Perhaps you have inherited a ‘spare’ property or moved in with your partner and now you have a second home. You are wondering whether to sell or rent your inherited property and have become an accidental landlord.
Not only owning an empty can attract inflated council tax rate which can be as much 200% of normal rate, it becomes the target of thieves, vandals and squatters who can vandalise your property.
Therefore, it makes sense to be decisive on whether to rent the surplus property or sell it quickly.
We’ll cover pros and cons of renting and whether selling your second home now is a good idea.
Table of Contents
Pros of renting a property as a landlord
Being a landlord isn’t easy or for everyone but if you are committed, have a bit of time on your hands, understand the latest legislations and your tax position allows you, it can be a rewarding career. The pros of being a landlord include:
Additional rental income
After paying for maintenance and management costs, the rent can leave with a monthly profit that can be additional spending money for you. Just make sure your tax liability doesn’t exceed your rental property since Section 21 changes have come into effect.
Capital growth over the long term
Property market can go up as well as down but if you hold on to it for long term say 20 years or longer, you are likely to see value increase.
Property is one of few assets that can give you income and capital growth
Property like shares is one of the very few assets that can give you both income and capital growth if you hold on to it for the long term.
It is also most illiquid meaning that you can’t sell your property tomorrow if you need a quick sale – in the best-case scenario, it could take two weeks with a genuine cash buyer like Property Saviour.
Cons of renting a property as a landlord
Renting a property is become less profitable than it used to be. With increased taxes, the profitability is lower. We will review cons of renting a property:
- Tenants tend to treat rented properties not as respectively as they would if they were their own homes. With ongoing maintenance costs and if property is empty between lets, you’d still be paying out council tax, insurance, and mortgage. Each time a tenant moves out, you’d have to repaint, deep clean the carpets before reletting it – not to mention additional management costs of finding a tenant!
- If you have a demanding job that involves working under pressure or long hours, then do you really have the time and money to deal with the dreaded call from your agent/tenant that your boiler has broken down?
- If it is an inherited property, then are responsibilities for tenants divided between the beneficiary or is one person their single point of contact?
- While rental income provides monthly cashflow, it can be taxed at 40% if you are a high-rate taxpayer, and this means that by the time you have paid for any damages/repairs, letting agency fees and mortgage there’s hardly anything left?
- How good is your letting agency’ s vetting process apart from a simple credit check? Do you have the time to vet the tenants and ensure that they pay rent on time?
- Does your inherited property meet current legislation?
If multiple siblings own the property, they may have different priorities for example one of you wishes to buy a property and isn’t interested in receiving monthly rent. Another may wish to help their children through education or pay off their mortgage. Do you have the funds to be able to buy out their share?
Being an ‘accidental landlord’ is an expensive hobby and won’t get you the returns you had hoped for. If you don’t want to let your property, and we don’t blame you, selling could be a viable option.
You may wish to pay off your mortgage, settle your debts or start a new business. Whatever your reasons for selling a second home, Property Saviour are here to help.
How to sell a second home without paying tax?
You can’t avoid paying tax. It is best to speak to an accountant before selling your second home.
Can I let my house and buy another?
You can rent your home however, there maybe a tax implication as section 24 tax is applied to your rental income turnover and if you are a high rate taxpayer, you could end up giving away almost half of your rent to the taxman. When you are buy a second home, you will end up with a higher rate of stamp duty.
Can I sell my second home to my son?
You can however, if transaction is deemed to be under-value then you are going to get an inheritance and capital gains tax bill from HMRC.
Can I sell a second home and not pay capital gains?
Unless you are a politician or a billionaire, you won’t get away with this. You will end up with a huge capital gains tax and possibly inheritance tax.
When to sell a second home?
Whenever it suits you. We will buy it for cash.
What to do with a second home?
Sell it or rent it. Selling it means no hassle from tenants and re-invest the cash as you see fit.
Renting vs selling your house
Selling your second property means that you can release all equity tied up into your home and the funds can be distributed amongst beneficiaries. If you are the sole owner, you can use the funds to do as you wish – spend it, treat yourself, go on a holiday, pay off your mortgage and debts, help children with education or put down a deposit for their first home.
You won’t have to rent a property, high turnover of tenants, refurbish of property or deal with eviction.
You can have the money in your bank account in 2-3 weeks. There are no estate agent fees as we will buy your house ‘as it is’. We will also pay £1,500 towards your legal fees. Our guaranteed offer means the price we offer is the price you get.
Why not give us a call today to see how we can help?
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
