A Bit About How I Started off as a Landlord

So, it is 1985 – and at the age of 23 I have just completed on buying my first lovely 2 bed flat in southeast London. I still drive past it from time to time.


It cost £36,000 and the mortgage was £30,000. Interest rates were about 10% I recall.

My intention had always been to let out the smaller second bedroom – and that is what I did.

In those days, this was done by placing an advert in the main local paper. It was a 15-word limit on a print advert in the London Evening Standard – this being before the internet.

And I remember my first tenant – a very tall lady called Susan who hailed from Hampshire. She was sweet. And I had the flat for two years with two other nice tenants coming and going.

The rent they paid was equivalent to my mortgage outgoings and I wondered why other people did not do the same thing. It was so easy.

After two years, I bought a three-bedroom house and did the same thing on a bigger scale – letting out more rooms and living in the property.

I had to put up 25% of the equity for the second property and get a special commercial “non status” mortgage loan from a company that later morphed into Paragon Mortgages. This was in the days before the buy to let mortgage had been invented, of course. Those only came along in 1996.

Back in 1988, the law was changed by Thatcher so that, shock horror!, a landlord could actually recover their property without the tenants having to be in arrears. This was quite a thing at the time, and it was done to ease the dire shortage of rented accommodation which followed all the years of rent controls and the restrictions on regaining possession of one’s own property.

Basically, over the years, landlords had exited the private rented sector because it was so hard to recover their property without proving arrears. The resulting shortage of homes to rent meant that though people could “Get on their bikes” to find work in another town, they could not actually take a job there because there it was so hard to find decent rented accommodation in which to rest their head at night.

Hence the law change by Thatcher.

(Of course, today, we are now moving back to restricting landlords from getting their own property back, thus proving the first real lesson from history – that folks don’t learn from history or are doomed to forget).

After 1988, following these law changes, there was renewed interest in private renting, despite the massive crash in property prices from 1989 to 1994. House prices did not really start moving up again until 1996.

One of the things I remember reading about back then was about some private firms raising finance to invest in private renting on a bigger scale. I recall that one of these was called Johnson Fry. Their investments looked good – and I read their prospectuses with interest and started to think more about how this could work for me. (Johnson Fry eventually morphed into what became Touchstone today).

I did not actually invest with Johnson Fry in the end – and I don’t know how their early investments fared, but from 1989, over exuberance in financial services, (not for the first or last time, of course), clobbered the financial markets, especially the housing market. So, maybe not so well. Steeply rising interest rates led to house prices in London falling around 40% in real terms and many people were plunged into negative equity. It was a similar story UK-wide.

So, I held back on investing for a few years and waited until things started to look a bit better, which they slowly did by 1996, which was around the time the new-fangled buy to let mortgage was invented.

My first buy to let, (where I did not live), yielded 13.4% and the mortgage rate when I bought it was around 9.5%, so a whopping margin of almost 4%, plus of course the potential for capital gain, which duly came in spades.

I often wondered why other people did not do what I was doing too and I used to ask my friends this, all of whom were like me, toiling away in boring managerial jobs for “the man”.

At least, I now had an alternative source of income, in case the boss decided he/she did not like me – always a likely possibility as I am a challenging, questioning sort of guy, as you will know if you have been reading my questioning of the Great Reset and coming mandatory surveillance society over at Twitter.

Friends used to say things like….

“Ooh, what if you get a bad tenant?”.

“Ooh, what if they call you at 9pm at night to tell you the washing machine is flooding?”.

And other worries, of course.

Well, the answer to those two is simple.

The first risk you eliminate by careful checks of anyone wishing to rent a property from you. More in my books – see below.

The second never actually happens. Most people are bright enough to remember how to turn off the water. In over 35 years in this business, I have only ever had one call out of hours.

I guess the reality is that lots of people like to keep their heads down in their little safe jobs and do not like taking risks and infrequently ask questions or look around at what is going on, seeking out new opportunities.

Now I have a son in his late teens. He does not have a clue what he is going to do and people I know often ask what he is going to do. I say, “I don’t have clue, I did not know at his age, I just drifted from university into dull, graduate type jobs, which I mostly just endured, rather than enjoyed”.

In fact, only after 19 years and one month of working for others had my property business grown enough that I could walk away from working for others. I could have walked away much earlier, but I was too cautious at growing my property business, a hangover of the caution instilled in me by my father who worked for the man all his life and whose main advice was to get a safe job with a good pension and canteen and to “keep your head down”.

But you cannot change the past and I guess we all live a little in the shadow of our elders.

I always encourage smart, questioning young people I meet to look around them at the opportunities out there and try to do what they enjoy. I was always interested in using the money I had earned from the man to invest and make more money. I like personal finance and housing and being a landlord is just a part of that. It was a natural progression.

Other people will be drawn to other things that interest them. The key thing is to keep looking and keep an open mind and don’t be afraid to try different things. Failure IS a VERY GOOD option and is a good way to learn!


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