The Truth About Renting or Selling Your Second Home

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.

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 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 needed a quick sale – at best case scenario, it could take two weeks with a genuine cash buyers like Property Saviour.

To Let board outside a London property
Letting a property sounds easy but what happens if your letting agent picks 'bad tenants' who trash the place?

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.

Why is selling a house better than renting?

Selling your second property meaning 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 renting a property, high turnover of tenants, refurbishment of property or dealing with eviction.

You can 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.