Renters’ Rights Bill comes back to Parliament – start the clock!
1 year ago | 12 comments
Landlords: Would you start in BTL in 2025 if given the choice?
9:28 AM, 17th January 2025, 1 year ago
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Despite a growing landlord exodus – which the housing minister Matthew Pennycook disbelieves – would you start as a landlord in 2025? There are reasons for and against. I’d like to hear your views because I try – honestly! – to remain positive despite what is regularly being thrown our way.
I got thinking after the Renters’ Rights Bill headed off to its next stop in the House of Lords.
Are things really as bad as I make out most weeks? I’m still here, most of my landlord friends are still landlords and people are still investing.
I’m not saying it’s all chocolates and roses, but I would say that government policies are inadvertently contributing to homelessness and rising house prices.
We are spending fortunes of taxpayers’ money on housing people – and this is on some tenants who don’t care about a landlord’s property even though it’s a free home.
Then we have the increasing legislation to contend with. The Renters’ Rights Bill is just a part of it.
There’s no doubt that landlords are selling up and other investors are wondering whether they should spend their hard-earned cash in the private rented sector.
I think there are still opportunities, and most tenants are decent people needing a home (not those tenants who emptied my mate’s flat of everything in a moonlight flit, obvs).
PRS stock will reduce
Without landlords remaining or investing, the PRS stock will reduce, and tenants will struggle to find a home.
Fewer homes mean choosier landlords and dearer rents.
I’m amazed at how this simple equation is little understood by the media, politicians and tenant activist groups.
So, here’s a quick rundown on the issues affecting us all:
- Renters’ Rights Bill: A big red flag for all landlords with a Bill delivering longer notice periods for eviction and limitations on rent increases which could impact profitability
- Taxation: Tax burdens like stamp duty, inheritance tax and potential changes in income tax can make BTL investments less attractive
- Regulation: Selective licensing adds another layer of bureaucracy for landlords and now Labour has announced that councils don’t need the Secretary of State’s permission, we really are in for a hiding on this.
While these issues affect landlords, any costs – we still don’t know how much joining the landlord database will be – will be passed on to tenants.
Jump into the PRS
For potential investors wondering whether they should jump into the PRS, then yes, it is something to consider. It’s not what it was years ago (the late 90’s were joyous times…) but there are opportunities.
Don’t lose sight of the fact that this is a business, and you should never do tenants ‘favours’. That will always cost you money.
Having said that, you’ll enjoy:
- Strong demand: Despite the challenges, there’s still a huge demand for rental properties in the UK. A lack of supply keeps rents high in many areas. Labour is still throwing work visas around like confetti so this demand will be high for a few more years
- Professionalisation: I hate this word, but the PRS is becoming more professional and is offering opportunities for landlords who provide high-quality accommodation and manage their properties efficiently
- Long-term Investment: Property can be a good long-term investment, offering capital appreciation alongside rental income. I’m not sure how the numbers work for those investing with a buy to let mortgage today, but for cash buyers there are rewarding opportunities.
Labour doesn’t know what it is doing
Obviously, the Labour Party doesn’t know what it is doing but they are making such a hash of things I don’t believe the PRS is their biggest concern. It will be when the homeless numbers go up.
Would I invest again if was starting out? I probably would since the good tenants tend to outweigh the awful ones (Yes, Generation Rent there are bad renters out there) and you’ll have an enjoyable business.
However, I resent being the whipping boy on a range of issues for second rate politicians who accuse us of profiteering and exploitation.
We can’t offer homes for free even though critics say this should be expected, and we must make money from the enterprise.
Don’t forget too when the word ‘professionalisation’ is bandied about, what they really mean is making a landlord’s role into a proper job – but without any of the benefits.
We aren’t seen as workers but the hours you’ll spend on the property will come as a surprise.
You’ll be sad at the legislation and jumping through the legal hoops, you’ll be baffled at the tax situation and the moronic politicians will make you want to pull your hair out.
So, yes, it is worthwhile but it’s frustrating, costly, unrecognised and comes with critics keen to criticise without wanting to be landlords themselves (Hello, Shelter).
We need more homes or fewer immigrants; we need a better tax environment that welcomes investment and encourages people to downsize, and we need recognition.
It is hard to believe but you’ll be entering a world of contradictions with tenants needing us, but everyone resenting us because we charge rent for providing a safe home.
It was ever thus.
Until next time,
The Landlord Crusader
Tags:
Buy To Let UK, generation rent, investing in property UK, landlord rights UK 2025, renters rights bill, Renters' Rights Bill UK, Shelter
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Member Since April 2024 - Comments: 31
1:51 PM, 17th January 2025, About 1 year ago
That’s a tough one. I bought my first property 35 years ago £50,000 and £500 pm rent. 50% commercial mortgage (no btl mortgages then) but the rent comfortably covered the repayments so all was good. Today its such a different market place that I would need to think long and hard. Price of property has risen to crazy levels and there is often talk of a crash (2007/2008) to bring prices back to more sensible levels. As a result capital appreciation is no longer certain. Add to that the regulations, the taxes, licensing and now this latest bill, I think I would probably say no. The ability for councils to now apply a licence scheme (let’s call a spade a spade and agree its just money grabbing) is worrying. Its not that I fear what they might ask me to do, it’s just yet another tax/regulation to cope with. The Tories were bad enough with their attacks on landlords but this shower have taken it to a whole new level. Maybe time to stop banging my head against a brick wall?
