I’m a landlord, and a tenant. I rent the family-size house I live in from someone else, while we let out my husband’s flat – and the whole situation is a total nightmare. I’m one of the 29 per cent of people who have become landlords through no choice of their own – and it’s put my family in the red.
We have a one-bed flat in the middle of leafy Clifton, just off the main shopping street which is made of Bath stone. It overlooks the downs. It’s a very desirable area. Everyone says: “Oh but you must make so much money on it.” We don’t. We actually lose money.
We are cursed by a poor housing market, high borrowing rates, and all during a cost of living crisis. Despite it being the cheapest place on the market in Clifton, dropped down to £190k – it still won’t move. I’m not exactly trying to shift a multi-million pound townhouse here.
In 2020, we moved out of the city, and our flat, back to the country for more space to have an (unexpected) baby. We had to move quickly, with a baby on the way, but ultimately had the goal of selling the flat. Then the pandemic hit immediately so it felt like we’d made the right move.
It’s just, four years later, it is still up for sale. It won’t let go of us. We’ve had multiple sales, and none have gone through – for absolutely no reason at all. The first time it happened, we accepted an offer, bought a bottle of champagne to celebrate, and it fell through a week later. They’d just changed their mind. Another one after that too.
We took it off the market and put it back as a rental, because we couldn’t afford to keep it empty any longer. We were paying for two properties – a mortgage for one and rent on another. And we had a new baby to pay for. And only one of us was working. We couldn’t exactly have a tenant in and say “this flat is up for sale so you might have to move out soon but maybe not who knows”.
The most recent figures say 52 per cent of landlords purchased their first property with the intention of renting it out. Just over a third bought their rental property because they planned to live in it themselves. So up to a third could be accidental, in a similar situation to us. Reasons include personal circumstances, pandemic moves, and the slowing housing market. The home experts Hamptons predict the figure could be around 29 per cent, and in 2023 there were 34,000 more properties available to rent than in 2022 – potentially from landlords like us who have been unable to sell.
We’ve never had a problem renting it out. It’s just making money we have a problem with, because we’re not professional landlords. We’re accidental landlords. The property isn’t in a trust, or listed as a business which means we pay an enormous amount of tax on it, at 40 per cent. And that’s not 40 per cent of the profit, that’s 40 per cent total. So if we rent it out for £1,100, and take away the 40 per cent that’s £660. The mortgage is £700 a month.
It also comes with a lot of work. People act as though owning property is passive income. But it’s not. You’re not just sitting around, enjoying free money entering your account. There’s the constant worry that someone might not pay and you’ll have to evict them (this has happened). The repairs that need to be done are on you to fix. The cost of damages. Handling the complaints from neighbours. Having to drive down to sort out issues in person. Decorating in between tenants. It’s labour, time, and risk, and for all that, we lose £50 a month.
If you’re a company with hundreds of properties, you can afford this risk. It’s not a big deal if you don’t get paid one month, or have to go through the process of evicting someone. But it could put us under, and 43 per cent of landlords only own one rental property.
There’s no easy solution. We could list it as a business to avoid the high tax bill, but it would mean selling the property to the business, and getting a new mortgage – which is more money and stress for something we don’t want to do, because we desperately don’t want to be landlords.
That’s why we put it back on as soon as our tenant gave notice in 2022. But this sale falling through cost us big time. The buyer dragged the process out for 12 months. She kept asking questions we’d already answered and asking for repeat visits to the property with different family members.
We paid for one last thing, a seller’s pack from the building owners, that she requested. Another £400. We were going to complete that week. The deeds were drawn up. It was finally over. And then she pulled out of the sale. There was no cost to her. We’d put £12k on a credit card.
It’s on the market now, with a different estate agent. We asked them what we should do in the meantime, and they suggested we Airbnb it, which we have. But we paid thousands for plastering and a professional decorator to paint – and the guests have already scratched up all the new walls with prams and suitcases. We haven’t had any offers this time, not even cheeky ones – despite dropping the price. Twice.
Sales just aren’t happening at the moment. In 2023, house sales were at their lowest in over a decade, and with higher mortgage rates and the cost of living it’s no wonder. The same thing happened during the 2007/8 crash, and by 2009 accidental landlords were selling again and exiting the rental market. But what needs to happen for us to get there?
David Meeks, CEO of This Land, a property development company, says he is cautiously optimistic about the market: “Nobody likes uncertainty. I think the changes the Government are bringing in are positive and should inspire more confidence in the market, in building and in sales. I think we’re going to see a change.
“Buyers and sellers are coming back together now. Sellers’ expectations are coming back down and buyers are coming to the understanding that these rates will be long term. They just want to know they’re paying a fair price.”
The real estate agency Savills has predicted a positive move in the housing market. It says the market was sensitive to “short-term fluctuations” due to uncertainty about a new government and impending general election. But now that’s decided, things should be on the up. They’ve even changed their pricing forecast and expect house prices to grow 2.5 per cent in 2024 (revised from -3.0 per cent as forecast in early November 2023), primarily due to falls in the cost of mortgage debt, and 21.6 per cent by the end of 2028 (revised from 17.9 per cent).
We’re looking at different options, like a new-build part-exchange scheme. They’d take the property for us, and it would also mean we could port the mortgage and save £5k on an early exit fee. But we don’t really want to buy a new build, so it would just mean changing one problem for another problem. Maybe we’ll try to hold on a little longer.
