There has been plenty of news around about first-time buyers having trouble getting themselves onto the property ladder and it seems as though this is having a negative impact on the housing market as a whole.
The Association of Residential Lettings Agents (ARLA) has put out some research they did about the increased number of homes coming onto the rental market. It would appear this in part due to the fact that they cannot be sold in an increasing number of parts of the UK. This is leading to a rise in the number of ‘reluctant landlords’ who are being forced to let their properties instead.
ARLA president Tim Hyatt said “Letting a property is an excellent way of generating consistent income from your property, if the correct approach is adopted by prospective landlords. However, lettings is an unregulated industry and there can be pitfalls for both landlord and tenant, including loss of monies. While we are, of course, happy to see an increase in the number of landlords, it is vital that every landlord, reluctant or keen, seeks expert advice before embarking on a rental arrangement.” he also said “In particular, we would advise anyone considering renting or letting a property, to consult a licensed ARLA member. Licensed agents have to adhere to a strict code of conduct, and must have a number of consumer protection mechanisms in place, meaning that if things do go wrong, there is a way to seek redress”
Of 47% ARLA member agents surveyed during the third quarter of 2011, some had reported a rise in the number of “unplanned” lettings from home owners unable to sell their property, or those holding off until a higher price is achievable decide to turn to the property rental sector. This figure is up 7% from 40% at the beginning of the year.
The trend was noticeable in England, in both the North East with 67% and North West with 62% where a higher proportions of respondents reported an increase in rental property coming onto the market which could not be sold.
This increase is not only limited to England, with more than 60% of members in Scotland, Wales and Northern Ireland also noting an increase. In contrast, Central London had the lowest figures with only 17%, where the housing market has not been suffering so much. According to ARLA, this means some homeowners will be turning into landlords reluctantly, for many it will be their first time. ARLA agents reported that most reluctant landlords are likely to bring to the rental market, detached and semi detached houses, while least likely are studio flats.
ARLA advises people who are planning to let a property for the first time to notify their mortgage and insurance providers as the terms of both may need changing as the use of a home will be changed from a residential to a rental property. They also advise conducting research about the local rental market to ensure the rent is set at a competitive but also realistic level. A detailed inventory that includes the condition of features and fittings of the property as well as its contents, making a clear note of any wear and tear will need to be done. With the mass availability of digital cameras, taking photographic evidence is also an option. Ensure that the final documentation is jointly approved by you as the landlord, and your tenant. If you are becoming a landlord yourself for the first time, it is advisable to get professional advice.
The mistake a lot of people make when getting a home ready for letting is they decorate it to their taste. The need to remember that the property is no longer their home, it’s someone else’s home and this needs to be taken into account when making decisions regarding the decoration and furnishing in the property as not everyone will have the same taste.
For some landlords, managing the property themselves is something they are happy to do, but for others, especially those without the time or if they are new to this sector. Employing a management agent to help you find and vet tenants, arrange documentation, and manage the property. If you do plan to use a letting and/or management agent, always use a regulated agent (such as an ARLA member) to ensure client money protection. This will secure both your money and that of your tenants and will give access to a redress scheme should it be required.