Member Since March 2017 - Comments: 317
4:03 PM, 17th January 2025, About 1 year ago
Absolutely NO. My last property now going through sale. If you include inflation I am actually paying capital gains tax on a loss in real terms, owned this one 10 years. I’ve never had a bad tenant, even when letting to students in the 70’s. My biggest fear now would be getting a pro. dodgy tenant. This and previous govt. are giving dodgy tenants a free license to rip of landlords for £1000’s. My ROI from rent over the years has averaged 4.7%, not a lot plus as said no real gain on the property values in real terms.
Member Since January 2025 - Comments: 1
4:35 PM, 17th January 2025, About 1 year ago
I am currently kind of in this position, although not exactly through choice. My residence will need to be rented out as we are moving abroad, and it’s not a great time to sell, hence why I’ve decided on a long-term rental. It helps I have consent to let, so I can stay on my nice base rate of 1.75%! Otherwise, I wouldn’t even give it a further thought. This government needs to go before anyone can even consider being a landlord.
Member Since November 2021 - Comments: 34
9:04 PM, 17th January 2025, About 1 year ago
The biggest benefit of being a private landlord is the possibility of leverage.
If I had £300,000 to invest:
Stock market average 8.5% returns
Outer London flat 5% plus 2.5% capital growth. Total 7.5% average return.
But do both:
Two flats 2x£300,000
Borrow £450,000 @ 4.5%
£150,000 in the stock market
Rental income £30,000
2.5% capital growth £15,000
Mortgage interest -£20,250
Stock market gains £12,750
Total gain £37,500
12.5% return on £300,000 before tax and any maintenance, agents fees and other costs.
Now that ain’t bad.
Member Since October 2022 - Comments: 402
9:17 PM, 17th January 2025, About 1 year ago
Reply to the comment left by Tom C at 17/01/2025 – 21:04
Yeah, that’s great. Except if something goes wrong. One tenant loses their job for example.
Member Since November 2021 - Comments: 34
9:47 PM, 17th January 2025, About 1 year ago
Reply to the comment left by David Houghton at 17/01/2025 – 21:17
With one or two flats, yes that can be a problem.
My wife and I have five, all in SE London.
We have mortgages totalling £1,170,000 and around £1.2m in stock market investments: £680,000 in ISAs so completely tax free.
We can comfortably take the hit of a rouge tenant and still make a comfortable 10 or 11%. And like everyone else we have suffered from rouge tenants from time to time. Four since 2013, each costing us between £5,000 and £10,000. It is never pleasant but we live a good life.
Member Since October 2022 - Comments: 402
10:11 PM, 17th January 2025, About 1 year ago
That’s good, it’s fine once you are established. My grandad did it, my uncle did it. Then I started form scratch renovating and selling whilst still a student. I’m really glad my kids are doing something different.
Member Since January 2025 - Comments: 1
10:40 PM, 17th January 2025, About 1 year ago
Nope been a landlord in South Wales for 10 years I’m selling up had enough of benefit tenants who don’t know the value of money or what us landlords spend to maintain our houses. Now stammer is in charge with his socialist government it’s time to sell up I wouldn’t trust that intilteled pleb as far as I can throw him. To top it all off my local council has offered to take over the houses for peanuts probably to house immigrants. No thanks they will be ten times worse and while British people are struggling to find somewhere to live it’s morally wrong to house immigrants who will not work and sponge of the UK tax payer.
Member Since May 2014 - Comments: 88
10:57 AM, 18th January 2025, About 1 year ago
Interesting question. I started in 1993 and was still buying last year, but have stopped now (5% sdlt was last straw. plus I’m getting old!)…I’ve got 30 now. It’s given me fantastic financial freedom.
It’s easy to forget what it was like when starting out age 26 and still climbing the corporate ladder with little savings. All my savings went into property 1, which on cash flow didn’t break even for years (though we were on a repayment loan, no btl mortgages then). If I’d had a long void or a non-paying tenant then I’d have been in big, big trouble as I couldn’t have covered the repayments. Scary thought to my more risk-adverse older self.
Roll on 32 years and I can absorb the extra costs/risks…and have enjoyed huge capital appreciation over the years. So I’m not selling yet (cgt being the biggest exit barrier for me), overall the PRS has been very kind to me.
Today’s climate is far worse for landlords than in the 90s…with tenants being “the most protected species on the planet”, as my agent puts it. The risks are much higher and the capital appreciation far less certain. Months to try and get rid of a defaulting tenant is crazy.
So on balance my young self would only invest if I had a large deposit (40%?) to protect from the less reliable cash inflow.
Sad times for the PRS.
Member Since September 2021 - Comments: 104
11:51 AM, 18th January 2025, About 1 year ago
Emphatically NO! Things in the UK will continue to get worse and worse! Its a nightmare of legislative rules, the courts and Judges hate us, as well as the rest of the UK. The govenment want to clear out all of the PRS, and they will do so, slice by slice.
Forget becoming a LL in the UK PRS and invest in property abroad, or in gold and silver ready for the big FIAT crash that is the future. We are going the way of Argentina, prepare for the great financial reset with CBDC’s and the end of cash and bitcoin.