Becoming a Landlord – Is this still a viable option?
To let or not to let – that is the question. And, the answer in today’s UK housing market is quickly becoming not to let. Why? Well, there are numerous changes that directly affect landlords, and one of the recent changes that took effect in 2018 has taken many letting units off the market. If you are a landlord, you might find the demand for your rental properties intact, but the ability to maintain them ineffective. Is being a landlord still a viable option in today’s housing market? Many experts say no.
What do the experts actually say?
The Residential Landlord Association reports that one in four lessors are in the process of or have already sold their rental properties. The reason why is recent legislative changes that have made owning rental property more difficult. Part of the new legislation adjusted buy-to-let regulations and reduced the tax relief property owners receive from rental property. There is also an increased stamp duty placed on rentals, so for many property owners, it doesn’t make sense to keep the rental.
With the pressure for changes throughout the world to reduce global warming, there is also a new requirement to ensure properties are more energy efficient in 2018 than they were in previous years. As such, the Residential Landlord Association states that under these new energy requirements, one in 10 rental properties will lose their rentable classifications. If you own rental property that is in that 1 in 10 scenario, now is the time to sell your rental property.
Broken Down Further
To break down the recent legislative changes further, the government established an increase in all stamp duty taxes of 3 percent in 2016. This places additional burden on both residential and commercial property owners looking to let the spaces out. In addition, in 2017, the government removed the buy-to-let tax relief landlords could realize on their returns, which makes selling your buy-to-let a little more appealing at this juncture. Why pay extra taxes on the property.
Finally, as discussed above, new energy regulation in 2018 have placed numerous property under an inefficient status and this means costly repairs to bring the properties up to code. Couple that will bad tenants who don’t or can’t pay their rents, and rental property in your financial portfolio isn’t as appealing as it used to be. One landowner in the UK reportedly sold over 450 properties because they became a bottomless black hole instead of a solid investment opportunity.
Your Best Interests
Of course whether to sell your let property or purchase more is up to you and your personal financial situation. For some, rental property remains a viable money-maker, particularly those with commercial rentals. If you have property that fits within all recent regulations and an awesome long-term tenant, you’ll likely continue to make money on your rental. When your ducks remain in a row and are profitable, making a move right now doesn’t necessarily make sense.
If you have a property that isn’t profitable, however, you’d be better off to sell it. Other reasons to unload the home or commercial space are relocation or retirement. Are you moving away from the area or just done with being a landlord? Unload the space. Are you tired of the responsibility? Unload it. If you’ve built equity in the property, you might also consider selling it to get your hands on the cash. Depending on its value, you stand to make a pretty penny.
Final Thoughts
Is being a landlord still a viable option? That depends on numerous factors, but the bottom line is simple: it isn’t if you aren’t making money off the property. If you aren’t, it’s time to sell it and cut your losses or reap the benefits of your profits. There are other, more stable investments you can make.
