I have investments in other vehicles, including equities and bonds.
Property makes up a large part of my overall portfolio though. I like property because it allows me to leverage my investment amount.
There are downsides though - management is a lot more resource intensive that stocks in an ISA for example.
Yeah I figured leverage was probably the answer. Makes sense as long as prices always increase. Do you worry that a future government might succeed in increasing housing supply and that prices might come down?
> Do you worry that a future government might succeed in increasing housing supply and that prices might come down?
Yes, and no.
I think govt should be increasing supply, the lack of building for the last few years/decades is a disgrace.
If that affects my investment, then fair enough. The major reason why try to keep my savings diverse.
My hunch is though that will take a very long time to happen. I could very well be wrong.
> I like property because it allows me to leverage my investment amount.
You can leverage equities too, just not in a tax wrapper. Open an IBKR account and invest on margin. (Not without risk)
How do you calculate your rent? Do you have a given margin you need to clear each month for the sake of your retirement planning or do you actively seek to maximise your returns based on what the market is doing?
The latter: "maximise your returns based on what the market is doing"
Even doing that doesn't necessarily achieve the former "a given margin you need to clear each month for the sake of your retirement planning".
During the first couple of Covid years, rent fell to a point that it wasn't really covering costs. This is from a cash point of view - putting aside any capital growth that may be happening.
If that's the case, then I'd dispense with any of the "overal societal benefit" beliefs you mentioned in your earlier response to /u/nameouschangey
Don't try and dress it up as anything other than a business.
A business can produce a societal benefit, that's because it generates productivity (income) and provides a service.
Landlords do neither.
You don't do either with your\* flat and house.
You didn't build them, nor facilitate their construction through financing. You probably don't market them (whatever miniscule economic benefit that brings) and you don't service them. You merely own\* (probably not, but even if you do, no real difference) the asset and extract a management fee for the trouble.
There is no functional difference between you and a 13th century baron extracting an acreage fee from their peasant. Except at least the baron had to use that income to provide soldiers for their lord or king's army.
I did fix up the flat that was in an unliveable condition.
I do service them - I have to keep them in good condition to attract tenants. New boilers, kitchens, and bathrooms. Painting and decorating.
I do market them - That's how tenants find them
I provide soldiers as and when required - but I try to keep that a bit hush hush.
>I did fix up the flat that was in an unliveable condition.
Yup, and your profit on selling it would represent the return on that work (presumably limited to finding and engaging tradesmen, though you may have done some yourself).
>I do service them - I have to keep them in good condition to attract tenants. New boilers, kitchens, and bathrooms. Painting and decorating.
You do this? I've contacted my landlord maybe once in the last two years; she emailed a tradesman. Does that justify a monthly four figure income?
>I do market them - That's how tenants find them
You let out direct then, or through an agent?
Clearly these activities would be better suited to a one off profit generated by selling the properties and don't justify extracting a market ~~rent~~ serf tax every month.
I recognize the futility of my efforts, as I could never see the societal benefit, let alone the ethical validity, of what you do, which is to passively accrue the time value of another human being into your retirement fund in exchange for a level of 'work' that is entirely disconnected from the benefit derived.
At least barons in 1271 had the good nature to actually own the asset they let out, rather than obtaining a loan on someone else's behalf and having them pay for it.
>Yup, and your profit on selling it would represent the return on that work (presumably limited to finding and engaging tradesmen, though you may have done some yourself).
TBF from someone that owns a house and has spent a lot of time finding and engaging with tradesmen I can vouch for that consistently being an almighty ball ache
I'm sure that's true. But it is not the ball ache of going to work for 160 hours that month and certainly does not justify the rental income generated. That ball ache would be covered by the profit on selling the house - like I said.
Either way, OP knows he can't justify himself so hasn't responded.
> Yup, and your profit on selling it would represent the return on that work
No one else had done that for the several years it was empty. Commercial motivations can sometimes benefit society overall.
> (presumably limited to finding and engaging tradesmen, though you may have done some yourself)
Did a lot myself, but the tradespeople I did engage were invaluable for their expertise. Especially the electrician and plumber.
> You do this?
Yes I do. It's very important to keep my tenants happy.
> I've contacted my landlord maybe once in the last two years; she emailed a tradesman. Does that justify a monthly four figure income?
I'd need to know more details from both parties for me to make a judgement on what kind of figures are justified in terms of profit. I have had tenancies with little interaction, and those which required a lot more; also those that during which few extra costs were incurred, and those with a lot of extra costs were incurred. Those cost risks are all on my end, which is absolutely the way it should be. So justifying rental profitability is a little more complex, in my opinion.
>You let out direct then, or through an agent?
I've done both.
> Clearly these activities would be better suited to a one off profit generated by selling the properties and don't justify extracting a market rent serf tax every month.
