The End For DIY Landlords?

Written by Sarah Walker

With landlord registration, licensing and the days of rocketing property prices well behind us, is it really worth being a DIY landlord any more, or is it all just too much of a faff?

There are already around 400 pieces of legislation governing the lettings industry, with 5 more coming into force in 2018:

…and more on the slate and/or in consultation:

Keeping on top of all this legislation is quite a job. Add to that licensing, planning permission, building regs, deposit protection, fire safety, health and safety, specialist insurance…it’s a lot of admin.

You’ve got to find and reference tenants, check them in and out, inspect the property, take phone calls, organise maintenance, pay contractors, jump to emergencies – who can be bothered?

In Scotland and Northern Ireland, you’ve got to register yourself and your property; in Wales you need a licence to manage a property. Licensing and registration is already in effect in certain parts of England (including Liverpool and certain London boroughs) so a national scheme can’t be too far away.

And look at the penalties if you get things wrong – even unintentionally. Your local authority can fine you up to £30,000, in addition to which, if your breach of the law is considered serious enough, you can be banned from working in the lettings business, prosecuted in court and even jailed. And if Karen Buck’s ‘Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill 2017-19’ comes into force, your tenant will have the right to take you to court themselves if they’re not happy with the standard of their home.

The rewards need to be pretty good to make all this toil and risk worthwhile.

According to data from LSL Property Services, average house prices in England & Wales – excluding London and the South East, where prices are falling – rose by 2.3% in the year to January. (Taking England & Wales as a whole, the figure is a miserable -0.4%) Some areas are doing brilliantly: Rutland’s up 12.1%, Bristol’s up 9.1% and Merseyside’s up 8.2%. But other areas have performed pretty horribly over the last year: average prices are down by 9.5% in Wrexham, 8.6% in Kingston upon Hull and 6.2% in Middlesborough. Every one of the ten regions has some local authority areas going up and others going down, so it really does depend where your buy to let is located – you could be winning on capital growth or you could be losing.

Rent-wise, the average yield for England & Wales is 4.4%, ranging from 3.2% in London to 5% in the North East. In Scotland, you’re looking at an average of 4.8%. However, these are gross figures and don’t take into account all the costs associated with operating a buy to let – net yields will vary depending on how highly you’re leveraged and how much you need to spend on maintenance, etc. If you’re operating an HMO or have only a small mortgage, your cash flow might be quite good, but otherwise you might not be making very much, month on month.

Then, from these potentially very modest profits, you’ve got to set aside money for bigger periodical works and tax, and it’s sensible to have a ‘rainy day’ fund.

Now, take a good hard look at what you’re left with, tot up the time you spend on your job as a self-managing landlord and consider the risk v reward. Is it really worth it?

About the author

Sarah Walker

Sarah Walker is a freelance writer and editor with extensive knowledge of the property investment industry.

A former estate agent and television presenter, Sarah has spent over a decade writing for industry publications and leading UK property companies, producing a wide range of marketing and PR content, including consumer guides, newsletters, website copy, articles and reports.

She has ghostwritten a number of property investment books, edited several others on property, business and branding, and continues to work with entrepreneurs to produce literature that supports their business enterprises. Sarah has been both a landlord and a tenant herself and has invested in the UK and overseas.

Away from her laptop, she’s a keen photographer and loves exploring the Scottish Highlands. Skiing is her sporting passion and she’s an enthusiastic member of her local amateur dramatic society.

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