The pros and cons..
It can be extremely frustrating not being able to sell your home, you may well have thought about renting it out instead. Of course, doing so officially makes you a landlord and this can generate a big impact on your life.
Selling or renting your house
As we outlined above, it may be that you simply have no choice and have to rent out your home.
According to research, as many as 30% of landlords in the UK can be classed as ‘accidental’ – labelled so because the decision to rent out their property was forced on them rather than being a conscious choice.
Renting out your home privately can bring with it excellent rewards, but it also brings a lot of hard work.
Whether you sell or rent your house, there are pros and cons to both, so let’s take a look at them…
The pros of renting out your home
- Renting out your property when it won’t sell could mean you are able to take your next step on the property ladder
- A good tenant will pay their rent on time, meaning an additional income for you, and take care of your property
- As well as rental income, you will benefit from capital growth over the long term
The cons of renting out your home
- You could experience high additional costs to ensure your property meets regulations for private residential lettings
- Tenants could cause damage to your property
- Bringing in a rental income could affect your tax bracket
The pros of selling your home
- You will release any equity that can be used for your next purchase
- The money you make on your home is not subject to Capital Gains Tax
- You avoid the workload that comes with being a landlord
The cons of selling your home
- You could be selling an asset that provides you with additional income and capital growth
- You may have to wait until it sells before you can move on
- You could have an emotional attachment to your home
When renting your property out makes sense
While it’s sometimes difficult to look too far into the future, it really does pay to do so when weighing up whether to rent out your home or sell it.
It’s also key to look at the rental market where you live as what could start as a necessity could become a great financial decision.
Renting out your home can be a great decision when:
- Demand for rental properties in your area is high
- Property values in your area are on the rise
- You are happy to spend to bring your property up to rental standard and make it legally compliant
- You are looking or an additional or replacement income
- You can retain the interest rate and terms on your mortgage as a buy-to-let loan
When selling your property makes sense
Many homeowners consider renting out their property because they see other landlords enjoying huge financial success and want the same.
But the reality is being a landlord is hard work.
A good letting agent will help you to look after your property, but you will have certain responsibilities to your rental and the tenants.
Therefore there could be some reasons to selling your property could be a sensible option; such as:
- You want to avoid the responsibility that being a landlord brings
- You don’t have the finances to update your home to comply with rental legislation
- You need the money tied up in your property to make your next move
Legal obligations when renting out your property
There are a whole host of legal obligations when renting out your property.
They include:
- Providing an Energy Performance Certificate (EPC) with a rating of at least E
- Providing a gas safety certificate
- Fire safety regulations and smoke alarms
- Electrical safety
- Legionella assessment
- Ensuring the property is ‘fit for purpose’
A good agent will ensure all of these issues are addressed
Costs when renting out your property
As well as legal obligations, it’s important to factor in costs you’ll need to soak up while you search for tenants.
These could include:
- Your mortgage payments
- Council tax
- Utility bills
- Service or ground rent charges
Ongoing costs once your property is tenanted could include:
- Your mortgage payments
- Managing agent fees
- Gas safety inspection
- Energy Performance assessment
- Landlord insurance premiums
- Maintenance costs
If you are considering the future of your property Carrick would be happy to offer you totally unbiased advised based on his extensive industry experience on both sides of the fence, so please do call to arrange a highly confidential, no pressure meeting.