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Evening Standard
Evening Standard
Business
Charlotte Duck

Rentlords: meet the tenants who bought flats hundreds of miles away — and rent them out to live in London

I wish my flat in London was mine, but I will get there eventually,” says Katie Wilson, 37. She’s one of a new breed of London “rentlords” who rent in the capital while letting out a property elsewhere in the country. The two-bedroom flat Wilson owns is in her hometown of Nottingham, while she lives in Victoria Park, Hackney. “It’s worked for me because it’s an investment for my future.”

Before buying in Mapperley, Nottingham, Wilson had been looking at moving to Margate or shared ownership options in London.

When her sister decided to sell a two-bedroom flat in 2020, Wilson, digital editor for The Boutique Handbook, decided she’d try to buy it. “As a first-time buyer, buying a buy-to-let property, I needed a deposit of 25 per cent on the £150,000 price, so that was £37,500, which I managed using savings and some help from my family.”

The Nottingham property is currently let to a long-term tenant who was found via an agent but who now deals directly with Wilson or her parents. “Mum and Dad are down the road from her, and they’re retired and have her number. I’ve been lucky because the flat is less than 10 years old and so not much goes wrong. I haven’t heard from my tenant for ages but I’m in direct contact and, if anything does go wrong, I know it falls to me to pay for it and I have money saved up for that.”

Meanwhile, the flat Wilson rents is managed by an agency, so she’s never dealt directly with her landlord. “As I was handed the keys, they said: ‘you know the shower has never worked in that flat, don’t you?’ At this point I’d already paid the deposit and first month’s rent, and this had never once been mentioned to me.” The boiler also needed to be replaced and there were black marks in some of the rooms.

“After the absolute faff that was my first six months in my London property, having to get several things fixed, I’m sympathetic to my tenants as I know how stressful it is to live somewhere where things don’t work properly.”

As a tenant, Wilson is also conscious that her rent is likely to go up in May — potentially by as much as £150 a month — and the service charge on the flat she owns has already increased. “Although I want to be a good landlord and be fair to my tenants, we are in a cost-of-living crisis and what I have to pay out on the flat I own has already increased this year. My tenant pays £700 rent a month, which hasn’t increased in two years, so that’s something I will need to look at.”

Wilson says she plans to keep renting out the flat and renting herself. “I’ve recently re-mortgaged and it’s gone up £30,000. I don’t plan to live in it but it’s a leg-up on the property ladder. If I meet someone or wanted to buy in London, there’s always the option to sell the Nottingham flat.”

According to the Land Registry, the average London house price was £534,000 in January 2023, compared with £163,000 in the North East, the cheapest part of the country to live, and £290,000 nationally. But, while Londoners might see being a “rentlord” as an investment opportunity, there are factors they need to be aware of. These include tax implications and, more importantly, being a landlord requires responsibility.

Natalie Allen wanted to try London living and says making life easier for her tenants means they take good care of her Hertford home (Hayley Bray Photography)

Natalie Allen, 26, has always lived in Hertford and in 2019 she bought a two-bedroom, two-bathroom apartment next to Hertford station. In lockdown, she moved in with her parents, who live nearby, but, once Covid eased, decided she wanted to move to London. “I wanted to experience the ‘London living’ lifestyle. I had always worked in London so I thought it made sense, at that time of my life, to make the move and rent.”

Initially Allen, a customer relations manager, rented with a friend in Islington but now lives with her boyfriend in Berkeley’s 250 City Road development. “Living here means no commuting costs and no more gym memberships, as I use the on-site gym five times a week. My boyfriend also has an easy commute to Canary Wharf. ”

Allen hasn’t had any issues since moving in but says being a tenant herself has changed her perspective. “I’ve become more proactive in resolving a problem or query raised by my tenant via my agent, as I know I’d expect and like to receive the same level of response from my landlord.”

Allen decided to keep her Hertford property as an investment. “As a landlord and a tenant, it has meant that I’ve been able to enjoy the London lifestyle while enabling me to stay on the property ladder and have the option in place to move back to Hertford.”

Like Wilson, Allen bought a new-build property near her parents and there haven’t been any major maintenance issues. “I would definitely recommend this approach. If you can’t afford to buy in London, look at alternative areas, preferably areas that you know well, so you can understand whether you are getting a good deal.”

Allen warns against seeing this set-up from a purely financial perspective, however: “I wouldn’t say being a landlord is ‘just business’ as the property is providing a home for someone, so you need to be more empathetic. I try to make life easier for my tenant and he looks after my apartment well.”

Buying hundreds of miles from where you live might seem like an extreme tactic for getting on the property ladder but there is method behind the madness. With shared ownership continuing to garner a negative press and London homes costing 12 times the average wage, first-time buyers are being forced to find ways to fund their dream of living in the capital.

Watch out tips for would-be ‘rentlords’

  • Be aware that your first-time buyer allowances, which can only be used once, might be thrown away on a lower priced property.
  • It’s not easy managing a rental property from afar. “Get a good letting agent and grill them about their practices. Ask about what service you are getting and the frequency of inspections,” says Paul Davies of At Home Estate and Lettings Agency and About Mortgages.
  • Buy newer properties with an EPC rating of C or above. “Newer properties will have this already, but older ones won’t and the updating work to get them up to standard could cost £10,000s.”
  • Many lenders don’t lend to first-time buyers/first-time landlords so your choice might be limited.
  • The lenders that do lend may not offer favourable terms. “You might need to pay a higher rate of interest and [since the mini budget] many buy-to-let mortgages now require a 35 per cent deposit.”
  • There are tax implications to consider. “The property, if sold in the future, will be within the scope of capital gains tax without relief for the property being the main residence,” says Anton Lane of Edge Tax.
  • Don’t forget you’ll have solicitors and estate agents’ fees when you buy and sell, which are tax-deductible, but will eat into any profit.
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