting it. After the service charge, my gross yield was 4.2%. I reluctantly decided to sell up earlier this year, and barely broke even on the sale price by the time I'd deducted the initial stamp duty.

I personally do like being a landlord, and have since bought somewhere else with a higher yield.

It's not easy being a landlord, and you should only do it if your heart's in it.

Good luck

saajan_12

cgfw201 said:

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. - economically, I see how you see it like that. But for HMRC, your personal rent would not be a deductible expense against your rental income. Unless you mean against farm business? 

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. - well how much of the mortgage is repaying capital? That portion is building equity, so not exactly a cost. 
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. - true, plus the 60-80% of the cost still comes out of your pocket (depending on 40/20% tax)

I hate owning the flat. I hate that another couple has to do 15 days work a month just to pay my own mortgage, - don't understand this.. do you mean the couple renting your property? They are paying for accommodation, whihc you are providing.. nothing wrong with that. 
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. - true, it is a time intensitve buisness and you have to price in your time as well do decide if its profitable. 

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? - well 4% interest in a 10% inflation environment is actually losing money in real terms. Plus the 4% isn't fixed for 20 years, could go down. Plus you also pay income tax on savings interest (after the thresholds).. how much are we talking about in equity? 
However there are other investments that could beat a savings account but also need no maintenance, eg a diversified stock portfolio. 

Comments in line. Re the suggestions to wait on the tenants to leave etc.. Tenants paying on time and avoidign a void are definitely a good think but that alone doesn't make a good lettigns business. Properties can be sold to investors - while you may lose a little on the price, you avoid eviction costs and rental void. 

TBagpuss

If you hate it, sell. 

No one can say for certain whether it will give you a better financial return in the long run if you keep it, but if you find it stressful and don't want it, sell, you can'tput a finacial value on your pece of mind. 

If you don't want to be a landlord there are other options for investment - you could put it in a savings account (especially if you xpect to need the funds within a short space of time)  but equally could look at putting money into stocks & shares - you can invest in mixed funds so you spread your risk over a range of different investments rather than having all your eggs in one basket. Or put some of it into a savings account and some into investments. Or put (some) of it into a pension and use it to start to build up security for the future that way.

Property has historically been a good investment but there are other things you can invest in,  

I'd say keep it if you thought it was likely thaty ou would want to move back to Lodon in the foreseeable future, otherwise, do wha you feel comfortable with..

You could also consider buying a home to live in - (although I realise that if you are living on a family farm your home may be very secure) or buy a local property to rent out if you feel that that might be easier to manage.