With the housing market in a state of hibernation and the demand for rental property increasing by the day, some home owners are being forced to consider entering the world of property rental.
Rather than have their former home stand empty while waiting for the right buyer (right offer) to come along, renting is one way of paying the bills. (This is the part where the government warning appears on the packet.) Being a landlord is not for the faint hearted!
Once upon a time, there was the 1988 Housing Act, which set out the 'rules of engagement' between new landlords and tenants in, what was to become over the next decades, a roller-coaster called Buy-to-let. Buy-to-let was seen as the cash-cow for all those 'want-to-be' upwardly mobile property speculators and the ordinary person in the street. Banks where handing out mortgages like confetti and for a modest outlay the rental income from a second, third or even forth property would ensure a cosy retirement, four holidays a year, private education for the kids and a car not unlike that of a premiership footballer (well maybe one in the championship) and just as it looked like it was never going to end POP!
This time around the banks have decided to be much less generous and, hopefully, behave in a much more responsible way. This does have a knock on effect for the housing market meaning that mortgage products are not as plentiful as before. Those wishing to buy property for either themselves or for private rental purposes need to do their homework which, on reflection, is a much more stable state of affairs for us all.
If you are planning to rent out a former home while waiting for the housing market to pick up you must seek advice from your mortgage lender and your insurers. Some mortgages are flexible towards short term rental, but this will be at the discretion of the small print. The same can be said for landlords insurance, do not cut corners. You will be required to take out a specialist landlords buildings insurance which is different to your standard home-owners insurance namely, the property will be occupied by a tenant.
So the mortgage is in place, the property is correctly insured. What next? You need rent and a tenant. The rates at which you set the rent will be dictated buy your outlay and the current market rate. Finding the right tenant does not have to become a lottery either. Many first time landlords often find tenants from amongst their friends, colleagues and associates. Others will seek a high street letting agent and private landlords looking to reduce their letting costs, would use online letting agents.
Whoever your tenant is, friend or stranger, it is in your interest carry out a credit check. The rental market calls them tenant references. It will help you find out that they are who they say they are and importantly that they can and are willing to pay their rent.
Landlords must then consider deposits, appliances, safety regulations and general upkeep. We will be looking into these next so stay tuned!