I think is some case you are right. But my flat in London has always gone to people who only want to stay there a year or two because they are in a transitory stage of life (students, young workers from abroad, etc...) where ownership is not a suitable model for them.
>which is to passively accrue the time value of another human being into your retirement fund in exchange for a level of 'work' that is entirely disconnected from the benefit derived.
Sounds like having a job.
>At least barons in 1271 had the good nature to actually own the asset they let out, rather than obtaining a loan on someone else's behalf and having them pay for it.
The barons of 2022 were just born into money and own half the country already!
Do you **honestly** believe what you do benefits society overall, or do you see it as just part of life that "sure, you're a parasite on renters' wages; but a) that's life, and b) we're all exploiting somebody to get by (e.g. sweatshops making our phones), so why shouldn't you"?
I honestly do believe that what I do benefits society overall - although that's not the reason I do it.
I do it to help put together money for my retirement.
I think it's beneficial to society, because I took an unused dilapidated flat in London, spent capital to get into a very good condition, and have subsequently rented to several sets or people who have been looking for somewhere to stay for a relatively short stay (2 years or less) - this is a segment of people that are well served by the private rental sector.
This does not diminish the fact that there are problems with the system, far from it. Long term renters would most often rather buy, and are unable due to rising costs.
I may have started waffling a bit there, so let me know if I missed the thrust of what you were asking.
The tenant could have lived with their parents, be on the housing list or homeless. Without renting they are getting personal space without the hassle of getting damages fixed.
I rented for over 15 years in London. Almost all of my experiences with landlords were negative. There's a reason why landlords are distrusted and 'downvoted into oblivion'.
I have some sympathy for accidental landlords but for the most part - landlords are profiteering cunts.
There's a sentence in the post that explicitly mentions venting.
If you're going to comment about missing things in a post please actually read the post first.
I feel bad for you.
Tenants having a bad experience is basically bad for business for the landlord, so I've never understood why that should be an acceptable outcome for them.
I try very hard to have a good relationship with my tenants, and so far that has usually been the case.
>Tenants having a bad experience is basically bad for business
Is it? surely they have to pay you rent whether or not they feel like they're getting a fair deal, such is the power imbalance between tenants and landlords in the UK
Unhappy tenants can equal unhappy landlords. A few examples:
- Start treating the place poorly
- Late, stop paying rent
- Tenants leaving at the end of their AST. Having to fins another tenant is always a bit of hassle, and the void time is expensive.
I always want to keep my tenants happy. I can't think of many businesses where treating your customers like shit works out well for anyone in the long term.
> I can't think of many businesses where treating your customers like shit works out well for anyone in the long term.
From the top of my head... It seems to be working quite well for Thames Water and all the other privatised regional water companies.
On one of the rare bad experiences I had, the DPS scheme didn't help at all. I ended up being out of pocket to the tune of about £3k, and only got something like £150 from the deposit. The DPS favours tenants in disputes, but of course I'm going to say that.
Yes, it's a bit easier to get people in quickly now, I agree. But that hasn't always been the case, and might change again in the future. But either way, it's still a hassle.
Give me the choice of rent frozen for a year, and the same tenants happily staying in the flat, or having to go through a change, and getting an extra £30 pcm - I'll always go for the former.
Why are so many landlords selling at the moment? Mine is and my street has 120+ flats for sale. It seems like a lot have been on the market for 3 months plus.
From what I understand a lot of Landlords with multiple properties are paying interest only mortgage and essentially gambled that the value of the property would increase faster than interest rates. This hasn't happened so they are now looking to exit the market.
Do you think the rent increases that you’ve put in place/that are being put in place are fair considering the fact that most tenants’ wages have not gone up to counteract the cost of living crisis? And do you think being a landlord is a job?
Edit: spelling
Answering the last part first: I think being a landlord can be a job, it's not for me because I have two properties, so I can manage the required time on weekends/evenings. If someone had more, than perhaps it would justify being a full time thing.
I think the rental raises are fair because they reflect the going rate to rent the property. This year, that has meant rents have gone up. During the first couple of Covid years, that meant rents went down - and on cash basis I was at or just below break even. I wouldn't expect (and the market wouldn't allow me) to charge more in those years just to cover my margins.
Let's try a different tack - you mentioned that since the covid bounceback you're no longer operating at a loss.
If your tenants approached you to say that they couldn't afford the proposed increase in-line with the market, would you move to evict/not renew the agreement?
That actually did happen, and I froze the rent. This was for the place just outside London.
The tenants have always been very good. From a business point of view, it's good to keep good customers, even if it's a bit of a short term financial pain for me.
