Are landlords selling up ?

Hopeful2016

draiochtanois wrote: »

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Negative equity is a only a loss on paper unless it's realised. If they are still a landlord then clearly they haven't realised any loss so why would it be taken in to account?

draiochtanois

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MarkAnthony

draiochtanois wrote: »

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1) Only for people that massively overextended themselves without the potential for earnings to improve.

2) Most of us, thankfully, borrowed stupid amounts of moneys on trackers, we're paying almost no interest.

3) It's not been my experience as it's done on affordability for unsecured debt but we tend to save then spend rather than borrowing on top of huge secured debt.

4) Fair point and it's not deductable.

newacc2015

ongarboy wrote: »

Is the general consensus here that if you have a hefty mortgage on your investment property, that the preference would be to exit being a LL asap once you get out of negative equity?..... but that if you owned the property outright, remaining as a LL would be prudent (despite the 51% tax on all rent received)?

Reason I ask is that I'm in a position where I have savings sitting stagnant in bank accounts earning almost zero interest and I'm strongly considering purchasing an investment property (which I could buy outright) to rent out but my worst fear is nightmare tenants (especially when you read about all the horror stories on this forum). As you can gather I'm pretty risk averse, so the stock market is not something I want to indulge in either. So many friends and family tell me I'm mad for not buying property (I have my own principal residence) but when I read about threads like this with landlords selling up, maybe investment property isn't the be all end all?

Would all the acccidental LLs here continue on as such if they hadn't got mortgages on said properties?

There is far better places to put your money than property. People fail to realise being a landlord is not 9 - 5. You are on call 24/7. A drunk tenant might be locked out, a water tank might burst in the middle of the night ( I know an apartment complex where 20% of the tanks have burst in the last 3 years). The biggest pain is dealing with the tenants. None of them understand it is a business. You can have tenants looking for x,y & z. Yet they might only be there for a few months. Look at all the threads on this site with tenants with unrealistic expectations eg one women was on Rent Allowance and didnt like the windows and was wondering what law/public authority could she use to get the landlord to replace them

The law is entirely on the side of the tenant. You might have a tenant robbing all your other tenants. If they refuse to leave after a notice to quit, you still have to go to the PRTB etc. If you do the logical thing which is change the locks as you dont want to wait 12 months for the PRTB. You will get a massive fine for illegal eviction

If you were a high income earner I would go to a fee based financial advisor. That way he will have no incentive to sell you a block of ****ty apartments in some god forsaken place like Georgia. IMO if you are a high income earner, I would consider short term investments that give tax relief such as the 'Employment Investment Incentive (EII)'. The companies they invest in varies from company to company who offer the scheme. But some of the companies are seriously sound. You might not get a massive return, but you get decent tax relief

Hopeful2016

draiochtanois wrote: »

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Is any of this unique to landlords? You don't see PAYE workers in the same boat expecting to pay a reduced rate of tax as a result.

draiochtanois

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Mrs W

Non accidental landlords here and we're getting out gradually. More tax, less reliefs, section 23 running out, more hassle and demanding tenants. PRTB no bloody use all leaves it not worth the hassle.
Selling 2 at the minute and as soon the prices increase a bit there'll be more going. I know another few professional landlords doing the same and then there'll be very little to rent around here

Bob24

Mrs W wrote: »

Non accidental landlords here and we're getting out gradually. More tax, less reliefs, section 23 running out, more hassle and demanding tenants. PRTB no bloody use all leaves it not worth the hassle.
Selling 2 at the minute and as soon the prices increase a bit there'll be more going. I know another few professional landlords doing the same and then there'll be very little to rent around here

Well if landlords are selling the properties are not disappearing. When you are selling one of your properties, most likely either a new landlord is picking it up or someone who was renting moves in as an owner occupier meaning once less household competing in the rental market. So it doesn't really change anything in terms of overall property availability.

Having said that, definitely understand the rest of your post and why you are getting out.

ongarboy

ongarboy wrote: »

but my worst fear is nightmare tenants (especially when you read about all the horror stories on this forum).

