[
Paulomi Debnath, 44, founder the jewellery brand Handmade by Tinni, has rented out properties for a decade. Here she explains why it has become too expensive and she no longer makes any money doing it.
Being a landlord used to be lucrative for us. We could make a little bit of money on top of the rent, but that is no longer the reality. We are only just breaking even, and sometimes we have to pay from our pocket to pay the mortgage fees.
My husband and I both have full-time jobs. We started buying property in 2007, and we have added more as the years have gone on. Now we have four rental properties.
The past two years have been very difficult. Six years ago, the mortgage on one of our properties in Kent was £196 a month. That has gone up to £500. Now our mortgage deal is up for renewal once again but costs are becoming crazy. The cost of the mortgages across all our properties in Kent, Essex and London have risen by 20 to 40 per cent.
Every landlord has to make sure the house is of high quality for tenants. That is a basic requirement. I’ve never had an issue with our renters and we try to look after them as our family, if needed. We will always put their needs first. But these basic costs are a lot more these days.
Recently, we had to replace a broken door as it was coming off its hinges. That cost £400 and wiped out the rental income for that month. Expenses like that happen constantly. If there is any problem with the property, we are down a considerable amount money per month.
We sold a one-bedroom flat last year because it was becoming a money drainer. It was a zone three London property that we had owned leasehold since 2007. It was a great flat but the mortgage had risen to £1,100 a month, and then the service charge is £1,000 a year. We were paying from our pocket, and it was costing more than we were making to pay the mortgage and the service charge.
We decided to put it on the market but it wasn’t an easy sell. The first sale fell through but we had already asked our lovely tenant of 11 years to move out. So we’d lost our renter and the flat was empty for three months. We weren’t getting any rent during that time but we still had a high mortgage to pay. It was one of the most stressful times in our lives.
We needed to get a short-term tenant quickly, so we decided to repaint the entire flat and modernise the kitchen to attract another renter. That cost £4,500 to do. Then we had to pay a letting agent to put it back on the rental market and manage the property. In total these costs were around £10,000. We emptied most of our savings to pay for the flat and maintain the mortgage and bills until we sold it, which is not something I would advise anybody to do. But we had no option.
I wouldn’t say we regret becoming landlords because we are in the long game – putting our savings towards a house is a solid investment, we love the idea of buying, renovating, and doing the research. It’s a passion and an interest. Also it is always beneficial in the long run, because over time, these properties will become our pension.
But lately, it is such a big gamble. The markets are very volatile and we never know how they are going to react. The interest rates are supposed to be coming down, but have they? It is a very difficult minefield and causes a lot of stress.
After we have paid the mortgages, the service charges, the estate agency fees, and then the yearly tax on our properties, we will have made no money. The rent we receive is only just covering these costs.
If you are buying property just for the rental income, this business is not for you. There is hardly anything left these days. Of course, the day-to-day managing of property is stressful but if you enjoy buying and selling property, there is some value in that. If you’re in it just for the rental income, being a landlord is not a good decision. There is hardly anything left these days.