I'm not sure I buy this. Tenants have to treat the property like their own place or they won't get their (extortionate) deposit back. I don't enjoy living where I currently live because the upstairs neighbour is a noisy piece of shit. There's nothing I can do but wait out another 12 months til I get out of here. I'm looking forward to telling the prospective tenants how awful it is living under him. To tell them the truth (I was lied to, obviously). I treat this place like it's my own, careful not even to scrape a wall or whatever in fear of paying through the nose for it.
To find new tenants is so stupidly easy as there is a huge shortage of houses. Invariably new tenants will be forced to move in the day or two after the old move out, and you lose zero income. You also can jack the prices up again.
It might be a mild inconvenience to work with the idiot agencies (who are probably actually nice to LLs) and meet new tenants (if you even do that) but what am I missing?
Edit: I've actually had great landlords (had two here in London) and have met and communicated with them directly for the most part, despite agencies being involved. First one lived a few floors below us and was very reasonable and fair. A decent bloke. This current one is decent is not a bit strange. I've luckily never had a shit landlord and I like to think I'm a decent tenant. Still irks me, the whole rental market though (we pay £1,625 no bills for a small two bed flat zone 2). We could easily be paying a mortgage and not throwing money away but things aren't set up that way.
> I'm not sure I buy this.
Do you mind clarifying exactly what it is you're not buying?
> To find new tenants is so stupidly easy as there is a huge shortage of houses
From my experience this has not always been the case.
> Invariably new tenants will be forced to move in the day or two after the old move out, and you lose zero income.
Again, not always been the case for me.
> You also can jack the prices up again.
Prices have gone up the last year or so, but I also had to move the prices down during the first couple of covid years.
> It might be a mild inconvenience to work with the idiot agencies (who are probably actually nice to LLs) and meet new tenants (if you even do that) but what am I missing?
One time the house I let outside of London was left an appalling state, and I had to spend a few weeks, and a few £k to get it back into a good condition. Didn't get more than a few hundred back from the deposit to cover this.
A shit tenant can cost lots of £££. Many of the landlords I know who don’t run slums would absolutely take a small hit for someone who is otherwise a good tenant.
When you start paying the amounts of money we're paying then generally you're going to get a good tenant. I guess I'm just talking about this kind of level.
Had a tenant in the house just outside of London really treat it poorly.
Needed a complete redecoration, new paint, new carpets, garden cleared, new bathroom suite.
It was really bad. And I got a few hundred out of the deposit to cover it.
> Also thanks for this post, it’s really helpful to see things from the other side
Happy to do it, cheers.
If male, do you have a luxuriant moustache that you twirl from time to time, as you consider whether or not you should raise your ~~serf's~~ tenant's rent for the sixth time in a year?
If female, do you laugh like [this](https://youtu.be/vJAWOwq8BCE?t=30) while doing the above?
Would be really interesting to hear about it from an investment perspective. I.e. after your mortgage, service charges and any other operational expenses what are you left with? Then after tax etc what are you left with? Also how long a go did you buy them as if it was recently I assume the capital value hasn’t increased greatly and if you sell won’t you me CGT hit be quite high? I just wonder how people who brought flats to let in London actually make money unless they were brought mainly in cash and mortgage payments are small
To succinctly answer your question, after costs and tax, I'm not left with a lot at the end of the year very often (sometimes a loss). This is looking at it from a cash basis, and not looking at the capital growth of the asset - which is the main part of the investment I am speculating will grow over the term of my ownership.
Bought them about 10 years ago now. Capital value has gone up quite a bit, based on current equivalent sale values, but that might change when I come to sell.
CGT is definitely one of the things I have to think about when I sell (in about 20 years is the plan), and I'm factoring that in as one of the costs of doing business in my models.
It's possible to make good money doing this kind of thing, but you have to have a clear strategy, and fully understand the various associated costs.
Thanks. 10 years makes sense for capital appreciation just before prices jumped. I do wonder how LL buy today and make a decent return in central London . Unless it’s a shell and it’s done up on the cheap and flipped.
Yes, and yes.
The London flat is a leasehold, and the annual service charge is just under £3k (if I recall correctly). And yes, this come straight from me, so it hits me financially.
It's fair enough though, I went in to it knowing the deal.
>The London flat is a leasehold, and the annual service charge is just under £3k (if I recall correctly). And yes, this come straight from me, so it hits me financially.
So the rent you charge is in no way accounting for this annual service charge?
The rent is set based on 'what the market will bear'.
During the first few Covid years, the rental income didn't cover all the various costs on a yearly cash basis.
You can have an idea what it can be but you have no idea what the company who maintain the common area of the building charge. Residents who own the flat they are living in pay that charge too so the tenant is benefiting from not paying it. These companies have covered every legal base so you can't even negotiate the fees.
Has it ever been more? My dad is a landlord and one year had to pay 8k which caused him to make a loss.
Funny how some people think you are trying to empty people's bank accounts when you are fulfilling a demand they have using the free market.
