New and past landlords tempted back to Buy to Let have been warned – passive income from property isn’t easy.
This is according to Charlie Davidson, a residential property expert with London law firm Bishop & Sewell.
Buy to Let mortgage statistics from the ONS suggest there are around 2.74m landlords in the UK, although the sector has shrunk in recent years as landlords have faced higher mortgage costs and increased obligations from legislative reforms.
Davidson says: “Buy to Let has been an incredibly popular investment vehicle in the UK for many years as it has offered a great way to achieve decent, stable financial returns while providing a steady and reliable cash flow.
“However, that landlords earn an easy passive income from their portfolios is a myth as the reality can be very different. Buy to Let is far from a quick route to riches.
“Being a landlord requires effort, and the property portfolio must be actively managed. Issues like rent arrears, damage to the property or the process of evicting tenants can be stressful, costly, and challenging.
“Unlike some other assets, the property will require maintenance, repairs and refurbishment that will eat into the landlord’s yield, while the large initial upfront investment to buy the property means Buy to Let should be viewed as a longer-term investment.
“Prospective landlords should avoid being tempted by social media chatter promising an easy fortune, or even more fantastical tax schemes. There have been several highly dubious and utterly artificial schemes marketed to landlords as a way of mitigating (or even removing) their tax burden. If something sounds too good to be true, it normally is.
“Buy to Let is not a walk in the park and successful landlords must be prepared to put in time and effort to earn a profit while also discharging their legal responsibilities to their tenants and ensuring the property is suitably maintained.”
