Can't sell your home? Must Read: 10 Rules
Paul Robertson, Business Development Manager, PAD4U, Letting Agents Manchester, writes:
If your house won't sell, how easy is it to rent?
1 Study the local market
“Sellers thinking of renting their home because of a difficult sales market need to make the decision very carefully because the main choice a professional landlord would have to make to maximise rents - the choice of property - has already been made,”.
2 Talk to your lender
If you do decide to go ahead, and if you have a mortgage, you need to clear it with your lender (and also to notify your insurer). In many cases, the lender will not require you to switch to a buy-to-let loan, but this is not always the case.
3 Do your sums...
“Once void periods and overheads are included, you'll need to aim to raise rental income of around 125 per cent of your mortgage payments to make renting your home a sensible option,” . Landlords face other costs too, such as compulsory inventories, gas and electricity safety certificates and minor repairs.
4 ...and try to be realistic
Do not be greedy: remember that the enemy of every experienced landlord is not a slightly lower monthly rental income but long void periods in which the property is not rented at all. Many new landlords miss out on opportunities to let their property by refusing to budge on the asking rent.
5 Head must rule the heart
You have to look at the property like a business and run it as such.
6 Think about your tenants
Although you cannot choose a property to fit in with local demand as a traditional buy-to-let investor would, you may be able to make adjustments. “In a busy student town, for example, bedrooms are key, and you will be able to maximize rents by converting any extra space or a second reception room into another bedroom.
7 Spend some money on it
Your plan to rent out your property may be for the short term, but you may need to make some changes, particularly the decor, if you want to attract tenants. Don't scrimp on fixtures and finish. High-quality items will last longer, attract better tenants and allow you to optimize rents.
8 Follow the rules
There is a host of legal obligations and regulations to follow. You need to ensure that the furniture, gas and electricity systems comply with health and safety regulations and that your tenants' deposit is insured and protected by a tenancy deposit scheme. If you are renting out a large property to five tenants or more, you may have to apply for houses in multiple occupancy license from the local council. The rules are complex: go to www.communities.gov.uk . Remember that from October all landlords will have to have an energy performance certificate available for tenants to see. Familiarize yourself with the tax rules.
9 Pick tenants with care...
Failure to carry out proper checks on tenants can be costly. Pad4u offers a tenant check that includes bankruptcy and county court judgment searches. Once your tenants are in place, treat them as clients. Respond quickly, politely and effectively to their requests, especially when something has broken down.
10 Always use a lettings agent
If you know that you will not have time to vet tenants and manage your property effectively yourself, consider a lettings agent. Management usually costs about 10/12 per cent of the rental income per annum, but is often well worth it. If you are unable to deal quickly and efficiently with your tenants' demands, they won't stick around. Management costs are tax deductable! Use a professional, less headaches, more rent, less tax. Get it wrong and it could cost you thousands! False economy is the hardest way to learn.