What would you do? Newbie landlord looking for advice!

Reply to the comment left by Steven F at 30/01/2025 - 10:55
If you do use a mortgage but not a high loan to value (LTV), you get the benefit of leverage. Only 20% finance relief now, but still to be considered.

Like all investments, there are risks, so that's where spreading money into various assets can help.

Lot's of people saying go all in on stocks currently because they have done so well of late. However, those same people have not experience a bear market lasting several years or stock crash.

I have been a landlord for 30 years and am selling up in order to avoid ever-more rules and fees. I have been lucky with tenants but wouldn't consider entering this market now as it is much too loaded against private landlords. Property ownership is not for free.
I now have investments in such as VCTs and equity ISA share accounts which are extremely beneficial from the tax free aspect. You'd need specialist advice when it comes to your children's inheritance. Best to be helpful to them whilst you are still alive!

Reply to the comment left by Steven F at 30/01/2025 - 10:55
The rough figures and advice I gave are based on outright purchases.

A simple example of a slightly more advanced strategy is to buy well and add value through refurb or solving tricky issues that others struggle with (such as planning permission etc). But this isn't passive and not so easy for new entrants with no experience.

The days of buying a house that's ready to go and sitting back while the cash comes in are long gone (if they ever existed at all). That's never been the case while I've been doing it this last 15 years anyway.

I'd recommend reading up on MEES (minimum energy efficiency standards) and the push to achieve EPC rating C by 2030. After this, if you are still hell bent on it just buy one and see how you get on...

Good luck!

Reply to the comment left by Steven F at 30/01/2025 - 10:55
I have one left out of 19 in dartford. Would you like to buy it! 🤣

I'm a landlord of 25 years and I just sold three HMOs but I deliberately didn't use the money to buy any more flats because I am retiring. But I'm still working at it.

If you buy rental property with your money you won't be retiring, you will just be changing your job.

If you do decide to buy, then start small with one or two and make all your mistakes small. Don't go all in, test the water.

As you will have no mortgage and the remainder of your money as sensibly invested savings, a non paying tenant won't bankrupt you, just dent your profit.

Do be very very selective on choosing good tenants, conduct thorough referencing, take out rent guarantee insurance and get a UK house owning guarantor.

Or go on nice long holiday whilst you think carefully about it. Enjoy your retirement.

There's a lot of negativity in most of the responses on P118 in general to your question as its been a tough time for LL in the last 15 years of constant meddling by governments legislation and negative press and a lack of push back from LL, it s due to get worse with further legislation but i would say that if you are mortgage free, use a specialist letting agent (not a high st estate agent), ensure you vet thoroughly and select well, ensure you inspect every 6 months for the first year min, and are lucky enough to get a decent tenant then its a good investment to have, alternatively that scenario can easily turn into a nightmare which could wipe out all your profit including any capitol gains. That said investing in stocks and shares is equally risky if there is a crash or you select poorly. Diversification is the key and keep a good pot of available cash to see you through the un-foreseen. Property is not a passive investment and requires time , effort , diligence , diplomacy, and not easy money . do not go all in , you may wish you hadn't but don't discount it entirely based on negativity from those of us who have suffered and remember the good old days. i,m a LL of 16 properties with 25 years experience

Reply to the comment left by robert fisher at 30/01/2025 - 12:24Thanks Robert. I knew I'd get a diverse response to my query and I'm getting some good advice and pointers from everyone. Yes the majority are warding me away from BTL and with good reasons. I appreciate everyone's opinion and respect the views of all those who have replied. This is not a decision I will make lightly. I wanted to weight up the pro's and con's before doing anything and hence why I'm asking on here. I'm also grateful to 118 for having this site and channel of communication between LL's to help me make that informed decision.
My take-away so far is to look at and compare alternative investment strategies like FIC's, std savings accounts, ISA's, guilts, stocks and shares and dividends. ISA's sound good based on the tax free element but it would take me a long time of topping them at £20K/yr to realise the benefit, so I'll look into some sort of hybrid whilst building up an stocks and shares ISA. An ETF on the face of it looks good however most don't pay dividends so would diversify the portfolio myself in the most stable FTSE 100 companies across different sectors with hopefully an average dividend yield of 5% or greater.
I've learnt a lot today. As they say, everyday is a school day!
Thank you all

Reply to the comment left by dismayed landlord at 30/01/2025 - 11:41
Er..no thnks!

Reply to the comment left by SteveFowkes at 30/01/2025 - 14:35
lol.

As you acknowledge, many of the responses are from established operators advising that you invest your hard-earned money elsewhere to get similar or better returns.

I am going to try to cover some of the case for and against

FOR
- Physical asset which does not have direct value correlation with the stock market
- Can be bought with debt for geared return
- Socially useful - provision of rental home
- Legislation and high capital investment create barriers to entry (a moat)
- The RRB will make the moat wider
- Rents are likely to move toward social sector annual indexation model

AGAINST
- Illiquid asset, hard to sell in a downturn with high entry, transfer and exit costs
- Asset is difficult to sell in tranches; you have to sell the whole thing in one go
- Tax treatment less positive than other investments (no tax wrapper for income or capital gains and income does not qualify for pension tax relief)
- You are ultimately responsible, regardless of how good your agent is
- Risks - property, agent, tenants, courts, local authority, more regulation, more tax

If you still want a property investment, why not look at commercial property where rights are more balanced and tenants generally are responsible for repairs?
As you want to be able to transfer ownership, you will need to own through a company, as this will enable the use of share rights as well as ownership to transition ownership and income.

I suggest you take an accreditation course before you commit, so you have a better understanding of the commitment you are looking to take on.

Otherwise, take the option which gives you a more liquid investment, is easily divisible, transferrable and comes with the tax advantages of lower stamp duty, and ISA, SIP or other pension wrapper - yes, ETFs, REITS and other listed investments, property or otherwise.