Is being a landlord worth it? The truth is, being a landlord in 2024 kind of sucks! I've known landlords that are eating out of food banks because they can't afford to eat in this country. Flights, travel, everything's gone up. House prices have doubled. It's like the rat race is constantly out of reach. There's nothing left to invest. In a recent YouTube video, I explained the problem in depth. You can see the video at the top of the page.
Landlords are selling their portfolios en masse. People who are wanting to become property investors and wanting to get into the buy-to-let private rented sector are struggling. In this article, I'm going to share with you 5 reasons why it doesn't pay to be a landlord in 2024. Keep reading until the end, because I explain how you can be part of the 1% of landlords that truly succeed!
1. Is Being A Landlord Worth It? Barrier To Entry
The first massive problem is this: the barrier to entry is just getting ridiculous. Let me explain. The average house in the UK is about £300,000, maybe just shy, maybe £250,000 to £300,000 depending on where you are.
When I bought my first house, I bought it for £100,000 in 2009. Now to buy a house like that is £300,000. Before, you would have just put down a deposit of about £20,000-£25,000. That was accessible to get. But now, buying a house for £300,000, with a £75,000 deposit, is out of reach for many.
Unless you happen to have inherited a load of money, or you're just a very successful businessman, just getting into the market is really hard. So that's the first problem.
2. Is Being A Landlord Worth It? Interest Rates
The second problem is interest rates. If you buy a house for £300,000, your mortgage is going to be about £225,000. This is the real killer now, because if your mortgage is £225,000, that means that your interest payments, minimum interest only, are going to be about £1,000.
So, if your interest payments are a grand a month and your rent is a grand a month, that means you're making nothing. And this is why landlords are exiting the market. People bought a house three years ago when interest rates were low, and they were making £300 a month. But now, interest rates have doubled. Now they're making nothing, or sometimes even minus.
3. Is Being A Landlord Worth It? Cost Of Living
Now, the third reason is that it is very tough to become a landlord for a normal person. Everything's gone up, right? Houses have gone up, interest rates have gone up, the cost of food has gone up, flights, travel, everything's gone up.
Flight prices have gone up by 300% in the last 18 months. Crumpets and baked beans have gone up by over 100% in the last 18 months. So, everything's doubling, tripling. Petrol, energy prices, everything's been going up the last few years. That's why we're in a cost-of-living crisis. What hasn't gone up? Wages! Wages have barely budged. So becoming a landlord is very hard for ordinary people right now.
4. Is Being A Landlord Worth It? Excessive Tenant’s Rights
The fourth reason is excessive tenant's rights. Let's say you're renting a property out for a grand, and then you're paying your mortgage payments for a grand, and you're making nothing. Then you realise that the tenant isn't paying rent. How are you supposed to pay the mortgage when the tenant hasn't paid the rent? You can't!
So, now you have to get this tenant out, but you can't get the tenant out because they just announced they're scrapping Section 21. Section 21 notices were a way that you could evict tenants out of your property without having to go to court, because the courts are backlogged. Going to court is a nightmare.
But now they're scrapping Section 21. That means that now if you want to get rid of a tenant, you're going to need to serve a Section 8 on them. This means that you're going to have to go to court, which takes months! In the meanwhile, you still have to pay the mortgage!
5. Is Being A Landlord Worth It? Unfair Taxation
Number five, taxation problems. I don't know if you knew this, but they changed the rules a few years ago. They're changing the rules again and again to destroy landlords.
If you're renting a property out for a grand a month, but then you're having to pay the mortgage, a grand a month, interest only, what's your profit? Zero. So, you're not making any profit. Maybe you're even making a loss because you've got expenses.
However, you still have to pay tax on the rent. This is Section 24 tax. You can’t write off the mortgage expense on your taxes, but you still have to pay it. You’re losing money and paying tax regardless.
Is Being A Landlord Worth It? SECRET VIDEO
I've created a secret video talking about how to avoid each one of these pitfalls. I would highly suggest that you go through this video. It's a short, nice, compact, punchy video. It was going to be just for my students, but I decided to give it away free! You can get access to the secret video at this link!
If you don't even bother to click the link and watch this video, then you probably deserve to be part of the 99% of people who struggle. The top 1% of people know the lessons in this video, and many of them would prefer you didn’t get to learn them. So watch it, download it, get instant access, completely free, no catch. Then, if you find the information helpful, share it with a friend.
