To Sell Or To Let - What's The Best Bet?
Despite a much improved property market, the number of property buyers particularly those willing to pay cash for property is still at a low level, especially in certain pockets of the UK where the number of property buyers is at an all-time low.
This isn't because of an unwillingness to buy, but more because even those willing to buy are not able i.e. they cannot get the mortgage required or cannot sell their own property in order to make their next purchase.
Yet, life carries on.
What About Renting Instead Of A Quick Property Sale?
People need to move when they have more children and need a bigger home, or when older children leave and parents look to down size and a million other reasons.
This patchy market for selling has coincided with a much improved picture in the letting market meaning that many sellers looking for a quick property sale are now turning to renting instead as a viable solution.
There are however, some things to be considered first. Becoming an accidental landlord (as it is known) because your property is not selling, can lead to other issues that need to be overcome.
For Example. . .
- If you have a mortgage, you will need to inform the lender that you are letting and they may increase your rates.
- If you rely on rent to pay your mortgage, you must work out what will happen if the tenant does not pay.
- The same applies if a big bill, for example a repair the boiler is required - can you still pay the mortgage?
- Letting a property creates income which the tax man will want his share of, you will need to declare the income and pay your tax, but remember, you should be able to offset many of the expenses as well.
- Lenders may be unwilling to let you borrow money to buy another house until you can prove a track record as a landlord. So, you may have to go off and rent yourself for a time rather than being able to buy straight away.
- You will let under a short tenancy regulations which guarantee the length of time a tenant can stay in place. And so, if the market does improve, or you get a buyer and the tenant is not willing to move out midway through the agreement, you may lose your chance to sell.
- The lettings market is highly regulated and so you will need to ensure the safety of your tenant, that you have a proper agreement in place, that the deposit they give you is protected and much more - all of which can be done by an agent, but they will probably charge you around 10% of the rent that they collect. So, factor this in to your workings.
On the upside, you will receive an income that with todays' interest rates will probably cover your mortgage and give you some additional money, and of course you stand to benefit from any capital growth within the market over the coming years.
So, To Sell Or To Let? What's The Best Bet?
Do your research by speaking to local estate and letting agents to get their view, and take sound financial advice before committing.
It will always be a gamble, but by taking good advice and doing your research, you will be tipping the odds into your favour.