My rental flats were my income. Now I’m hanging on by my fingernails

My savings have gone, and next year’s mortgage renewals could leave me paying into a portfolio I depend on to live. I would welcome some guidance from other landlords.

I am a widow in my late sixties and I own ten rental flats in the London suburbs. My husband died more than ten years ago, and the income from those flats has been my main means of supporting myself ever since. Apart from my State Pension, it is the only income I have.

For a long time, it was enough. I could pay the mortgages, meet the running costs, put money aside for repairs and still have enough left to live on. I knew property would involve work and occasional problems, but I thought I had a reasonably secure future.

Over the years I have become progressively worse off. I have used my savings to make up the difference between what the flats provide and what I need to live on. Those savings are now exhausted, and I am frightened about what happens next.

The safety margin has disappeared

Around ten years ago, my mortgages were about 50% to 60% of the value of the flats. Interest rates were much lower and I thought there was a comfortable amount of equity behind me.

Now, looking at what I might realistically be able to sell for, some of the mortgages represent 80% or 90% of the property’s value. On the worst affected flats, the figure could be close to 100%, or even more. I have not borrowed more money. The values have fallen around the debts.

Service charges have become a large part of the problem. They take a much bigger share of the rent and seem to put buyers off as well. Anyone buying one of my flats would face the same bills, whether they wanted to live there or let it out.

The rents have increased, but the amount I keep has fallen. Repairs cost more, keeping up with legislation takes more time and money, and I worry increasingly about the consequences of getting something wrong. There is no longer a savings account I can turn to when an unexpected bill arrives.

Section 24 has made things much worse

I own the flats personally, so I have been badly affected by the Section 24 restrictions on tax relief for mortgage interest.

Mortgage interest is no longer deducted when working out my taxable rental profit. There is a separate, restricted tax reduction for finance costs, but that does not make my tax bill reflect the money I actually have left to live on.

In practice, I can be paying Income Tax on income that has already gone to the mortgage lenders. As my costs have risen, the difference between what the tax calculation says I earn and what is left in my bank account has become painfully clear.

The tax bill is one of the reasons my savings have gradually disappeared. I cannot keep filling that gap, because there is nothing left to fill it with.

Next year is what frightens me most

The mortgage deals on the flats come up for renewal in 2027. Using today’s rates, my projections show that after refinancing the rent would no longer cover the mortgage payments and running costs. I would have to put money into the properties just to keep them going.

Yet the figures still show an Income Tax bill because of the Section 24 restrictions. I would be trying to fund a shortfall on the flats, pay the tax and cover my own living expenses, with my State Pension as my only other income.

I am also worried about what mortgage options will actually be available with so little equity in some of the flats. I cannot assume that finding a replacement deal will be straightforward.

I have spent years hoping that things would improve. Now there is a date approaching when the figures become worse, and I cannot see where the money will come from.

What can I realistically do?

Selling sounds like an answer until I look at what I would actually receive. Once the mortgages, selling costs and any tax due have been paid, some flats could leave me with very little. Others might need me to find money to complete the sale, and I do not have it.

If I sell the ones that still have some equity, I could release money to live on. But would I be left with the flats that cost the most to keep? I am afraid of selling the better properties simply because they are the ones someone will buy, then finding that the remaining portfolio is in an even worse position.

Keeping everything means finding a way to pay bills that the rents will no longer cover. Waiting for prices to recover would be easier if I still had savings. I have already used them to get this far.

I need to work out how to support myself for the rest of my life. At the moment, I cannot see how to do that by keeping all ten flats, or what I would have left if I sold them.

If you have been through something similar, I would be grateful to hear what helped you find a way forward. Who did you turn to for guidance? What did you look at first, and were there practical steps that made a difference?

I am hanging on by my fingernails. If you were in my position, with no savings left and these mortgage renewals approaching, where would you start?

Thoughts from Mark Alexander – Founder, Property118

I do not have a single answer for everyone in this position, but I am concerned about the effect these circumstances can have on people’s health as well as their finances.

For someone who has relied on rental income throughout retirement, watching that income disappear while the bills keep arriving can be frightening. There may be sleepless nights, anxiety and a growing reluctance to open letters or answer the telephone. Someone who has always managed their own affairs may find it particularly difficult to admit that they are struggling.

If this describes how you are feeling, please tell someone you trust. You deserve support with this.

A family member or friend could sit with you while you organise the paperwork, help you make a call or accompany you to a meeting. You do not have to work out the whole answer before asking for help. If the worry is affecting your sleep, mood or ability to cope with everyday life, please speak to your GP.

There is also something practical I would be willing to help with.

If you recognise your circumstances in this story, I would be happy to assist you in preparing a preliminary Statement of Affairs, together with the supporting financial information, to discuss with a licensed insolvency practitioner of your choice. 

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In plain English, this would bring together what you own, what you owe and the financial commitments you face. For a landlord, that means realistic property values, mortgage balances, other debts and liabilities, including any outstanding tax or service charges. It needs to cover your wider personal financial position as well as the rental properties.

Alongside that, we would set out your current income and expenditure, what you need for essential living costs, and a cash-flow forecast showing the effect of mortgage renewals and other bills coming due. Where selling a property is being considered, the figures would need to allow for mortgage repayment, selling costs and any tax, with the tax position checked by your accountant.

Why might that help? Because it gives the practitioner a clearer basis for assessing the options. They can examine whether the difficulties can be managed, whether changes to borrowing or the portfolio might produce a sustainable position, and what an exit would mean for your finances and living arrangements. It can also help identify the most urgent deadlines.

Preparing this information for an initial consultation does not commit you to bankruptcy or any other insolvency procedure. My role would be to help you organise the facts so that you can obtain specialist guidance and make informed decisions about what happens next.

If that would be helpful, please contact me privately. There is no need to disclose detailed personal financial information in the comments. Equally, please do not wait until every figure is perfect before seeking help, especially if you are already missing payments or facing an urgent deadline.

For free, confidential debt guidance, Business Debtline specifically helps buy-to-let landlords. Its telephone number is 0800 197 6026, Monday to Friday, 9am to 8pm. Citizens Advice and Age UK are also places to discuss your circumstances and ask what support is available.

I would also encourage you to speak to your local MP. Take a clear summary of what comes in, what goes out and what is left to live on. Explain the effect on your daily life. Owning several properties tells them very little about whether you can afford your next household bill.

These are people who believed they were making responsible provision for retirement. We need to shine a light on the unintended consequences of legislation, particularly when tax and regulatory changes combine with higher borrowing costs and rising service charges. The financial and human consequences deserve serious attention.

Then there are the tenants. These ten flats are also people’s homes. If the rental business fails, what happens to their housing security? If some ultimately have to move, where will they find somewhere they can afford? Their circumstances need to be part of the discussion from the outset.

Above all, please seek support if this is becoming too much to carry. If you need someone to listen, Samaritans can be contacted free on 116 123, at any time of the day or night.