Tuesday, 19 May 2015

Why Become a Landlord?

Most of us aspire to better ourselves in one way or another. It is a human trait that has existed since man took his first breath. For our caveman ancestors it might have meant a bigger cave, a safer spot, a more elevated position, or perhaps even a sea view! Fundamentally it was about well-being and survival. Today home ownership is not a survival issue; it is however about financial security as we endeavour to put a ‘roof over our families head.'


It is one thing being a home owner, but what about a multiple home owner and investment landlord?
There are currently more than 2 million private sector landlords owning approximately one in five UK homes! Government statistics indicate that this will increase to one in three homes in some parts of the country. The trend towards renting locally is slightly higher than the national average. It is inevitably skewed by 'poor' wages leading to lack of affordability. Supply is also constricted by second home ownership and limited new house builds. This hints at the entrenchment of the trend towards renting.

If its financial security that you are looking for then history would teach us that there is no better investment than property. After all an investment in bricks and mortar should be, ‘safe as houses’?

In 1966 my parents bought their house in Redannick in Truro for the princely sum of £3000. In 1990 it sold for £88,000.  Checking the 'Zoopla House Price God', that same semi would conservatively be worth more than £250,000 now. Even allowing for inflation this represents a significant net gain.

Few  of us will  take any joy in the fact that a great number of hard working people cannot afford to buy their own home, let alone invest in a second or third. As individuals there is little we can do to influence this. Inheritance, luck, choice and the lottery of life determines these things.

The opportunity of being a landlord does not make for bad people or money grabbing capitalists. It gives ordinary people a calculated chance for financial stability and to control their own investment destiny. Further, by buying property locally, and becoming a landlord you have a chance to ensure its quality and fair rent for the current generation of tenants - your children, grandchildren, friends, neighbours and acquaintances; you also enable them to put a roof over their heads. What is more, your investment down the track, may even enable your children to raise a down payment on a mortgage and continue the cycle of home ownership that is currently beyond the reach of many.


The choices to make and the rewards to gain are significant ones.  Do I downsize and release equity to purchase? What do I do with the pension money I have earned from a lifetime of working? What do I do with inheritance money? Do I forgo the foreign family holiday for the next 5 or 10 years? Do I put the kids through private school? OR - Do I buy a rental property?


These decisions are ‘tug of war decisions’. There are upsides and downsides to each. There is no right or wrong answer; what is important, is what is right for the individual. History is never a certain indication of a trend continuing. However house prices in the region are reckoned to go up at least 20% in the next three years (Savills Quarterly Report). The rental sector is growing too.

The difficult choice may be made easier if you consider one certainty. No one is going to look after your interests, your health, and your wealth in old age better than you.

Take the plunge and become a landlord.  The water is lovely and warm.

Next Time we look at what makes a good landlord

1 comment:

  1. Being a landlord can be the best of times or the worst of times. I've had lots of ups and downs. I love the steady income and most of my tenants are great. But every so often there's that one person who steals the stove when they move out, you know? Being a landlord in SoCal is really a trip.