Buy to let - second property

[Vince Green]

11 minutes ago, eddoakley said:

2 good posts above.

Using an agent is a decision you'll have to weigh up.

I've been on both sides and am currently leaning towards using an agent. 

I've always managed my own property and have managed for others and thought that it was money for old rope and I've also done plenty of work for agents on properties that they managed again thinking that it was easy money.

But lately I've considered using an agent who is offering me 10% fee for portfolio (15% for less than 5 properties) buy offering guaranteed rent. I'm trying to be retired (not doing too well at that) and just can't be bothered with the work involved in managing tenants. The agents get top rent meaning that their fee is actually less out of my pocket. I still get the option to do any of the maintenance too so if I feel like it I just get it done or if I can't be bothered I give them the go ahead to do what's needed.

10% as a pound note figure looks like a lot to lose each month but overall I think its going to be sensible for me, OP would need to weigh it up.

I've been doing it for 25 years and have had the good and the bed but I know what to expect and have never relied on the income, jndeed at times I had to top up the rent to pay the mortgages but I was working and able to cope.

25 years since the 1st one and with mortgages paid off and other properties bought cash then the income is enough to live, not a fortune but enough if I'm sensible. 

To the OP, don't get into it if you are going to rely on it. It's a good supplementary income if you have spare cash yo set it up and plan it properly and don't mind the work at times. Or it's a good long term savings plan if you do repayment and just forget about the income for as long as possible.

It's not all doom and gloom but it's certainly not easy.

 

Edd

Not in all cases. 

Flats and houses are different. Fire strategies differ. Escape routes matter.

I don't think any of my places have needed fire rated doors retro fitted.

 

Edd

There is a lot of anger down here in Cornwall about "unregulated" AirBnBs operating without any safety certificates etc. 

We are also starting to see the beds in sheds phenomenon spreading down here as there is such a shortage of rental properties because so many landlords have bailed out.

[eddoakley]

18 minutes ago, Vince Green said:

There is a lot of anger down here in Cornwall about "unregulated" AirBnBs operating without any safety certificates etc. 

We are also starting to see the beds in sheds phenomenon spreading down here as there is such a shortage of rental properties because so many landlords have bailed out.

Just spent the weekend in Cornwall and was chatting about the very same thing.

My mate has bought a restaurant and is living between a static caravan (on a proper site)  and a motor home while he gets everything on track. He said there is a huge shortage of rentals (decent or otherwise) and its expensive to buy anything if he can even find it.

Here in Wales there are new rules and regulations all the time, most recently 6 months notice and a scheme to try to remove the section 21 notice basically meaning that you can never give tenants notice because you want to, only for breaches of agreement. I know there have been some bad landlords but there are more bad tenants and now everything is tilted in their favour and against the landlord, even when they do things properly.

 

Edd

[Mungler]

I’m a big fan of letting the market sort itself out and as far as I can tell all the government changes / interferences have made the rental market worse for everyone.

My business partner and I wandered into B2L’s because we could see the pent up demand post 2008 (we could see a property price rise coming over the horizon) and with 2008 ringing in our ears, placing money with 3rd party investment fund managers wasn’t for us - they don’t give you your money back when they get it wrong and if I was going to go down that route I’d plumb for pharma, munitions and tobacco / drugs and I can just as well make those choices reading the financial section of the Daily Mail. 

It’s worked well for us so far but the tax changes to mortgage interest payment and now capital gains tax really has sucked the life out of it, but what’s the alternative? We all know there’s going to be a stock market / banking collapse any moment now, and as for property - well, everyone still needs somewhere to live and somewhere to go to work.

The big long term problem is capital gains lock up. 

 

Edited April 11, 2023 by Mungler

[ShootingEgg]

On 10/04/2023 at 10:06, Mr.T said:

I have a property that I rent out, my advice would be get a good agent that gets good tenants. Shortest tenancy I have had is three and a half years. Be a good landlord and hopefully you can keep good tenants. 

My last tenants were in the property 10yrs. Sensible rent figure which I had no need to increase so they were able to save and now own a property... New tenants in with an increase to the rental but they are more than happy. So here's hoping for another long term tenancy 

[smokingdragon]

If you don't want the extra hassle and worry don't do it - tenant rings me if there are any issues which I try to resolve quickly as I don't want the property going downhill but it is still hassle and in Wales it is only going to get worse. I agree there are bad landloards and housing associations are as bad but tax wise and regs are concerned it is getting bad.

On the plus side I'm making a good return and the house has nearly doubled in value in 8 years and my current teneant who is on Housing benefit and disabled always pays me on time and was crucial during covid and she wasn't affected by furlough or no job.

[serrac]

12 hours ago, Mungler said:

The big long term problem is capital gains lock up.

Or maybe ending up with a Stranded Asset
https://thewanderinginvestor.com/private-list-update/a-very-important-trend-all-real-estate-investors-should-know-about/

[Mungler]

10 hours ago, serrac said:

Or maybe ending up with a Stranded Asset
https://thewanderinginvestor.com/private-list-update/a-very-important-trend-all-real-estate-investors-should-know-about/

I did have a thought that the government were forcing landlords to ensure that their properties were all tip top - electrical, gas and energy efficiency will guarantee minimum standards.

