buy to let problems Archives - The Secret Landlord

Read any news report about the property market in the last few weeks and you’d be forgiven for not realising we are in the middle of a pandemic with a recession looming, prices just keep rising.

And yet, landlords are selling and no tranche of newbies are making their way to take their place. RICS data shows in the years from 2017-19, demand for rental properties has been steady, but there has been a consistent decline in new landlords.

Hamptons data shows the number of UK landlords has hit a seven-year low and The Mortgage Works’ (TMW) Buy to Let Barometer research in April this year, found landlord confidence in the future of their letting business had fallen to record lows.

Of course, you could say this is to be expected. Landlords are in the frontline for dealing with the fallout from Covid-19 and non-paying tenants. The eviction ban and then the introduction of a six-month notice period to regain possession, along with massive court delays, meant landlords watched helpless as their assets got further and further out of reach.

Commentators popularly voice it’s all about the money – landlords are cashing in due to the tax situation and ever-changing legislation which are seeing expenses multiply and profits dwindle.

In part, I agree with this. But, I don’t think these explanations really get to the heart of the issue and the reason why the British have fallen out of love with property investment.

Control is what I really believe this is about.

Back in the early days of buy-to-let people invested for their future, for their pension, a nest egg they could sell up, a bit of extra cash on the side. Owning and renting out a property you could go and see, touch and feel, was more real than stocks and shares. Plus, with a property you also had the chance to do it up – you could add value, you could control your asset and maximise it to your heart’s content.

Of course, you could also leverage. And, unlike the stock market, the property market is not as volatile. Plus, where a stock may be worthless in years to come, a property will always be worth something – and even if prices drop – you could always go and live in it yourself.

Property, therefore, was seen as a safe bet.

But 2020 has shown us, while property is fundamentally the most basic human requirement and we all need somewhere to lockdown to, property can also be a liability.

Owning a property where the tenant is not paying rent and yet the landlord still gets stiffed with the ongoing maintenance and repairs bill is a dangerous concoction. Add to that the government stitch-up of landlords footing the never-ending bills to meet ever-changing legislation and yet not being allowed access to their asset, makes this a situation about to blow.

Who in their right mind would invest in an asset class where you have no power to make the customer pay and yet get lumped with all the expenses? No business can continue without income and only mounting bills to pay.

Landlords are now exercising the only control they have left: to sell.

1. Everybody lies

Look, I know people don’t always mean to lie and sometimes they thought they were telling the truth, when in fact the opposite was true, but that’s life.

Everybody lies.

The sooner you get used to this line of the thinking, the easier your landlord life will be.

And when I say that, don’t think for one minute I’m just talking about tenants, nah, I’m talking about everybody.

I’m talking about the solicitor you use to purchase a buy-to-let and who says everything’s fine and then you learn two years later there’s a clause that prohibits you from letting the property and the freeholder’s on your back threatening you with a multitude of sins and you’re thinking WTF?

I’m talking about the builder you pay handsomely to install a new bathroom and who you think has done a good job to only learn months later they didn’t bother to put a frame in and the bath pulls away from the wall and floods the downstairs flat.

I’m talking about the housing officer who wants to rehome a vulnerable family and who promises you the property will be monitored and looked after and who does a disappearing act – along with the vulnerable family – and who leave your property smashed up and in smithereens.

I’m talking about so many things I could go on and on and it would burn your ears with the boredom, but the fact remains: Everybody lies.

Get used to it and get on with it.

2. There’s no Lamborghini in the drive

I swear when I started out in property there was a promise of untold riches. Before long, I thought, I’ll be on a helicopter jetting off to a 5-star isle and all will be well in the world.

No.

For the run of the mill landlord, that’s not the case. For the very few, it will be, but my golly you need a lot of bloody good stock!

A few years ago a good friend of mine said to me ‘Why buy another house, it won’t make you happy’. And I looked at him and I thought, what a dick. What a dumbass thing to say. I love property, of course I should buy more, how else am I ever going to get my lambo!

But later that night, I realised he was right.

It was a turning point in my life when I realised, you know what: I have enough. I don’t have the lambo and the helicopter and the rest of the shebang I figured would come, but I do have a lot. I have way more than so many others and so I should be happy with what I have.

And I don’t remember the Buddhist saying, but it’s something like the pursuit of happiness which will make you unhappy. And something to do with clinging onto things and stuff.

As I say, I’m clearly not Buddhist, but I have reached a new level of understanding and meaningfulness in my life where I know money and even the pursuit of it will bring me no joy.

And I’m ok with that.

I’ve made my peace and I know, while the council and many others seem to believe I have a magic money tree at the end of the garden, I know magic is only for fairy-tales. And I’m way too old and far too cynical to believe in all that razzmatazz now.

3.Get rich quick is for suckers

In the beginning I read about property prices doubling every seven years. There was a graph that was touted about which had all these rising lines showing how rich you could be if you invested in property.

This is not the case across the whole of the UK.

Yes, I agree some places have seen stratospheric rises, but there are many areas where growth has yet to get back to 2003 levels.

Yes, there are some developers who make shedloads of money by flipping and selling and I’ve been fortunate to have done a few deals, but as an ongoing business model, it’s tiring and time-consuming. My developer friend tells me his life is like ‘feast or famine’, I would add it’s also a roller-coaster of risk and I’ve known many to lose the shirt off their backs on a particular deal.

And that’s the other thing – who knew you could lose money in property? I certainly didn’t when I started almost two decades ago. Back then, I was thinking it would only be a couple of years in the game and then I’d be out partying with aforementioned lambo not giving a shit about anything coz I would be bathing in riches.

Again, not true.

Yes, of course you can make money in property, but it’s a slow, hard, long game. Play it quicker and maybe you’ll win, but maybe you’ll lose.

What I can tell you is all this time on, I didn’t think I’d still be renting out property for a living.

When I started, I didn’t really have an end-game; I had a goal, a dream. And if truth be known, none of it included me still being a landlord all these years later.

And don’t for one minute think I’m having regrets about my life, because I’m not. I’m just sharing some of the things I wish I’d known then, before I started.

But the truth, regardless of everything I wish I had known before I became a landlord, is that I would do it all over again.