Free Book Excerpt – Chapter One

Can’t sell? Then Let!

Many people in today’s market are having trouble finding a buyer for their property, let alone get a price they are happy with. Because of this, more and more people are using letting agents as an alternative. Many are taking the view that if they sell now, they may have to take a reduced price, but letting for a year or two – until the market picks up – means they won’t have to.

Letting your current home and renting or buying a new one allows you to move on to the location and type of property you are looking for. You can then wait until the market recovers.

Pensions and investments

Some people, having let their property are deciding to hold onto their property as a long term investment. They may supplement their pension fund or decide to build a portfolio of properties.

The good news for owner – occupiers

There’s some good news for owner-occupiers thinking about letting their property. As their properties will usually be of a much higher standard then the majority of buy-to-let property on the market, they’ll get a big head start on much of the competition. They may let faster, attract a better class of tenant and possibly achieve a premium on the rental.

How long do I have to let for?

When you decide to let your property out, the minimum you can normally* let for is six months.
After this the lease can be renewed for another six months, or longer. But if you need flexibility, you can, with the tenant’s agreement, renew with a Periodic Tenancy. This would give you the right to give the tenant two months notice to leave the property.

*Short lets are possible but are more appropriate in holiday areas, can be seasonal and require much more intensive management.

Let to Buy

Due to the popularity of people letting out their home in order to buy another, mortgage lenders have introduced specialist products tailored to this way of doing things. A “Let to Buy” (as opposed to buy to let) mortgage works by allowing you to borrow money to buy a new home to move into, while your existing residence is let out to tenants.

Many let to Buy mortgages require a deposit, although some lenders will allow a deposit to be released from a property through a re-mortgage or secured loan.

Let to buy mortgages allow you to rent out your existing property whilst buying in a completely different area of the country. You can retain your property as an investment and have your mortgage paid by tenants. The rules of let to buy lending are different from buy to let, and can be more flexible and require less equity.

Selling

When you decide it is time to sell, give your tenants as much notice as possible. It is not a good idea to try to find a buyer while the tenants are still living there. Not only is this a hassle for the tenants but you’re unlikely to get the best price. You’l have a much better chance once your tenants have left and you’ve presented the property well.

Conclusion

Letting can be a good way to enable you to move into more suitable accommodation whilst ensuring you don’t make a loss by selling in the current market. There are even mortgage products that can allow you to buy a new property whilst retaining your old one as an investment. But please be sure to take professional advice on this from a qualified mortgage advisor.

Claim your book now or read Chapter Two »