Greetings, I Come in Peace

[AVJ113]

Turbine Terry,

Thank you for that. I've already changed my property searches to give the EPC rating priority. I'll check out Openrent, it sounds excellent.

[AVJ113]

1. Legislation & tax 2. More houses. But wouldn't buy any today.

Do you mean income tax, capital gains, or something else?

[AVJ113]

I still can't think of a better thing to invest in even given all the new regulations. The lessons i have learnt are:-
1) Never let to people on benefits.
2) Don't over leverage your borrowing.
3) Have access to spare funds for unexpected things like a new boiler being required or new EPC rules.
4) Don't be too friendly with tenants - keep it polite and business like.
5) Don't be rushed into a tenancy because someone is desperate and check all tenants very thoroughly.
6) Never let to people on benefits.

I see a theme here :-)
What is your experience with people on benefits?

[AVJ113]

PS If you by a flat remember that ground rent and lease charges come straight off your bottom line - freehold is much better!

Yes I've yet to hear a good reason to buy leasehold. I can't even work out exactly what it is you're buying.

[AVJ113]

Just googled them and they’re £684! Ha ha ha! How long would it take for it to pay for itself?

It's all just a game. Virtually none of the improvements suggested on an EPC are cost-effective. The point is that it is £684 for an extra point on the EPC.

[Turbine Terry]

When you say, "best returns", Terry, is that based on what you paid for the properties or their current values?

In a large nutshell and apologies for going off thread topic. Rental yields in my area (and many areas) have risen, particularly in the last year or 2. Even though house prices have gone up, rental prices have increased at a faster rate, so a better return on investment is being achieved lately.

I use mortgages so if I compare my ROI (so the amount I have invested, not property value or purchase price) or the rental yield that I achieved at the time one of my houses was purchased say 5, 10 or 15 years ago to the ROI and yield I get from some almost identical houses purchased recently then, due to rents rising faster than property prices the ROI and rental yields are notably higher now.

Of course I can and have increased the rents of the houses purchased years ago to around the same as the ones recently purchased meaning the old houses are even more profitable as I purchased them more cheaply. But to compare sausages with sausages I am comparing the ROI/yield I got at the time 5/10/15 years ago, to what I get with the houses recently purchased, and even though the houses recently purchased cost more the ROI/yield is better than many years ago.

That is all simplified and slightly ‘back of a fag packet’ and other factors come into play (mortgage interest costs etc) but I am certainly getting the best returns I have ever had. This is mostly because my area often only has 3 or 4 properties for rent at any one time in a town with 25,000 people, and some decent investment in infrastructure and amenities has occurred in recent years. I shall keep the town name to myself lest you ‘orrible lot start buying BTL’s there; keep out of my town

[davetg]

"I see a theme here :-) What is your experience with people on benefits?"

I have been renting properties for over 20 years initially to mixture of working and benefit tenants. I have had to evict 3 tenants - all of them on benefits. This has cost me about £12,000 in lost rent and court fees with no chance of ever getting back any of it.

Most benefit tenants are great but if you get a bad one it will be expensive and stressful. There is no guarantee working tenants will not run into problems but in my experience it is far less likely and you you will have some chance of recovering your losses.

To evict a tenant who stops paying the rent will take at least 6 months and you may have to spend thousands renovating a trashed property. This is the reason so many rental property adverts used to specify no benefit tenants.

[theartfullodger]

Being as I am in receipt of 6 benefits (old) I do wonder why some landlords indulge in such discrimination.

More than half UK adults are in receipt of some benefit (CB, wtc, CTC, etc etc ). Is it wise to do restrict your market?

How would you know a prospective tenant is in receipt of a benefit?

[boletus]

What is your experience with people on benefits?

https://www.mortgagestrategy.co.uk/n...andlords-nrla/

Almost one in ten private landlords with Universal Credit claimants have experienced at least one tenant running into difficulties paying their rent.

That's not good odds.

[davetg]

" Is it wise to do restrict your market?" in my opinion yes - what is your experience and would you recommend to the OP that s/he accepts tenants on benefits?

Perhaps I should hare been clearer and said none working tenants on benefits, I do not have a problem with people working full time who receive benefits like CB and wtc but I would expect their salary alone to pass the rent affordability test. I have never had an "old" retired? person apply.

[jpucng62]

People lazily refer to tenants 'on benefits' when what most really mean is people who do not work. As artful says many people have some sort of top up by the Govt - tax credits, child benefit, LHA - because their incomes are below the threshold set. If you remove all these people from your pool of tenants you may not have many left!

I try to aim my properties at the higher end of the spectrum and so the affordability check would filter out people who do not work or who work very little. It is the people who can only just afford their rent &/or who depend heavily on LHA who are most likely to run into problems if their hours change or they have an unexpected bill.

By setting my rents well above the LHA rates (you can google these for your area) I avoid the tenants who I believe are most likely to default.

[jpucng62]

Yes I've yet to hear a good reason to buy leasehold. I can't even work out exactly what it is you're buying.

You are buying the right to occupy that space for the number of years on the lease - nothing more!

[boletus]

How would you know a prospective tenant is in receipt of a benefit?

Bank statements.

[theartfullodger]

Bank statements.

Me too, but like many I have a number of bank accounts. Suspect many landlords don't look and even if they do, don't understand how to see which sort of benefits are being paid...

[jpucng62]

It doesn't matter where the money comes from its about income & affordability. Some benefits eg state pension give a guaranteed income, so this is really good source of income - you can't get sacked from your retirement!