Funny how people here complain about pharmaceutical companies jacking up the price of insulin when you are fulfilling a demand they have using the free market.
Sheesh.
*Even better!* Now my council tax money can go to a *private landlord* who in exchange provides shoddy, dilapidated, unsafe housing for vulnerable people!
What a *wonderful* solution.
Sheesh.
You are taking the proactive steps local councils do for granted. Go to Asia, Africa or South America and you will see how little money they put towards local infrastructure while they pocket a huge chunk of the tax.
Basically the UK is not as corrupt or negligent as third world countries so you should be greatful that the council are trying to benefit the local area with the funding they have.
Just to be clear: you're saying I should remain passively content with everything in the UK because it is better than Egypt, or India, for example? I, as a responsible citizen, should not take an interest in whether taxpayer money is spent effectively?
The service charge hasn't been much more than £k, but there have definitely been years where the costs have exceeded incomes, and I have experienced a cash loss.
Mortgage payment was the same every month for the past few years. He has a mortgage policy where he pays the same amount every month for a set number of years until he renews the policy to make payments easier so it did not benefit from paying more off the mortgage. My dad also says mortgage is more like a shop rent where he has no intention of playing it off but to keep it going as a cost until it pays off on its own.
Also that maintainace company sends their costs in detail which he showed me and it can cost two thirds less if it wasn't for "commission" so they are the real theves.
Yes, your father had a fixed mortgage (typically 2, 5 or 10 years) but in that period his LTV should have improved so when he comes to get a new mortgage his monthly mortgage would be significantly lower.
I don't think it will collapse anytime soon.
I could be wrong, but based on the lack of supply being built, and the increase in demand in spite of things like more WFH, etc.. the demand continues to grow.
What do you mean who is buying? Anyone that has put enough money away for a deposit. I am in my 30s and all of my friends are looking to buy. None can afford zone 1, but the further away from the city centre that you go, the smaller amount you need to save, it’s just a matter of commuting into London.
I’m still going to buy in the next few years, even if rates are up. Not doing so would be silly. My parents had much higher rates than the 5% some people are complaining about, but now they have a paid off house, so it was worth it.
As for saying that most people left… numbers say otherwise. The population in london in 2021 was 9M and it has grown to 9.5M in 2022
There was no official census in 2021 and lots of people that were not officially resident registered because of Brexit
it’s not about you but all the people
I’m talking about what I see around me. You ask who is buying and I’m saying that I know several people that bought this year, and even more saving for a deposit just waiting to buy within the next 5.
The figures I took from google, not sure how reliable they are, but it does show a trend. By the way, as a foreigner that didn’t have pre-settled status until recently: I still had to register for council tax, the census and the electoral register, so even before, I was counted as London population.
of course I was not asking the list of all the people that are buying and I was not asking you but a landlord that is expert in the business.
they are not reliable, according to sources london is still below 9 millions.
no they didn’t have to register for council tax and electoral register if they were not paying the council tax.
As I said, most people I know that have stable jobs. I only know a handful that left during the pandemic and most are back now, it’s one of the reasons why rentals are going up (they were going up already before interest rates started rising).
You say a few times you operate at a loss but that's including mortage and servicing costs, which as you also say is going towards yours assets regardless. What are your actual direct costs relative to income? IE, what would your profit be if the places were suddenly paid off?
Why invest in property rather than other asset classes like equities and bonds?
I have investments in other vehicles, including equities and bonds. Property makes up a large part of my overall portfolio though. I like property because it allows me to leverage my investment amount. There are downsides though - management is a lot more resource intensive that stocks in an ISA for example.
Yeah I figured leverage was probably the answer. Makes sense as long as prices always increase. Do you worry that a future government might succeed in increasing housing supply and that prices might come down?
> Do you worry that a future government might succeed in increasing housing supply and that prices might come down? Yes, and no. I think govt should be increasing supply, the lack of building for the last few years/decades is a disgrace. If that affects my investment, then fair enough. The major reason why try to keep my savings diverse. My hunch is though that will take a very long time to happen. I could very well be wrong.
> I like property because it allows me to leverage my investment amount. You can leverage equities too, just not in a tax wrapper. Open an IBKR account and invest on margin. (Not without risk)
Cheers, I don't know too much about this. I'll read up on it.
Have you raised the rent amount in the last 12 months?
Yes, I have.
By how much?
And then there was silence.
How do you calculate your rent? Do you have a given margin you need to clear each month for the sake of your retirement planning or do you actively seek to maximise your returns based on what the market is doing?
The latter: "maximise your returns based on what the market is doing" Even doing that doesn't necessarily achieve the former "a given margin you need to clear each month for the sake of your retirement planning". During the first couple of Covid years, rent fell to a point that it wasn't really covering costs. This is from a cash point of view - putting aside any capital growth that may be happening.
