‘We have never raised the rent’: accidental landlords reveal their top tips for property investors

Becky Lloyd Pack - Andrew Fox/The Telegraph
Becky Lloyd Pack - Andrew Fox/The Telegraph

As the housing market cools, beleaguered sellers may be tempted to ride out the slump by letting out their homes instead of selling up.

But becoming a so-called “accidental landlord” is no walk in the park.

Tougher tax rules and legislation to improve standards for tenants has heaped more responsibility and cost on second home owners’ shoulders making it one of the most challenging times to be an amateur landlord yet.

Becky Lloyd Pack and her husband Joe became first-time landlords in 2020 after being unable to sell their one-bedroom shared ownership flat in Islington, London, when the building failed fire safety checks because of cladding. The couple needed to move to Nottingham after Joe had been offered his dream job as a design manager.

“I’d describe us as unwilling landlords and naïve when we started out,” says Becky, 33.

“We went to a letting agent for help but they quoted us thousands of pounds to manage the property. It was too expensive so we went with an online platform called OpenRent that provides landlord services instead which was much cheaper.”

Becky Lloyd Pack - Andrew Fox
Becky Lloyd Pack - Andrew Fox

Becky and Joe, 37, a design manager, paid an upfront fee of £203 to the platform to advertise their flat, manage the deposit, create contracts and carry out tenant referencing. They also make sure the couple comply with all necessary regulations. They pay £5 a month for the company to collect the rent but they manage the property themselves using WhatsApp to communicate with their tenants who have lived in the property since Becky and Joe moved out.

Joe checks in with the tenants monthly to find out if there is anything wrong with the property or if there is anything they need.

Living more than three hours away, Becky says it’s important to establish strong ties with tradespeople based near the flat so if something goes wrong they can call on local help.

Despite saving money by managing the property themselves, Becky, owner of Story by Design, says they made an expensive mistake.

“We actually made a loss because we didn’t realise we’d have to pay tax on our rental income,” she says. “At first we thought we would almost break even but then my accountant told me we would have to pay tax as well which of course seems obvious now.”

Over a year, Becky and Joe collect £23,240 in rent and pay £25,836 to their mortgage lender which agreed to let them rent out their home without converting to a buy-to-let mortgage under a “content to let” agreement. But the couple are faced with a £4,620 tax bill for the property which they had not factored in.

Camilla Taylor, of accountants RSM UK, says: “Generally, landlords will be required to file a tax return if their gross property income exceeds £1,000 a year. If taxable rental income exceeds £2,000 a year it can influence student loan calculations. Landlords must register for self-assessment by 5 October following the end of the tax year in which they received rental income.”

The couple hope to sell this summer after the cladding has been replaced.

Not every landlord relationship is plain sailing, however, as Emma Parsons Reid found out.

‘My dream tenant has installed solar panels’

Not every landlord and tenant relationship is plain sailing, however, as Emma Parsons-Reid (right) found out. Emma, 55, became a landlord 16 years ago when she moved in with her husband Kevin, 61 a retired chemical engineer. To maintain some independence, Emma decided to keep her two-bedroom house and rent it out.

In 2017, the former civil servant, who lives in Cardiff, found herself between tenancies. “The market was slow and my house was dated so we struggled to let it,” she says. “My daughter suggested I advertise the property on Facebook. I let my house to someone without carrying out any checks first.”

The tenancy did not go well and Emma decided the best thing to do was start again and use an estate agent the next time around. Emma now has a dream tenant. She paid the agent £600 to find, vet and draw up the contract, which Emma says was money well spent.

She says being a landlord can be “nerve-racking” at times because she manages the property herself, living just a mile away. But it has given her the freedom to retire aged 48 so she can spend more time with her daughter Hannah, 32, and her five grandchildren.

Emma has kept a small mortgage of £8 a month to maintain her credit score and charges £725 a month in rent even though the market rent is £900.

“If you have to increase the rent, work with them to come to an affordable arrangement,” she advises. “If you have a good tenant don’t get greedy.”

Emma’s tenant receives a Universal Credit top-up to her income. The benefit entitles the tenant to apply for a grant to upgrade the energy efficiency of the property. With Emma’s support, her tenant was able to claim for solar panels, new radiators and a boiler worth in total £11,000 which has lowered her monthly bills.

Emma recommends joining national and local support groups. She is a member of two Facebook groups; Welsh Landlords and Landlord and Tenant Advice.

‘We have never increased the rent’

Ashley Ritchie and her husband Michael first rented out their three-bedroom terraced house five years ago. They planned to sell their home and move into a new house they had built in the countryside of Coleraine on the north coast of Northern Ireland but they were unable to find a buyer.

Ashley Ritchie - Charles McQuillan
Ashley Ritchie - Charles McQuillan

“We were devastated not to sell but in the long run it’s worked out for the best,” says accountant Ashley, 39, who has four children Daniel, 10, Thomas, 8, Matthew, 3 and Anna, 1.

“We now see it as an investment for our children.”

Ashely and Michael, 40, a pharmacist, charge £525 a month rent and the mortgage is around £260, giving them a monthly income. Ashley adds: “When we moved out we were in negative equity but over the last five years we’ve flipped the situation around by using our rental profit to pay down the mortgage. The house has since risen in value by around £50,000.”

The couple have only had one tenant. To avoid losing her and having to spend money finding a new tenant they have never increased the rent. They charge £525 a month instead of the market rent of £600.

Ashely says a common overlooked factor of being a landlord is having adequate insurance. As well as having building insurance, landlords should insure any contents they leave behind which may need repair or replacement such as white goods, she recommended.

Are you a landlord? What tips would you give? Tell us in the comments section below