“My property is not selling. Is it better to rent?”
We are increasingly receiving this question as the year winds down fast towards the end of the year. These homeowners put the property up on the market in late spring and throughout the summer and have seen no traction. If the mortgage repayment is getting a little tough, is it time to consider renting out?
Where to start
Depending on the property being a house or a flat, there are different things to start thinking about rental. For example:
- Timing – when can you vacate the property?
- Appraisal – do you know how much the property would fetch as the market slows down?
- Permissions – if leasehold, did you know that you need permission to let from your lender and freeholder? This can take substantial time.
- Appeal – if it’s a house, is it appealing enough to get the interest needed for a quick let? For example, if you have a big house and one bathroom, you may not have as much interest.
The key is to start a conversation with your preferred agents and gain advice.
Being a homeowner to being a landlord can be surprisingly costly. What do you need to budget?
- Void period – as we slow towards Christmas, the void period can be longer than expected. Can you meet this period of no rental income?
- Compliance – being a landlord means you may be subject to obtaining a local property license and meeting compliance such as gas and electrical safety checks. Is your EPC out of date? The rating can come out lower than expected, especially if your property is listed. If you are an overseas landlord, 20% of your income will be held back automatically if you are not registered as a Non-Resident Landlord.
- Other costs – landlord insurance, contents insurance, removal and storage if the property is your current residence, deep-cleaning costs for any upholstered items, and professional costs like your accountant and agent fees.
- Refurbishment – does the property require repair that’s been a long time coming or sprucing up? For instance, is there a leak you didn’t attend to, a boiler nearing the end of its life, or faulty windows? Will the whole place need a lick of paint to freshen up?
Work It Out Backwards
At the end of the day, renting out your property needs to make sound commercial sense. Working out your budget backwards is the logical step to making sure if becoming a landlord now is suitable or not. For example, take the lower end of the market appraisal and deduct the big-ticket items like your monthly mortgage and general living cost. Then deduct what work your property requires, and can you stress-test the budget if the property remains empty?
Every property is different, and it’s wrong to assume every property will let out just like that. Tenants deserve to be in a well-functioning home, and if you have everything in tip-top shape, it will also cost less for you, too, in the long run.
Need a hand on where to start? Contact us today on 02035885115 to discuss how we can help you.
Disclaimer: Marybow Property takes all reasonable care to ensure that the information contained on this website is accurate. However, we cannot guarantee the accuracy or completeness of the content. Our website, including the blogs, is not legal or financial advice and should not be construed as such. We reserve the right to change the information on this website at any time.