I'd be interested in having a property rented out also as a sideline however the only way I would do it (and advise anyone else thinking of doing it) is to rent rooms seperately, maintain access to common areas and ensure the people living there are licensees and thus have no rights.

It's a bit more work at the start as you have to find the people seperately but after that you can even go down the road of letting people moving out find replacements etc and as you have access to the property you can inspect when you want and get rid of any bad person before things escalate.

You also have the rent coming from different people so even if one did stop paying you are still getting say 2/3 of the rent until you get them out and a new person in.

Bob24

Robert Loose Radius wrote: »

ensure the people living there are licensees and thus have no rights.

I understand your reasoning, but taken in isolation that sentence doesn't sound very good ;-) (everybody should have rights and duties - what matters is to strike the right balance)

draiochtanois

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Hopeful2016

draiochtanois wrote: »

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Rental income isn't PAYE, it's passive income. A landlord may or may not have PAYE income too. What has any of this got to do with expecting to pay less tax on rental income?!

I understand your issue. You made a bad investment and now you're stuck with it.

Bob24

Bob24 wrote: »

I understand your reasoning, but taken in isolation that sentence doesn't sound very good ;-) (everybody should have rights and duties - what matters is to strike the right balance)

Taken out of context it may look harsh but I think most people know what I mean. I'd have no intention of treating people living there badly, I'd keep things repaired etc etc. If I had, for example, someone not paying rent though I'd want to be able to remove them immediately without them having any recourse.

Bob24

draiochtanois wrote: »

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True ... the difference is that some selective quotes clearly mean something and others don't (what exactly does yours say about me?).

Maireadio

Robert Loose Radius wrote: »

I'd be interested in having a property rented out also as a sideline however the only way I would do it (and advise anyone else thinking of doing it) is to rent rooms seperately, maintain access to common areas and ensure the people living there are licensees and thus have no rights.

Wouldn't that give you less choice of decent tenants? Most people will want a proper lease. I'd only take a room as a licensee if I had no other options. Admittedly in today's rental market, it might be easier to find people willing to be mere licensees but I doubt it would be anyone's first choice. Most people won't want to live in a place where the landlord can waltz in any time they want.

draiochtanois

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WEST

Lindsey Strong Parakeet wrote: »

I'd be interested in having a property rented out also as a sideline however the only way I would do it (and advise anyone else thinking of doing it) is to rent rooms seperately, maintain access to common areas and ensure the people living there are licensees and thus have no rights.

It's a bit more work at the start as you have to find the people seperately but after that you can even go down the road of letting people moving out find replacements etc and as you have access to the property you can inspect when you want and get rid of any bad person before things escalate.

You also have the rent coming from different people so even if one did stop paying you are still getting say 2/3 of the rent until you get them out and a new person in.

Hi Lindsey Strong Parakeet, I'll end up googling this tonight but do you have any more information on how to rent the rooms separately? Is the rental income at 52%?

Hopeful2016

draiochtanois wrote: »

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Are you referring to me? I don't have any problem conceiving so you might to re-read whatever you thing you're talking about.

NE is definitely a problem but not paying tax on rental income isn't going to solve that.

Maireadio

Maireadio wrote: »

Wouldn't that give you less choice of decent tenants? Most people will want a proper lease. I'd only take a room as a licensee if I had no other options. Admittedly in today's rental market, it might be easier to find people willing to be mere licensees but I doubt it would be anyone's first choice. Most people won't want to live in a place where the landlord can waltz in any time they want.

You will find plenty of good people who want to houseshare and generally people who houseshare don't sign contracts or are not too worried about long term stability as they see it as a short term arrangement. Any houseshare I've been in there is usually at least one or two changes in the people there every year.

Lots of postgrad students and young professionals especially look to houseshare rather than rent fully so you can find lots of good people.

