Despite the changes in the property market and the slowing down of sales, the lettings market can only be described as buoyant.
Properties are inundated with requests for viewings from tenants within minutes of launching to the market, sometimes receiving up to 100 enquiries per property. Clearly, there can be only one tenant for each property, so this is leaving countless families disappointed and still frantically searching for somewhere to call home.
The demand has far outstripped the supply of available properties in the private rented sector, which has, in turn, caused the rental rates for those properties to rise.
So could renting be the answer for you rather than selling?
As the property market rose post-pandemic, many landlords decided to cash in and sell their investment properties. The rising value of the property meant that the capital growth of those investments went way beyond anything that these landlords had been expecting, and perhaps the allure of a cash lump sum was just too tantalising to pass up.
But, because of the high purchase prices, there were far fewer new landlords to fill their shoes. Properties were sold to homeowners, not landlords, because the rental yield and return on investment simply don’t stack up like they used to.
And so, thousands of properties were removed from the private rented sector, leaving lots of tenants without many options. It is a lot like musical chairs, and each time the music stops, a chair, or in this case, a metaphorical property, is removed from the game.
But as the market for sales begins to slow down a little and the chaos of open viewings and bidding wars abates, perhaps there is an option for you to rent out your property rather than sell it?
Of course, this will only work in certain situations and will not be an option if you need to realise all of your equity from selling your property to purchase another. But this could be the answer you’ve been looking for in some specific scenarios. You could be sitting on the key to unlocking long-term wealth and additional investment income you might not have considered.
After the credit crunch in 2008, there was a rise in what became known as ‘Accidental Landlords’. These were property owners that needed to vacate a property or ended up with a spare house through relocation, inheritance or perhaps the merging of two families. Rather than trying to sell those houses at a reduced price, the owners opted to hold onto the property until the market value recovered, so they chose to rent it out instead.
This solution helped many people and bought them time, allowing them the space to work out what they wanted to do for the best when leaving a property empty was simply not an option. For many, it even gave additional income at a time when this was definitely needed. And the result was that many new landlords could dip their toes into property investment, opening the door to go on and purchase more properties and build a portfolio for their and their children’s future.
The market today is not in any way replicating the doom and gloom of 2008, we are simply seeing a slowdown to a more steady and normal property market, but perhaps you could take advantage of the frankly hectic rental market to enable you to hold onto the property whilst the market settles.
The ideal scenario is that the property generates more income from the rent than it costs to keep, and any profits come back to you. Of course, you mustn’t forget about taxes payable on these profits, so it is advisable to seek professional advice as everyone’s tax situation is different.
This may be somewhat unknown to you but don’t panic. A good letting agent will be able to handle all elements of the rental for you and manage everything day-to-day so you can simply move on with your life and reap the rental rewards.
If you think you can move on without selling your property and want to learn how to rent the property out instead, contact our team of property professionals today.