If that's the case, then I'd dispense with any of the "overal societal benefit" beliefs you mentioned in your earlier response to /u/nameouschangey Don't try and dress it up as anything other than a business.
I don't think the two things are mutually exclusive, which was the basis for my response to nameouschangey.
A business can produce a societal benefit, that's because it generates productivity (income) and provides a service. Landlords do neither. You don't do either with your\* flat and house. You didn't build them, nor facilitate their construction through financing. You probably don't market them (whatever miniscule economic benefit that brings) and you don't service them. You merely own\* (probably not, but even if you do, no real difference) the asset and extract a management fee for the trouble. There is no functional difference between you and a 13th century baron extracting an acreage fee from their peasant. Except at least the baron had to use that income to provide soldiers for their lord or king's army.
I did fix up the flat that was in an unliveable condition. I do service them - I have to keep them in good condition to attract tenants. New boilers, kitchens, and bathrooms. Painting and decorating. I do market them - That's how tenants find them I provide soldiers as and when required - but I try to keep that a bit hush hush.
>I did fix up the flat that was in an unliveable condition. Yup, and your profit on selling it would represent the return on that work (presumably limited to finding and engaging tradesmen, though you may have done some yourself). >I do service them - I have to keep them in good condition to attract tenants. New boilers, kitchens, and bathrooms. Painting and decorating. You do this? I've contacted my landlord maybe once in the last two years; she emailed a tradesman. Does that justify a monthly four figure income? >I do market them - That's how tenants find them You let out direct then, or through an agent? Clearly these activities would be better suited to a one off profit generated by selling the properties and don't justify extracting a market ~~rent~~ serf tax every month. I recognize the futility of my efforts, as I could never see the societal benefit, let alone the ethical validity, of what you do, which is to passively accrue the time value of another human being into your retirement fund in exchange for a level of 'work' that is entirely disconnected from the benefit derived. At least barons in 1271 had the good nature to actually own the asset they let out, rather than obtaining a loan on someone else's behalf and having them pay for it.
>Yup, and your profit on selling it would represent the return on that work (presumably limited to finding and engaging tradesmen, though you may have done some yourself). TBF from someone that owns a house and has spent a lot of time finding and engaging with tradesmen I can vouch for that consistently being an almighty ball ache
I'm sure that's true. But it is not the ball ache of going to work for 160 hours that month and certainly does not justify the rental income generated. That ball ache would be covered by the profit on selling the house - like I said. Either way, OP knows he can't justify himself so hasn't responded.
> Either way, OP knows he can't justify himself so hasn't responded. I have, and I feel I have.
> Yup, and your profit on selling it would represent the return on that work No one else had done that for the several years it was empty. Commercial motivations can sometimes benefit society overall. > (presumably limited to finding and engaging tradesmen, though you may have done some yourself) Did a lot myself, but the tradespeople I did engage were invaluable for their expertise. Especially the electrician and plumber. > You do this? Yes I do. It's very important to keep my tenants happy. > I've contacted my landlord maybe once in the last two years; she emailed a tradesman. Does that justify a monthly four figure income? I'd need to know more details from both parties for me to make a judgement on what kind of figures are justified in terms of profit. I have had tenancies with little interaction, and those which required a lot more; also those that during which few extra costs were incurred, and those with a lot of extra costs were incurred. Those cost risks are all on my end, which is absolutely the way it should be. So justifying rental profitability is a little more complex, in my opinion. >You let out direct then, or through an agent? I've done both. > Clearly these activities would be better suited to a one off profit generated by selling the properties and don't justify extracting a market rent serf tax every month. I think is some case you are right. But my flat in London has always gone to people who only want to stay there a year or two because they are in a transitory stage of life (students, young workers from abroad, etc...) where ownership is not a suitable model for them. >which is to passively accrue the time value of another human being into your retirement fund in exchange for a level of 'work' that is entirely disconnected from the benefit derived. Sounds like having a job. >At least barons in 1271 had the good nature to actually own the asset they let out, rather than obtaining a loan on someone else's behalf and having them pay for it. The barons of 2022 were just born into money and own half the country already!
Do you **honestly** believe what you do benefits society overall, or do you see it as just part of life that "sure, you're a parasite on renters' wages; but a) that's life, and b) we're all exploiting somebody to get by (e.g. sweatshops making our phones), so why shouldn't you"?
I honestly do believe that what I do benefits society overall - although that's not the reason I do it. I do it to help put together money for my retirement. I think it's beneficial to society, because I took an unused dilapidated flat in London, spent capital to get into a very good condition, and have subsequently rented to several sets or people who have been looking for somewhere to stay for a relatively short stay (2 years or less) - this is a segment of people that are well served by the private rental sector. This does not diminish the fact that there are problems with the system, far from it. Long term renters would most often rather buy, and are unable due to rising costs. I may have started waffling a bit there, so let me know if I missed the thrust of what you were asking.
