There has never been a stronger lettings market. Demand has reached an all-time high with those struggling to cement a foot on the property ladder looking to the rental sector to find their next home.
There has also been an increase in people who have sold their home and want to rent before deciding on their next purchase.
In these uncertain times those who would normally buy property are now renting as they are unsure of what the housing market will do.
The result is a demand for rental properties of all types, though the most popular are two- and three-bedroom terraced houses and three- to four-bedroom semis. Rents typically range from £600 to £695 per calendar month for a terraced house and £695 to £850 for a semi-detached. They offer affordable yet often spacious accommodation and appeal to a broad market place including singles, professional couples and families.
The good news for those with rural property is that the rental market has seen a real surge in tenants looking to move away from the hustle and bustle of towns and city centres. Fortunately, there has been a real surge of large properties, such as detached family homes, farmhouses, country cottages and even large estates, up for let.
Many of these homes have been for sale and not sold and so their owners have decided to generate a rental income rather than a sale and it is a healthy, consistent return. It is not uncommon to see larger properties ranging between £1,500 and £3,000 per calendar month successfully let.
The rise in those choosing to let rather than sell has seen “reluctant landlords” go on to rent out their property on a permanent basis as they realise how profitable the lettings sector can be. In many cases, these people go on to buy more properties to let, adopting a fresh philosophy of “better to have your money in property than in the bank”.
However, there are pitfalls and it is vital that landlords follow these guidelines:
Choose an ARLA (Association of Residential Lettings Agents) registered agent. These agents have to adhere to certain codes and bylaws and will ensure that every step of the lettings process is carried out to the correct standard. Arla registered agents also have to be trained to a high level to reach accreditation.
Make sure that all tenants are fully credit checked and referenced and, where possible, meet your tenants to check them out personally. It can often help to have an understanding of what your tenants do for a living, why they are renting and to grasp an idea of how long they are looking to rent for. Finding the right tenants will reduce the risk of rent default and damage to your property.
Make sure that you and your tenant sign a tenancy agreement. Typical agreements are Assured Shorthold Tenancy Agreements and are usually for a minimum period of six months. Having a signed agreement allows you to serve the correct notice should you need your property back in the future.
Make sure that you have a professional inventory and schedule of condition and make sure that you take a damages deposit and that it is lodged with one of the accredited government bond schemes. It is important to know that you have some insurance should your property be damaged during a tenancy.
Ask about rent guarantee insurance – these policies are designed to help you pay your mortgage should a tenant default on rent payments.
Make sure you are not paying too much to an agent for finding a tenant. Typical fees should be about 50 per cent of the first month’s rent for a tenant-find service and between eight and 12 per cent per month for a fully managed service.
Richard Chapman is the head of residential lettings at estate and letting agents Beadnall Copley. Contact: 01423 505458 or email email@example.com.