I’ve recently bought a flat which is close to completion and look to rent it out in the near future but wondered what landlords experiences are with renting out there places and would they suggest renting right now in the current situation we’re in with this country and with our government?
This is my first property and going by figures I wouldn’t be making much profit on it monthly, more just having an asset for myself and the tenant paying my mortgage.
Thanks
I would have thought it would have been better to ask that question before you bought it?!
There is a lot of regulations you need to be aware of so given lack of experience using an agent would be sensible or at least some training provided by a landlord association.
It rarely makes sense to rent out a property if you dont already own one given you will pay tax on rent received but cant deduct against rent you pay on where you live.
You are right that profitability is limited…
she hasn’t bought it… still time to pull out.
In my message I said I would look to rent it out in the near future.
My plan is to move in for a year and then look into the option of renting it out after, as I’ll most likely be moving in with my partner.
I would like to know landlords experiences of renting and if it’s a sensible option.
thanks
It was probably more of a sensible option in the past. The rental landscspe is changing with a lot of smaller landlords selling up. To deal with regulations it really only mskes sense if you are renting multiple properties.
Folk here will tell you the yield /profits for tenant rent less mortgage and other costs won’t give you big profits
If you rent out you have income from rent, no council tax or utilities to pay,
but on the negative side there’s managing (or letting agent cost), a few extra costs (eicr, annual gas certificate, advertising, inventory, rent gtee insurance etc). Also higher tax for LLs income. And risk of bad tenants.
Good luck
Long, challenging and, thankfully, profitable.
Not any more
been ok for me as I bought long ago so all worth a lot more now . But guess at todays prices and mortgage ? not as good
Fine whilst the tenant is ‘paying your mortgage’, but you need to consider your finances if they stop paying. Plan for the worse case scenario.
My experience: ok-ish.
I have not taken any money out and only let it go towards the mortgage.
For me, it’s only worth it because I already had the property and became an accidental LL. I wouldn’t go into it planning to become one
You will need to change your mortgage so renting is allowed.
My experience is that renting out has been a good investment so far
I would not get into btl today
1 laws are crazy involved esp with RRA
2 councils can be aggressive for ctax and minor infractions getting stronger by the minute
3 non paying or damaging tenants can be mighty stressful
4 in flats can be neighbour problems over which you have no control
5 management costs can be aggressive
6 at end cgt is just going up and will steal your profit
7 limited companies are more involved than you might think
8 get some decent low ter etfs in an isa such as vanguard and ease your stress
I made good money with 35 rental units for many years but every year it just gets worse so steadily selling now before labour increase cgt again in the autumn budget( prophesy)
Based on my 25 years of landlording…
1 Never, NEVER buy a Leasehold flat. NEVER, NEVER. Only buy it if you have “Share of Freehold” or “Commonhold”. You may get stuck with huge repair/service bills (eg £60,000 per flat for roof repairs). Also remember that you never buy the flat, you only by the LEASE. There is a huge difference.
2. NEVER buy a property without allocated parking and a means for tradespeople to park really close by when they turn up to fix your boiler, check the electrics, service the fire alarms etc.
3. You will only turn a profit on a single-let rental if nothing goes wrong. That is, you have NO voids and the boiler doesn’t blow up and you don’t have to repaint it, or evict a “bad” tenant.
If you DO make any apparent profits, they will be swallowed up by accountants fees battling with HMRC, letting agent fees if you use one, and mortgage fees (who manoeuvre you into re-financing every 2-3 years at a cost of £2-£5000 each time.)
One “bad” tenant will give you stress and expense and destroy your profits for the next 10 years. A second bad tenant will destroy your faith in mankind, the police, council services and the court system. The third time it happens you will decide to sell everything - (and it will be at a loss if you’ve had three), and your optimism, energy and marriage will be permanently scarred. Four bad tenants cause landlord mental health issues and occasionally suicide. Seriously.
Under the new laws you will not be able to remove a tenant unless you can PROVE bad behaviour - (it’s pretty much unprovable by the way - and the courts often rule that six foot high mounds of rubbish, a garden wall-to-wall with dog shit and regular 2am loud drunken orgies resulting in neighbours calling YOU at 2am are legitimate “life-style choices” on the part of the tenant).
In other words, in my humble opinion, you would have to be young, seriously deluded, financially illiterate and masochistic to move into the rental market. If you have some cash, put it in the bank. At 4% it will earn more than you get from a leasehold flat and you can both sleep at night and put your time and energy to earning money in a steady job somewhere.
Apart from that it is all good ?!
I would never buy Property again to rent out. The stress is enormous. It’s not that profitable I own my flats with no Mortgage and I still think it’s not worth it. I am getting out. I’m selling everything. The tenants no matter how lovely they are. Don’t tell me when things need to be repaired and then they sit there for 2 1/2 years. These are things that wouldn’t be a parent on an inspection. I constantly ask them if there’s anything I need to know about because I know that they’re not good at reporting but even when I ask them directly, they say everything is fine and then when it comes to the day that they’re leaving that’s when I find out all the problems and it’s a complete another nightmare and it cost an absolute fortune
I’ve had scamming tenants who lied about their income and Openrent/rent guard passed them. And then they just stopped paying the rent. It is a very very very high risk business it’s not worth the stress anymore and I’m getting out.
Everyone I know that’s bought a flat in the same situation that you’re in, has got out because they could not cope with the hassle with no payback.
I would never advise anyone to buy Property now to rent out unless your filthy rich and not bothered if you lose money on it, you can hire a managing agent that can do everything for you but even that is stressful because they often do not do a good job and they cost a fortune.
I would advise not to get involved unless you know that you can afford a tenant stopping paying rent, that you are financially stable and can afford a loss.
As Colin said
right Lisa?
Now, about investing my money elsewhere, I’d like to look into opening a high interest Cash ISA, and explore any other recommended investment options.
Thank you.
well you will want to look at what that cash ISA invests in if you care ethically about what people do with your money. My other recommendation would be to find a good IFA who can make your money work for you. Just like with letting property, if you don’t know what you’re doing, you can lose money faster than you make it.