Many homeowners were forced to become reluctant landlords when the recession started to bite, simply because they could not sell their property. Letting a property could prove a more sensible decision anyway, although naturally this depends on each individual circumstances. Here are a few pros and cons of becoming a landlord in the current housing market.
Some Advantages of Letting
One major bonus for those who choose to let at the moment is that the letting market is far more stable compared to the market for sales.
Research undertaken by the Association of Residential Lettings Agents (ARLA) shows that there were more tenants looking than there were properties available in the second quarter of this year.
One reason this has occurred is that few people have been able to buy because of the banks' tighter restrictions on mortgage lending – therefore, the lettings market could be described as buoyant.
This has resulted in now being the best times in the last ten years to enter the rental market. Rents have recovered and exceeded previous levels in 2009 and offer stability to potential and existing buy-to-let owners.
Letting your home can provide you with financial security as the extra income should cover – or indeed exceed – your mortgage repayments, affording you extra income.
It is possible to offset some of the tax payable on the income from your rental property on expenses such as estate agents fees and the cost of furnishing the property in readiness to let it.
Letting your property allows you to wait for the best time to sell, rather than being pushed in to selling when prices are depressed.
Tenancy contracts generally have a six month break clause, so you retain flexibility and can make an informed decision whether to keep the tenancy going or to place the property on the market.
Some Disadvantages of Letting
Once you have sold a property any maintenance costs become the responsibility of the new owner – as a landlord, you will have to keep the property spic and span. As properties generally deteriorate over time, the bills will keep on coming!
However, the good news is that wear and tear is generally covered in tenancy contracts, and you can retain a percentage of the deposit to cover any associated costs. Remember though that the onus remains on the landlord to keep the property and any garden in reasonable condition and to ensure that items such as boilers and electrical installations meet current legislation.
There remains one big risk – and that is that you will have to cover the mortgage payments should the property be left empty between tenancies. However, ARLA figures suggest that the average void period between tenants fell to just 2.3 weeks between April and June this year – so the likelihood of you going for longer than a month between tenancies in today's market is slim.
You could, however, encounter problems with the tenants you do get. Try to mitigate the risks of falling foul of dodgy tenants by engaging the services of a letting agent to run a credit check for you on references – and also to chase any missing payments. If you are really worried about this, you can take out rental income protection – although this will add to your insurance bill, it is worth looking at.
Take expert advice, talk to a company who can explain why you will need specialist landlord insurance for the building and contents and who can point out the pros and cons of different types of insurance. Westhill Insurance Services can provide simple, straightforward and cost-effective solutions for all your insurance needs. The role of the landlord is quite onerous, so make sure you protect yourself and your property so that you can enjoy the benefits of letting your property, without worrying about the horrors which could occur if you are incorrectly insured.
Contact Westhill Insurance Services, today.