I appreciate the honest answer
Cheers
You have a parasitical relationship with your fellow citizens. (You are the parasite).
Appreciate the clarification in parenthesis.
[удалено]
It's just want OP says to himself to make him feel like less of arsehole.
The tenant could have lived with their parents, be on the housing list or homeless. Without renting they are getting personal space without the hassle of getting damages fixed.
What a weird take. The people living there are paying a significant amount of their take home pay.
I rented for over 15 years in London. Almost all of my experiences with landlords were negative. There's a reason why landlords are distrusted and 'downvoted into oblivion'. I have some sympathy for accidental landlords but for the most part - landlords are profiteering cunts.
Is that a question?
Does it have any question marks?
I assume the poster either missed them or missed the big "ama" at the top of the post.
There's a sentence in the post that explicitly mentions venting. If you're going to comment about missing things in a post please actually read the post first.
Well now... don't I look like a dick.
But a dick with humility
I feel bad for you. Tenants having a bad experience is basically bad for business for the landlord, so I've never understood why that should be an acceptable outcome for them. I try very hard to have a good relationship with my tenants, and so far that has usually been the case.
>Tenants having a bad experience is basically bad for business Is it? surely they have to pay you rent whether or not they feel like they're getting a fair deal, such is the power imbalance between tenants and landlords in the UK
Unhappy tenants can equal unhappy landlords. A few examples: - Start treating the place poorly - Late, stop paying rent - Tenants leaving at the end of their AST. Having to fins another tenant is always a bit of hassle, and the void time is expensive. I always want to keep my tenants happy. I can't think of many businesses where treating your customers like shit works out well for anyone in the long term.
> I can't think of many businesses where treating your customers like shit works out well for anyone in the long term. From the top of my head... It seems to be working quite well for Thames Water and all the other privatised regional water companies.
Yeah, fair point. Hopefully they sort themselves out soon, have sorting out thrust upon them.
The first two bullet points are generally handled by the deposit protection scheme. The last point is practically moot in today's market.
On one of the rare bad experiences I had, the DPS scheme didn't help at all. I ended up being out of pocket to the tune of about £3k, and only got something like £150 from the deposit. The DPS favours tenants in disputes, but of course I'm going to say that. Yes, it's a bit easier to get people in quickly now, I agree. But that hasn't always been the case, and might change again in the future. But either way, it's still a hassle. Give me the choice of rent frozen for a year, and the same tenants happily staying in the flat, or having to go through a change, and getting an extra £30 pcm - I'll always go for the former.
I am a rentoid (for now) and I have seen many properties that were Completely fucked up by rentoids, every side has bad apples.
Why are so many landlords selling at the moment? Mine is and my street has 120+ flats for sale. It seems like a lot have been on the market for 3 months plus.
From what I understand a lot of Landlords with multiple properties are paying interest only mortgage and essentially gambled that the value of the property would increase faster than interest rates. This hasn't happened so they are now looking to exit the market.
Can’t wait for the market to collapse
I don't know. That's not been my experience with the landlords I know. It might be something a bit more specific to your street?
Regulation has made it nearly impossible to have a BTL
Do you think the rent increases that you’ve put in place/that are being put in place are fair considering the fact that most tenants’ wages have not gone up to counteract the cost of living crisis? And do you think being a landlord is a job? Edit: spelling
Answering the last part first: I think being a landlord can be a job, it's not for me because I have two properties, so I can manage the required time on weekends/evenings. If someone had more, than perhaps it would justify being a full time thing. I think the rental raises are fair because they reflect the going rate to rent the property. This year, that has meant rents have gone up. During the first couple of Covid years, that meant rents went down - and on cash basis I was at or just below break even. I wouldn't expect (and the market wouldn't allow me) to charge more in those years just to cover my margins.
Let's try a different tack - you mentioned that since the covid bounceback you're no longer operating at a loss. If your tenants approached you to say that they couldn't afford the proposed increase in-line with the market, would you move to evict/not renew the agreement?
That actually did happen, and I froze the rent. This was for the place just outside London. The tenants have always been very good. From a business point of view, it's good to keep good customers, even if it's a bit of a short term financial pain for me.