However, when landlords shell out for that compliance / those upgrades they tend to want a return on their investment, and with an increase in costs comes an expectation of an increase in rent to be charged.

If you wanted the worse case scenario, that’s the government pushing these costs / upgrades onto landlords and then introducing legislation (like the old Rent Acts) which makes it almost impossible to kick a bad tenant out (which is where we are headed to, fast). 

Indeed, I could see a Labour government doing that for sure. 

 

[eddoakley]

12 hours ago, Mungler said:

 

If you wanted the worse case scenario, that’s the government pushing these costs / upgrades onto landlords and then introducing legislation (like the old Rent Acts) which makes it almost impossible to kick a bad tenant out (which is where we are headed to, fast). 

Indeed, I could see a Labour government doing that for sure. 

 

Ain't that the truth!!

As I mentioned earlier in the thread I remember sat listening in almost disbelief, a radio 2 discussion about removing the section 21 notice as it was unfair on tenants.

For those that don't know s21 is giving a tenant notice to quit through no fault.

For example if you want to sell, if you want to move in yourself, of you want to put a family member in the property, if your tenant tells you they can't or won't pay an increased rent. No reason you can give would allow a s21 notice. You as a landlord are entirely reliant on the tenant agreeing to leave, because that's what's fair. 

I was listening to all of the sob stories about how families had been in the same house for 2, 5, 10 years but now their landlord had given them notice to leave but they couldn't find anywhere, usually because they couldn't afford what was available.  That just explains that what they are currently paying is below market value and the landlord is losing out on income.

The government (councils) sold off all of the property they owned and now that private landlords are needed more than ever they are trying to screw them.

You may notice this is a tiny bit of a sore subject to me 

 

Edd

[serrac]

14 hours ago, eddoakley said:

Ain't that the truth!!

As I mentioned earlier in the thread I remember sat listening in almost disbelief, a radio 2 discussion about removing the section 21 notice as it was unfair on tenants.

For those that don't know s21 is giving a tenant notice to quit through no fault.

For example if you want to sell, if you want to move in yourself, of you want to put a family member in the property, if your tenant tells you they can't or won't pay an increased rent. No reason you can give would allow a s21 notice. You as a landlord are entirely reliant on the tenant agreeing to leave, because that's what's fair. 

I was listening to all of the sob stories about how families had been in the same house for 2, 5, 10 years but now their landlord had given them notice to leave but they couldn't find anywhere, usually because they couldn't afford what was available.  That just explains that what they are currently paying is below market value and the landlord is losing out on income.

The government (councils) sold off all of the property they owned and now that private landlords are needed more than ever they are trying to screw them.

You may notice this is a tiny bit of a sore subject to me 

 

Edd

And it won't end there. 

Section 21 was abolished in Scotland ~2017.
It was replaced with 18 valid grounds for eviction, 8 of which were mandatory and the other 10 discretionary.

Recent legislation has removed one of the grounds and made the other 17 discretionary - you now have to convince a tribunal that a tenant not paying rent is sufficient grounds to end their tenancy (i.e. their not paying the rent is more of a problem to you than their having to would be to them)

On top of that, as a response to the cost of living crisis, rent increases are frozen at 3% (but only for private landlords, not the social sector who have rising  costs to cope with, don't you know...).

There is currently a moratorium on evictions, likely running into 2024, so you could wait a year with no rent coming in before a tribunal even hears your case.

Edited April 13, 2023 by serrac

[harrycatcat1]

Just been to do a little job on one of my properties and saw this on a door across.  It's their first buy to let.

 

[oowee]

On 11/04/2023 at 10:48, Mungler said:

I’m a big fan of letting the market sort itself out and as far as I can tell all the government changes / interferences have made the rental market worse for everyone.

My business partner and I wandered into B2L’s because we could see the pent up demand post 2008 (we could see a property price rise coming over the horizon) and with 2008 ringing in our ears, placing money with 3rd party investment fund managers wasn’t for us - they don’t give you your money back when they get it wrong and if I was going to go down that route I’d plumb for pharma, munitions and tobacco / drugs and I can just as well make those choices reading the financial section of the Daily Mail. 

It’s worked well for us so far but the tax changes to mortgage interest payment and now capital gains tax really has sucked the life out of it, but what’s the alternative? We all know there’s going to be a stock market / banking collapse any moment now, and as for property - well, everyone still needs somewhere to live and somewhere to go to work.

The big long term problem is capital gains lock up. 

 

Its something that I have started to look at as we go to live on our boat. We will need a UK base on occasion and to store some kit. We want to exchange our house for a small lock and leave and put money into rentals to maintain the house capital value. Looking at the extra stamp duty means I would be tied in to keeping the rental for some time to cover costs. The stamp duty payment can be offset against the capital gains bill but that's still another down side. Factor in voids and it starts to look very flaky. 

I wonder if its still possible to put the rental in my wife's name as effectively a first house for her?

Alternatively to but a place with an annex live in the annex and rent the house. 

Or even look to buy the second house abroad (I might be able to get a passport) to avoid it all.