Updating post from Reddit.
I only have the one BTL property (my only property I own) and have been a landlord for over 5 years now. Just wondering what other experienced landlords' experience has been like in terms of turnover of tenants - how often do you have to find new tenants for each of your properties?
Reason I ask is with 5 years in, I have had 5 different tenancies as well, so have to find new tenants every year. It seems this is too high to make it worthwhile - more HMO like but without the yield, but wondering if others had a similar experience?
It is not so much of a hassle, my voids have been very low (covid as an exception) but the low gross yield (5% - annual rent divided by value of property) and extra potential legilsation makes it seem I am doing too much work for little return.
My property is furnished so that might be an issue, but having it unfurnished would make it look unattractive given the size and layout. It is in a well located affluent area in zone 2/3 London.
I guess what I am trying to find out is whether it is worth keeping it as a BTL or just selling it in a years time when my mortgage term ends. It seems the only reason to keep it is to remain hedged given I own no other properties.
Would love to hear others thoughts.
Have you asked your tenants if they want to share why they are leaving?
If you are letting to students, it could be that their courses are ending and they no longer need to be in London.
If working professionals, it could be that the rent is higher than they are comfortable paying.
Is there a reason that utility bills are unusually high for the property, and they realise after a while that they can't afford it long term?
Of course your tenants don't have to tell you why they are leaving, but there is no harm in asking, politely, if they would be willing to provide some feedback.
Most people hate moving and would only do it if they really had to, so the explanation is likely quite straightforward.
They all seem to leave for various reasons, nothing to do with flat or area plus it is always leaving at the end of fixed term before any potential rent increase can be discussed.
Reasons include moving abroad, moving in with partner, relocating to another part of UK for work etc. All tenants have been professional working young people.
I think it is a combination of the property attracting the kind who do not want to stay long term (given it is furnished) and it is a 2 bed so always two friends sharing, so if one wants to leave both usually decide to leave as well (rather than finding another friend to replace).
I also think having this much turnover increases risk of a bad tenant. I have been fine so far, but it is about numbers and more turnover simply means more chance of a bad tenant.
Consider accepting DINK tenants who have a pet.
It's currently hard to find a landlord who will accept pets, so tenants tend to stay longer for lack of better alternatives.
Even if there's no garden, lots of people have indoor only cats.
If it's a two-bed, perhaps consider marketing more towards couples/young families? They tend to prefer staying put, especially once any children are in school.
It is not the sort of property for families, but a couple would be better than sharers, only that I thnk there is less demand from them as they usually want to save costs and go for a 1 bed.
It sounds like you don't think there's anything you can do about it.
Loads of couples want 2 beds now because of WFH.
Same for one of ours. No issues- but local area has large foreign engineers and tech worker population. Young professionals on one to two year contracts.
in the current market with a general shortage of rentals, I'd say there is something wrong... have you asked any of the outgoing tenants? might be you, might be the area/ neighbours or you might have been unlucky.
I'm not quite sure what your complaint is? You say you have had 5 tenant in 5 years, "so have to find new tenants every year. It seems this is too high to make it worthwhile. I am doing too much work for little return.", but also "it is not so much of a hassle".
Are you just concerned about the costs of finding new tenants? If it is this, have you costed it out to work out whether it is worth offering a lower rent? If you think you would save £1.2k every 2 years then you would break even if you charged £50 a month less (ignoring income tax).
Re furnished/unfurnished, have you asked any lettings agents in the area what is preferable? My gut feeling is you would get more committed tenants from unfurnished, but these things can be vey localised, and vary by property type or price point.
> It seems the only reason to keep it is to remain hedged given I own no other properties.
Many people treat it as a long term investment not an income source, i.e., if you buy it for £100k and sell it 10 years later for £200k that £100k (minus CGT) was the point, not the rental income. Or you could re-mortgage at that point and take out some cash that way.
It might be helpful to explain why you became a landlord in the first place. Is this your sole income? Is this your pension? Is this a hobby?
Thanks for your reply. To answer your questions:
When I say "not too much hassle", I am not saying it is no hassle, just that there is a once a year process that goes with dealing with agents, reviewing offers, vetting tenants, reviewing references and handling the smooth check-in incluidng cleaning. I suppose the main issue/ stress factor is that since I am dealing with a new set of tenants every year, this increases the likihood of a bad tenant at some point. whereas a long standing tenant this risk is much reduced.
I do factor in all costs and void and get a return on equity of around 3-4% assuming higher mortgage costs next year. That excludes capital appreciation, but it is still pretty poor, mainly a function of interest rates. At current low deal I am on ROE is 6%.
I have asked agents before and they say leave it furnished as the size and layout of my property is best suited ot having it furnished.
My financial situaiton is that I have a part time job which is fairly low paying, plus the income from this BTL property. I do have substantial (for me) equity investments (over £1m) so do not need to rely on the BTL for spending. I am renting as well and happy to be for the long term.
I understand capital growth is a big factor but I just can not see it from this point forwards. I fell into landlording because I moved away from the area and used to live in the property. I would not say it is a hobby or pasison, but I do like some aspects of it like fixing things and receiving the rent (lol). If I did not own this property I certainly would not be actively looking to buy a BTL property.