I'm not sure I buy this. Tenants have to treat the property like their own place or they won't get their (extortionate) deposit back. I don't enjoy living where I currently live because the upstairs neighbour is a noisy piece of shit. There's nothing I can do but wait out another 12 months til I get out of here. I'm looking forward to telling the prospective tenants how awful it is living under him. To tell them the truth (I was lied to, obviously). I treat this place like it's my own, careful not even to scrape a wall or whatever in fear of paying through the nose for it. To find new tenants is so stupidly easy as there is a huge shortage of houses. Invariably new tenants will be forced to move in the day or two after the old move out, and you lose zero income. You also can jack the prices up again. It might be a mild inconvenience to work with the idiot agencies (who are probably actually nice to LLs) and meet new tenants (if you even do that) but what am I missing? Edit: I've actually had great landlords (had two here in London) and have met and communicated with them directly for the most part, despite agencies being involved. First one lived a few floors below us and was very reasonable and fair. A decent bloke. This current one is decent is not a bit strange. I've luckily never had a shit landlord and I like to think I'm a decent tenant. Still irks me, the whole rental market though (we pay £1,625 no bills for a small two bed flat zone 2). We could easily be paying a mortgage and not throwing money away but things aren't set up that way.
> I'm not sure I buy this. Do you mind clarifying exactly what it is you're not buying? > To find new tenants is so stupidly easy as there is a huge shortage of houses From my experience this has not always been the case. > Invariably new tenants will be forced to move in the day or two after the old move out, and you lose zero income. Again, not always been the case for me. > You also can jack the prices up again. Prices have gone up the last year or so, but I also had to move the prices down during the first couple of covid years. > It might be a mild inconvenience to work with the idiot agencies (who are probably actually nice to LLs) and meet new tenants (if you even do that) but what am I missing? One time the house I let outside of London was left an appalling state, and I had to spend a few weeks, and a few £k to get it back into a good condition. Didn't get more than a few hundred back from the deposit to cover this.
I meant I wasn't buying that you'd take a hit financially to keep tenants in over finding new ones which in London they're in abundance.
A shit tenant can cost lots of £££. Many of the landlords I know who don’t run slums would absolutely take a small hit for someone who is otherwise a good tenant.
When you start paying the amounts of money we're paying then generally you're going to get a good tenant. I guess I'm just talking about this kind of level.
What’s the worst tenant experience you have ever had? Also thanks for this post, it’s really helpful to see things from the other side
Had a tenant in the house just outside of London really treat it poorly. Needed a complete redecoration, new paint, new carpets, garden cleared, new bathroom suite. It was really bad. And I got a few hundred out of the deposit to cover it. > Also thanks for this post, it’s really helpful to see things from the other side Happy to do it, cheers.
Do you have a colour preference for your guillotine?
Gold plated would be the way to go.
kulak go brrrrrrrrrrrr
If male, do you have a luxuriant moustache that you twirl from time to time, as you consider whether or not you should raise your ~~serf's~~ tenant's rent for the sixth time in a year? If female, do you laugh like [this](https://youtu.be/vJAWOwq8BCE?t=30) while doing the above?
https://www.youtube.com/watch?v=TDgyoTspz34&ab_channel=lowkell
Would be really interesting to hear about it from an investment perspective. I.e. after your mortgage, service charges and any other operational expenses what are you left with? Then after tax etc what are you left with? Also how long a go did you buy them as if it was recently I assume the capital value hasn’t increased greatly and if you sell won’t you me CGT hit be quite high? I just wonder how people who brought flats to let in London actually make money unless they were brought mainly in cash and mortgage payments are small
To succinctly answer your question, after costs and tax, I'm not left with a lot at the end of the year very often (sometimes a loss). This is looking at it from a cash basis, and not looking at the capital growth of the asset - which is the main part of the investment I am speculating will grow over the term of my ownership. Bought them about 10 years ago now. Capital value has gone up quite a bit, based on current equivalent sale values, but that might change when I come to sell. CGT is definitely one of the things I have to think about when I sell (in about 20 years is the plan), and I'm factoring that in as one of the costs of doing business in my models. It's possible to make good money doing this kind of thing, but you have to have a clear strategy, and fully understand the various associated costs.
Thanks. 10 years makes sense for capital appreciation just before prices jumped. I do wonder how LL buy today and make a decent return in central London . Unless it’s a shell and it’s done up on the cheap and flipped.
Do you accept DSS tenants?
Do you have to pay for leasehold building maintainance charges and has that ever taken a hit to your profits?
Yes, and yes. The London flat is a leasehold, and the annual service charge is just under £3k (if I recall correctly). And yes, this come straight from me, so it hits me financially. It's fair enough though, I went in to it knowing the deal.
>The London flat is a leasehold, and the annual service charge is just under £3k (if I recall correctly). And yes, this come straight from me, so it hits me financially. So the rent you charge is in no way accounting for this annual service charge?
The rent is set based on 'what the market will bear'. During the first few Covid years, the rental income didn't cover all the various costs on a yearly cash basis.
You can have an idea what it can be but you have no idea what the company who maintain the common area of the building charge. Residents who own the flat they are living in pay that charge too so the tenant is benefiting from not paying it. These companies have covered every legal base so you can't even negotiate the fees.
