The Benefits Of Letting Property
The advantages of letting property as a means of income.
It is nowhere near as easy as it used to be to get on the property ladder, let alone climbing it to move into a new home. Many people are seemingly stuck in what was designed to be their first home, and are unable to move due to market forces.
However, there are some options available for people within this bracket.
Rather than considering selling the existing property, whilst times are tough and values are relatively low, it may be worth letting the first property out to fund the purchase of a second home.
This option works well if savings have been made, a substantial deposit can be made on the second home and there is equity in the first home.
There are many advantages to letting property in the current climate. At the moment, the rental market is booming, and landlords are in a stronger bargaining position than they were pre 2008.
As such, rental values are at an all time high. With the Bank of England base rate still at an all time, unprecedented low, mortgage rates are as low as they can possibly be. Although some banks have started to increase borrowing rates, the current rates have a long way to go before they hit the same level as they were during the property boom.
The result is that rental yields can be surprisingly high, and a good boost to income. Consider also that when taxing the profits from a rental property, certain expenses can be offset against the income, thus reducing the amount of tax payable to a minimum.
Obviously, success in letting a property depends on the type of tenant which occupies the property. As a landlord, the market is strong and as such requests and negotiations can be made to ensure that the right type of tenant occupies the property.
It is often worth dealing with reputable letting agents who can manage the property on behalf of the landlord. These agents usually take a small fee, which is tax deductible. However, it provides peace of mind that the tenants are vetted correctly, and all necessary checks are carried out. Where there is a failure, this will be on the part of the agent, and as such the landlord will have recourse against a third party.
A reputable agent will always advise a new landlord to consider updating insurances to include buildings, contents and landlords insurance to provide full protection when letting properties out. They will also advise that where a previously occupied home is let out by a landlord, the mortgage should be converted to a buy to let mortgage.
Wesley Gain shares his interest in Letting Property on behalf of Stonier Insurance