As for the LL coming in anytime he wants, it's really not much different to the other housemates who you probably never met before coming into the house. In this scenario the LL may even keep a room in the house to really ensure the people living there are licensees so not much difference between him coming and going and one of the other housemates.

WEST wrote: »

Hi Lindsey Strong Parakeet, I'll end up googling this tonight but do you have any more information on how to rent the rooms separately? Is the rental income at 52%?

If you are living in the house you can avail of the tax free rent a room scheme but if you are just renting the rooms but living elsewhere the tax is the same as if you rent out the entire place.

4ensic15

Bob24 wrote: »

Well if landlords are selling the properties are not disappearing. When you are selling one of your properties, most likely either a new landlord is picking it up or someone who was renting moves in as an owner occupier meaning once less household competing in the rental market. So it doesn't really change anything in terms of overall property availability.

Having said that, definitely understand the rest of your post and why you are getting out.

At the moment is is less likely that another landlord is buying in. If an ex rental property is being bought as a private residencxe it is likely that the number of occupiers is smaller. e.g a 3 bedroomed house is let to 4 single people. If sold, it might be bough by a couple. This is causing a decrease in the rental stock and a rise in rents as a result.

Eugene Norman

[Deleted User] wrote: »

Fair enough, but I wasn't referring to personal demeanor or stress levels of the landlord.

If you can't see that you're comparing an amateur in danger of going bankrupt to a professional looking to balance risk and return. And that the amateur's best chance of success is not risking the dodgy tenant and missing months of mortgage payments, then I'm not sure you understand what an accidental landlord is.

I know what an accidental landlord is. It's not very hard. However in reality it doesn't work out the way you claim, the amateur landlords are always trying to maximise income and the professionals are prepared to keep tenants in place at below market rent until they leave. Probably the professionals know the danger of bad tenants having multiple properties.

Eugene Norman

Robert Loose Radius wrote: »

I'd be interested in having a property rented out also as a sideline however the only way I would do it (and advise anyone else thinking of doing it) is to rent rooms seperately, maintain access to common areas and ensure the people living there are licensees and thus have no rights.

It's a bit more work at the start as you have to find the people seperately but after that you can even go down the road of letting people moving out find replacements etc and as you have access to the property you can inspect when you want and get rid of any bad person before things escalate.

You also have the rent coming from different people so even if one did stop paying you are still getting say 2/3 of the rent until you get them out and a new person in.

I don't think you can make your renters licensees unless you live there yourself.

4ensic15

Eugene Norman wrote: »

I don't think you can make your renters licensees unless you live there yourself.

Not true. If you live there yourself they are automatically licencees. If yhou don't live there itg is more difficult but not impossible to make them licencees. There have been cases where the PRTB held that renters in student accommodation were not tenants.

newacc2015

Eugene Norman wrote: »

I don't think you can make your renters licensees unless you live there yourself.

You actually can. They have to sign a contract stating they acknowledge they are licensees and that they dont have exclusive use of the premises. Some people will say that you will need to have a cleaner in once a week to make the licensee agreement legally stick ie that they dont enjoy exclusive use due to the cleaner

Although they wont be PRTB registered and therefore you cant claim mortgage interest relief. If you are on a tracker, you might not be too bother as the mortgage interest relief is so low and the security of being able to evict a dodgy tenant instantly is there

Maireadio

Robert Loose Radius wrote: »

You will find plenty of good people who want to houseshare and generally people who houseshare don't sign contracts or are not too worried about long term stability as they see it as a short term arrangement. Any houseshare I've been in there is usually at least one or two changes in the people there every year.

Lots of postgrad students and young professionals especially look to houseshare rather than rent fully so you can find lots of good people.

As for the LL coming in anytime he wants, it's really not much different to the other housemates who you probably never met before coming into the house. In this scenario the LL may even keep a room in the house to really ensure the people living there are licensees so not much difference between him coming and going and one of the other housemates.

Right... but most of my houseshares have come with leases. The decent ones anyway. The two things aren't mutally exclusive.

And the landlord is not the same as housemates, it's a totally different dynamic.

