With house prices continuing to slow, home owners are finding it more difficult to sell, and are having to accept low offers to tempt buyers. Letting your property may be a good alternative.
Selling your home is not easy at the moment. With lenders being more choosy about who they offer mortgages to, and a swing to a buyers market, those looking to sell their homes are facing considerable challenges. These difficulties are driving house prices downwards. According to the Halifax, house prices fell by 0.3% in February.
Even if you find a buyer for your home, the current market conditions make it very difficult to hold a chain of buyers and sellers together. With house prices falling, there is a constant risk that those at the lower end of the chain will be tempted by new properties coming onto the market which offer increasingly better value, as asking prices tumble.
We know of several chains which have collapsed recently because the first time buyer found a better property for the same money elsewhere.
Have you considered letting your house instead?
You may not have noticed that as the house market falls away, the rental market bursts into life. People want to sell their houses and move into rented accommodation in the hope of picking up a cheaper house in a couple of years time.
This is creating a strong demand for the rental of family sized houses. In fact indications show that houses with three or more bedrooms are becoming easier to let than the multitude of one and two bed flats available in town and city centres.
Whereas it can take three months to sell your house, as long as the chain holds together, letting your property can take only a few weeks.
You become a tenant as well
So if it is easier to let your property, rather than sell it, where do you live?
The answer is that you become a tenant as well. Whilst it might not suit everybody, it means that you can make the move to a new property much more easily than if you were selling and buying.
Paying rent to someone else may seem crazy, but remember that someone is paying rent to you for your property. You also do not have to pay for a HIP, stamp duty and legal costs associated with house sales and purchases.
You may also live in a better rented house than you could afford to buy – something that many property owners don't realise.
Falling house prices make letting more attractive
As we've seen, a falling property market increases the demand for rental properties and that almost certainly includes your house that you cannot sell.
You could also rent a better property than you can buy, with much of your rental costs being met by the rent from your own property, remembering that tax is due on any profits that you make from your rental income.
There are pitfalls that you should consider too, such as your capital is tied up with the home that you are letting, the landlord may want their property back at the end of the tenancy agreement forcing another move. Also some people just don't like the idea of being a tenant living in someone elses house.
If the pros of letting out way the cons of renting, then becoming both a tenant and a landlord could be the answer, however your personal circumstances and financial situation have to be taken into account to ensure that this is the best strategy for you.