I bought my investment flat in 2004 for £155,000, the last to go in a new development just off Oxford’s Cowley Road. It was pre-crash, both in national and personal terms, and I entered into the business of being a “virgin landlady” with great optimism and enthusiasm.
Thirteen years later I’ve decided to sell, despite the fact that the flat rents like a dream thanks to its location, its loveliness and Oxford’s insatiable appetite for rental property.
So why sell now? It’s not because of the hassle, although I live 40 miles away and have only used the letting agent to find tenants, not to manage the property.
On the whole, my initial optimism and enthusiasm have been rewarded with good, reliable tenants and only a few major disasters during the course of the past 13 years. The most memorable of these was when I discovered that my tenants had been keeping a cat in the one-bedroom unit with no garden – under a lease that specifically forbids pets. As a cat lover myself, I was appalled at the stench and, worse, the thick garlands of hair that festooned every surface. The tenants forfeited their deposit for the clean-up, which included dismantling the heating system to unclog the hair, and I learned landlady lesson No 1: uncomfortable though it may be, it is necessary to call in on your tenants regularly.
Another set of tenants moved out just ahead of the bailiffs. These were the only tenants who were ever late paying their rent and they were on a warning from me. Although I was grateful that they prioritised me over their other creditors, things would have become very difficult had they defaulted. Landlady lesson No 2: document everything, including all conversations, with a follow-up email.
The boiler was a constant source of headaches, frequently refusing to produce either heat or hot water despite annual servicing. I had no trouble ever again after I took out a British Gas insurance policy on it. Landlady lesson No 3: buy the insurance, for everything.
Aside from the tenants mentioned above, most of the people living in my property have been pleasant and responsible. The university in Oxford generates a huge transient population in need of housing for one to three years. These people are not looking to settle down but to rent and then move on, and several of my tenants have been post-doctoral students and young professionals. Changing tenants is a tedious and expensive business, so my policy has been to keep rents unchanged from year to year if I have good tenants. Landlady lesson No 4: good tenants are worth more than a rent increase.
On balance, I have been lucky with this flat, but my life has changed a lot in 13 years. I used to work about a mile away from the flat, and now I’m a novelist based in Wiltshire. My health has declined dramatically and I’m now unable to drive, so it is difficult to pop up to Oxford. So my reasons for selling are partly to do with my change in circumstances: I need to simplify my life.
But there are bigger forces driving my decision, Brexit being one of them. The uncertainty, instability and general economic dampening effects are, I feel, bound to impact the housing market, even in a place as buoyant as Oxford. We are already seeing a “softening” of property values, according to Nationwide, and loss of consumer confidence as the weak pound reduces buying power. Although I have no doubt that there will be a recovery eventually, it could be a long way off.
My other major concern is about the increase in legislation and costs in the private rental sector. Wales has just introduced a landlord accreditation scheme requiring all landlords and agents to undergo training and assessment. The tenant fees will probably be shifted to landlords. And, from this year, the government is reducing the amount of tax relief on buy-to-let finance costs such as mortgages, loans and overdrafts. HMRC says that “only some will pay more tax”, but I’m taking it as another sign. No doubt these and other measures will better regulate the rental market and reduce some of the widespread abuse that goes on, but for me, as a private landlord with only one investment property, it’s simply too onerous.
It feels like the right time to get out. The flat has sold for close to the asking price, producing a good profit after tax, better than I had ever hoped or expected – thanks to it being a desirable property in a good location, with a healthy, stable housing market.
Were it not for all the changes above, I would be content to carry on letting it. My husband and I will combine our capital gains allowances of £11,000 each. Whatever we net will go partly to reduce the mortgage on our own house and the rest will be invested. However, when looking at the total picture since I bought the flat, the rent barely covered the running costs.
Was it worth it? There’s no doubt that it was a good investment. Nothing else could have generated a similar return. I don’t regret being a landlord for 13 years, but it’s time to move on to a new challenge: being a successful novelist.
One-bed flat, off Cowley Road, Oxford
Purchase price £155,000
Selling price £270,000
Mortgage at purchase £100,000*
Mortgage at sale £60,000
Gross profit £210,000
Costs of sale £4,437
CGT liability £16,740
Net profit from sale £188,82Total rent collected £125,000
Mortgage payments £94,000
Other costs** £13,000
* £50,000 raised by borrowing against another property
Ground rent insurance…
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