Eugene Norman wrote: »

I don't think you can make your renters licensees unless you live there yourself.

Not sure about this but definitely you can't avail of the rent a room scheme if the house isn't your sole residence ie. the one you mostly live in and where people can expect to contact you. So anyone keeping a room free in their rental property to avail of the scheme is breaking the rules. Staying there the odd night doesn't satisfy the conditions. If I saw it mentioned in an ad that a room was being kept vacant in the house, I'd run a mile. Dodgy as hell!

Maireadio

Maireadio wrote: »

Right... but most of my houseshares have come with leases. The decent ones anyway. The two things aren't mutally exclusive.

I've never had a lease nor any form of agreement or contract in any place I've shared never signed a thing. Usually only dealing with the LL when I've more or less moved in and getting the account details over the phone for transferring deposit/rent.

Maireadio wrote: »

If I saw it mentioned in an ad that a room was being kept vacant in the house, I'd run a mile. Dodgy as hell!

It would never be mentioned in an ad though nor be referred to as vacant. There is a vacant box room in my current place and it means I'm sharing with 2 others compared to all the neighbouring houses which have 4 rooms rented and I'd be sharing with 3. Extra room when you have friends visiting, place for us to dry our clothes, less people in the house etc. I saw having this room as a positive.

On the other hand if I was the LL and I was retaining a room for myself in the property I'd be telling the people moving in that I lived there, even if I didn't (I wouldn't be doing the same to revenue). None of their business really if I happen to be away a lot of the time.

Evertontoffees

indie warrior wrote: »

I have one property rented with ras, same tenants for last 8 years, no hassle with them at all and rent paid into my account every month which just covers the mortgage. The problem is paying almost 52% tax on the full rental income, absolutely killing us and not sustainable ( there is only so much you can write off) so yes will sell when we come out of negativity

One example for landlords not to tar decent people with the same brush in not accepting hap/ra/ras/etc

Good on you sir at least your head is not stuck up your hole

Eugene Norman

Robert Loose Radius wrote: »

I've never had a lease nor any form of agreement or contract in any place I've shared never signed a thing. Usually only dealing with the LL when I've more or less moved in and getting the account details over the phone for transferring deposit/rent.




It would never be mentioned in an ad though nor be referred to as vacant. There is a vacant box room in my current place and it means I'm sharing with 2 others compared to all the neighbouring houses which have 4 rooms rented and I'd be sharing with 3. Extra room when you have friends visiting, place for us to dry our clothes, less people in the house etc. I saw having this room as a positive.

On the other hand if I was the LL and I was retaining a room for myself in the property I'd be telling the people moving in that I lived there, even if I didn't (I wouldn't be doing the same to revenue). None of their business really if I happen to be away a lot of the time.

If I were your licensee under this arrangement (I wouldn't be as I was always on a lease when I rented) I would be straight to revenue about you if you decided to evict without cause.

It would be pretty clear where you lived.

Maireadio

Robert Loose Radius wrote: »

On the other hand if I was the LL and I was retaining a room for myself in the property I'd be telling the people moving in that I lived there, even if I didn't (I wouldn't be doing the same to revenue). None of their business really if I happen to be away a lot of the time.

Well as long as the new licensees are informed. But you'd be leaving yourself open to a former licensee alerting Revenue themselves if they felt aggrieved for any reason, justified or otherwise. (As we all know, people can take the hump about anything, even if the licensee was asked to leave for a reasonable reason, they might not see it that way) It's really obvious why landlord keep rooms vacant in houses, people aren't stupid. So I wouldnt be encouraging people to commit tax fraud by abusing the rent a room scheme.

Barely Hedged

Eugene Norman wrote: »

If I were your licensee under this arrangement (I wouldn't be as I was always on a lease when I rented) I would be straight to revenue about you if you decided to evict without cause.

It would be pretty clear where you lived.

And how would you prove that?

This is based on the assumption that all the bills in the house being rented are in the landlords name and for his/her primary residence they're in a different name.