Despite a fantastic sales market over the last eighteen months if not more, have you considered taking advantage of the booming rental market and letting your home out instead? If you don’t actually need to sell up, but you need to move, then you could benefit from becoming what is known as an ‘accidental landlord.’
Many landlords are not in the lettings industry through choice. Often the situation arises due to a change in circumstance such as relocating to a different area for a job, or moving in with a spouse. Obviously, the rental income pays the mortgage – and often there’s a little extra spare change that you can put away for a rainy day for example.
The results can be quite rewarding. The lettings market in and around Chichester for example continues to deliver excellent results for our landlord clients, particularly family homes offering plenty of outside space which are highly sought after at the moment. We have recently let a number of one to five bed homes between £650 and £3,500 a month, with demand very much being fuelled by tenants selling their properties in London and needing somewhere to rent for a year as they struggle to find something to purchase in West Sussex. However, we have also seen a rise in young families and professionals looking to leave urban life for the countryside, where they can work from home and enjoy the local lifestyle. Such houses are flying off the shelves so fast that by the end of the first day of being live on the portals, we are back to back with viewings. Recently we let a two bed house for £1200 per month on the very first viewing/day, and another for £1,550 per month within a similar time frame.
What’s interesting however is that tenants are also seeking Chichester city itself once more. According to the Rightmove Rental Tracker, high demand and properties being let out so quickly for city locations as a whole, have led to rents rising at the fastest rate ever recorded, up by 8.6% on a year ago! Demand for flats has almost doubled as well – an increase of 95%, with three and four bed flats seeing the hottest competition. Meanwhile, the south east as a whole has seen average rents across the year increase 8.5%, with an increase of 3.6% over the last quarter.
It’s not just high yields landlords can benefit from, however. Capital growth is just as vital for success, and our part of the world continues to be one of the highest performers in the country. Rightmove claims the south east has seen house prices rise 9.1% annually, with it taking just 37 days on average to sell a property. Whilst house selling weather forecast, PropCast, has found buyer demand in and around Chichester is very strong, with 60% of homes currently for sale under offer or subject to contract, indicating it’s a very hot sellers market. Obviously we cannot predict what the future holds, but considering our local property market has survived a global pandemic and performed better than what anybody expected, we’re pretty confident that West Sussex will continue to appeal to property buyers for the foreseeable future – which only reflects well on prices!
So all in all, it’s clear to see why now might be the best time to become a landlord… Here are a few other things to think about should you wish to become one:
- You’ll need to let your mortgage lender know that you will be renting your home out. They will either consider a Consent to Let for a short-term solution, or they will switch you to a buy to let mortgage for something more long-term
- You will have to pay income tax on your entire rental income, but you can claim 20% back as tax relief
- You’ll need landlord insurance which covers things like rental arrears and damage
- There are various rules and regulations you will need to adhere to
- You should prepare your home for rent if you want to maximise your rental potential. This includes things like removing all of the furniture (or at least removing anything valuable or sentimental should you wish to offer the property furnished), making minor repairs and sprucing up your rooms, garden and front of the house with a lick of paint
- Use a letting agent to find you a tenant, as you’re more likely to find a good one that has been vetted and has good rental payment history. They’ll also create a contract for you and organise an inventory
- Consider using a managing agent to take away the stress of keeping on top of everything. Benefits include longer tenant retention, legislative peace of mind, maximising rental income, quick response times to tenants, property inspections and managing the check out process.
If this sounds like something for you, do get in touch. As well as offering a lettings management service, Hancock & Partners is also an estate agent too, so we would do everything for you during your tenancies and update you with what’s happening in the sales market for when you’re ready to sell again.