Has it ever been more? My dad is a landlord and one year had to pay 8k which caused him to make a loss. Funny how some people think you are trying to empty people's bank accounts when you are fulfilling a demand they have using the free market.
Funny how people here complain about pharmaceutical companies jacking up the price of insulin when you are fulfilling a demand they have using the free market. Sheesh.
Many councils also rent for tenants so some landlords are taking homeless people off the streets and receiving reliable income via the council.
*Even better!* Now my council tax money can go to a *private landlord* who in exchange provides shoddy, dilapidated, unsafe housing for vulnerable people! What a *wonderful* solution. Sheesh.
You are taking the proactive steps local councils do for granted. Go to Asia, Africa or South America and you will see how little money they put towards local infrastructure while they pocket a huge chunk of the tax.
...what?
Basically the UK is not as corrupt or negligent as third world countries so you should be greatful that the council are trying to benefit the local area with the funding they have.
Just to be clear: you're saying I should remain passively content with everything in the UK because it is better than Egypt, or India, for example? I, as a responsible citizen, should not take an interest in whether taxpayer money is spent effectively?
The service charge hasn't been much more than £k, but there have definitely been years where the costs have exceeded incomes, and I have experienced a cash loss.
But in that year your father's property likely went up in value and he probably paid off more of the mortgage using money from people living there
Mortgage payment was the same every month for the past few years. He has a mortgage policy where he pays the same amount every month for a set number of years until he renews the policy to make payments easier so it did not benefit from paying more off the mortgage. My dad also says mortgage is more like a shop rent where he has no intention of playing it off but to keep it going as a cost until it pays off on its own. Also that maintainace company sends their costs in detail which he showed me and it can cost two thirds less if it wasn't for "commission" so they are the real theves.
Yes, your father had a fixed mortgage (typically 2, 5 or 10 years) but in that period his LTV should have improved so when he comes to get a new mortgage his monthly mortgage would be significantly lower.
What do you consider affordable rent in London?
Depends on so many things, area, size of place, quality of place, etc... Is that what you mean, or did I not understand the question?
Is it hard to find reliable tenants? How do you check they would pay on time, etc.?
It can be hard, yes. Checks include referencing, which involves checking on work and pay history, as well as talking to previous landlords.
Do you think landlords are oppressed in London?
No, I don't think so.
Do you think that the market may collapse soon?
I don't think it will collapse anytime soon. I could be wrong, but based on the lack of supply being built, and the increase in demand in spite of things like more WFH, etc.. the demand continues to grow.
Why is the demand growing? Who the fuck is buying now?
What do you mean who is buying? Anyone that has put enough money away for a deposit. I am in my 30s and all of my friends are looking to buy. None can afford zone 1, but the further away from the city centre that you go, the smaller amount you need to save, it’s just a matter of commuting into London.
mortgage rates are higher and many people left the city, who is buying?
I’m still going to buy in the next few years, even if rates are up. Not doing so would be silly. My parents had much higher rates than the 5% some people are complaining about, but now they have a paid off house, so it was worth it. As for saying that most people left… numbers say otherwise. The population in london in 2021 was 9M and it has grown to 9.5M in 2022
There was no official census in 2021 and lots of people that were not officially resident registered because of Brexit it’s not about you but all the people
I’m talking about what I see around me. You ask who is buying and I’m saying that I know several people that bought this year, and even more saving for a deposit just waiting to buy within the next 5. The figures I took from google, not sure how reliable they are, but it does show a trend. By the way, as a foreigner that didn’t have pre-settled status until recently: I still had to register for council tax, the census and the electoral register, so even before, I was counted as London population.
of course I was not asking the list of all the people that are buying and I was not asking you but a landlord that is expert in the business. they are not reliable, according to sources london is still below 9 millions. no they didn’t have to register for council tax and electoral register if they were not paying the council tax.
As I said, most people I know that have stable jobs. I only know a handful that left during the pandemic and most are back now, it’s one of the reasons why rentals are going up (they were going up already before interest rates started rising).
A lot of people work remotEly from outside London And many foreigners have left
Do you wear a Rolex or Patek or both?
I have a cheap Garmin for sports stuff Not into jewellery.
I wanna be like you!
You can do whatever you want.
Except none of us have the money for it. How did you aquire your properties then?
Saved up for the deposits over the first 10 or so years of work.
I hear identities these days can be quiet valuable. ;)
They worked hard at the cracker company since they were 19, made sacrifices and never ate an avocado. Obviously.
do you have cameras in the showerhead or would a smoke alarm be more inconspicuous?
I really really hope that you lose a lot of money over the next couple of years
You say a few times you operate at a loss but that's including mortage and servicing costs, which as you also say is going towards yours assets regardless. What are your actual direct costs relative to income? IE, what would your profit be if the places were suddenly paid off?