> I am not saying it is no hassle, just that there is a once a year process that goes with dealing with agents, reviewing offers, vetting tenants, reviewing references and handling the smooth check-in incluidng cleaning.
Have you considered fully managed so you pay somebody to worry about all that? I suspect you should consider that, or just sell up. It sounds like you have done all you can regarding retaining tenants, and it does not sound like your heart is really in it.
If you have got decent equity you could re-mortgage and use that to buy another flat somewhere else so you have 2, or buy a flat for you to live in.
I don't know you, but I get the impression you have made a decision to sell and you are seeking permission from this sub to do so.
FWIW, I would do the sums on fully managed and if it is better than break even, switch to that for a year and see how you get on. Then it will be more like your other investments. If you still hate it, then sell it at that point. To be clear, that will increase your costs because you will be paying somebody to do the check-in, inventory and so on, as well as a percentage of the rent. But it will allow you to mostly sit back and treat it like an ISA or similar, albeit a very very illiquid one.
I think the furnished option makes it more appealing to short term renters. I wouldn’t rent a property that was furnished and I automatically assume it’s short term ie 1 year or less.
Yes I think that is the main factor.
Yep, ignore the agent's opinion and try unfurnished
Absolutely agree. Our house rents in the blink of an eye unfurnished. Im selling so advertised it furnished short term and only got a couple of interested parties. I think if you’re going to rent furnished you need to explore Airbnb/holiday rentals
You need to find out if there are problems with the neighbours. Antisocial behaviour that might make tenants want to move away. Sound problems?
Is the heating adequate. Poor heating will mean it is too cold in winter.
Are the kitchen and bathroom and other rooms to a good standard. You may think it is, but your tenants might not think so, so they only view the property as a temporary abode.
A furnished accommodation may attract someone who is only looking for a temporary abode. Unfurnished may attract someone who wants to stay longer.
I've got 10 tenants in two HMO's so there is always some turnover but it's easy to stay on top of. I know where to advertise to get young professionals and do all the admin myself. I never use agents because they are useless and I like it that I have direct communication with my tenants.
Probably because your rent is going up each year
incorrect.
So the rent has stayed the same every year?
I only set at market rent every time I need to find new tenants.
Does that mean other tennents are paying less then old tenants?
It sounds like it’s the whole property being let rather than per room
Ahh OK my mistake, totally read this wrong
7-10 years per tenant.
How often you jacking the prices up? How quickly you fixing issues?
Only set at market rent or below whenever finding new tenants. Never had the opportunity to increase rents for existing tenants as they always leave at fixed term end. I am a good landlord always fixing issues when told about them.
Fair, maybe try a different letting agency? Maybe you're marketing to wrong people? Students/nurses people that are only around for short periods.
I'm getting 10% yield and below market rate, as I want the people in to stay for long term. But that's how my finances stacked up.
It's a lot of work for 5% in London if you have constant churn.
I have nearly been through agents as many as tenants lol. Going to another one I highly doubt will make any difference. None of my tenants have been students or shrot term workers, except one, and she wanted a break clause becasue of it (which I accepted as she was a very good tenant on paper and the most hassle free tenant I have got).
Yes it feels a lot of hassle for 5%.
How much rent are you charging? What area?
Furnished properties are better for temporary accomodation. So your tenants have seen this advantage and used it. You can try AirBNB since its furnished but thats another headache.
Have you calculated profitability with increased mortgage rates? I personally would let it out for another year. If RRB and mortgage make it more stressful next year, I would sell up.
Did you buy it to live in, and if so, why did you leave.
My guess is it's a flat and in my view you're more likely to get more turnover than a house.
There could be many factors that we can't pin point without knowing more.
Single property “landlords” need to be stopped as soon as possible. Half arse it and then whinge about paying two mortgages when they get a rogue tenant.
I'm a professional tenant, i like to stay as long as is realistically feasible as i like to build a home as much as possible but in the past decade that's never been more than 2-3 years. Prices go past what the property is worth quite quickly in my experience. If it was up to me i'd be renting the same place for 10 years + but its very noticeable when your rent increases moreso compared to the properties around you. Moving is expensive and a massive hassle.
I feel like I'm missing something here. Are you unhappy with the type of tenants you receive? Are you unhappy with the rental yields or the condition of the property?
If the property is in Zone 2/3 London, I've recently seen a downfall in the rental market here due to the bloated rates post Covid. You could be charging too high of a rent for what the property is worth? Local rental rates don't always line up with what the market wants to pay and unfortunately the covid bubble has burst leaving the general public (especially young professionals) with the realization that long term in London isnt viable fiscally and its more of a "temporary experience" - obvs this is a bit of a blanket statement but I've personally found that in experiences this seems to be the case.
Honestly if the only hassle is re-advertising and finding new tenants every 12months then its a win I think. As other have mentioned, you could always ask the tenants as to reasons for why they left and most are often more than happy to answer honestly.
Most of mine are around five years. Current longest is 12 years.
We do tend to have slightly older tenants: 30+, so probably a bit more stable. I also don't tend to increase rent much (or at all) during a tenancy.
I had one per year initially but over time it’s settled down to an average of 2 or 3 years. I think it’s ended up with families with kids in schools.