Tag Archives: renting

Tom WIlls City Home

Today’s guest post is by Tom Wills of City Home, the buying and renting property specialists based in Leeds. When Tom isn’t writing about all things property related he enjoys renovating his own home: his first!

Although the housing market is slowly improving, in many places, it’s still a fragile state of affairs. Those who are looking to sell might still find it isn’t as easy to find a buyer as they had hoped. Initiatives such as Help to Buy are aiding first time buyers to get their deposit together, it’s worth considering renting as an alternative path in the property market.

Renting a property can be a sound financial investment. If it’s possible and you can afford a new place without having to sell, then renting is great for supplementing your income, alongside having other inherent advantages. Such as:

Income – this is one of the main reasons that people get into the property renting market. As a long-term investment, property has always been a good field to get into. Over time, you can really begin to see the advantages.  For example, increasing the rental price (competitively of course) means you can continue to pay for the mortgage, whilst potentially being able to make a small profit.

Capital growth – if you’ve had your mortgage for some time (say a few years), then more payments can be applied to the principal amount, allowing your overall amount to be paid back quickly. You might find that you could end up owning your property outright faster than you originally planned.

Tax benefits – as a landlord, you are eligible for several tax deductions. Things like repairs, interest, expenses, and depreciation of items used for the property can theoretically fall under deductible tax.

Of course, there are several factors that must also be taken into consideration:

Empty Property – if for some reason the property is unoccupied, say due to having to evict problem tenants, you may find yourself paying mortgage on an empty property.

Maintenance – as the owner, you are responsible for ensuring the property is liveable. This means regular maintenance and upkeep. Repairs might have to be made from time to time, adding to your outgoings.

Problem Tenants – you might find there are issues with tenants. They may start to refuse paying rent or cause avoidable damage to your property. Unpaid rent, fees and repair costs will of course have an adverse effect on your income and perhaps even the value of the property. This disadvantage can be avoided however with a proper and in-depth screening process when it comes to choosing your tenants.

If you feel that the advantages outweigh the negatives then renting out your property might be just right for you. 

Visit the City Home website here: http://www.cityhome.co.uk/

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I had a call today from a client of ours who is considering all his options, and wanted to ask my advice.  He is currently building a home in Greece, and having invested heavily, needs to start recouping his investment from his current home.  His original plan was to use the funds from the sale of his family home to finish his and his wife’s dream home in Greece.  However, 18 months later, and his house is still for sale.  So he wanted to know, “Should I rent it out instead?”

There are merits and demerits of renting your home out, and speaking as a landlord myself, here are some points to consider before taking the plunge:

  • Becoming a landlord is not a short-term fix.  You need to commit to it for at least 3 – 5 years in order to fully realise the benefits and avoid losing financially;
  • If yours is a unique home, perhaps period and/or rural, you may find your target market to be very limited: tenants are often looking for convenience and practicality, which your home may not offer.  Therefore the rent you set needs to account for this;
  • As well as convenience, tenants nowadays want all the mod cons: not only will they be looking for a property with contemporary kitchens and bathrooms, you’ll be expected to provide good quality white goods too; dishwasher, washing machine and often a tumble drier are all considered necessities by today’s tenants;
  • Allow at least 10 – 15% for maintenance costs, and also repair and renewal costs for the end of the tenancy.  I write this on the day that I’ve just had to write out a £2000 cheque for a new boiler in one of my properties – ouch!  Most importantly, do not expect to receive your home back at the end of the tenancy in a fit state to try to sell it; you’ll need to invest several thousands of pounds in replacing the carpets, repainting the walls, renewing any worn out fixtures and fittings, and getting the garden looking its best again.

As you can see, there are quite a few factors to take into account before signing that tenancy agreement, so think carefully before you do.  If you don’t want to become a professional landlord with all that it entails, focus on getting your home sold instead.  Ultimately, you’ll be glad you did.

If you’d like my help to sell your home more effectively, please answer a few short questions here and if I think I can help you, I’ll be in touch.