The Association of Residential Letting Agents (ARLA) has noted a rise in the number of homeowners who are now becoming ‘reluctant landlords’ by renting out their properties because they are unable to secure a sale. The organisation said that in the final quarter of 2011, almost half (47 per cent) of its members witnessed an increase in the number of rental properties coming onto the market because they could not be sold, a considerable increase from the 18 per cent recorded a year before.
Reluctant Landlords Should Be Aware Of Mortgage Changes
Although for many property owners, becoming a short-term landlord can be a viable way to make money from a vacant house, ARLA warned that there are several things to take into account before they proceed. Home insurance from Castle Cover, or whoever provides your policy, will certainly need to be changed to account for the fact that the policyholder is no longer the main resident of the property. Similarly, the mortgage provider will need to be notified in case the terms of the loan need to be changed: some will offer an alternative or revised mortgage.
For short-term lets, ARLA recommended pre-agreed utility bills with tenants to avoid problems with payments later down the line. It is often best to set a price to cover costs at the beginning of the rental period, even if this means you end up paying some of them yourself – it’s preferable to chasing ex-tenants for unpaid bills.
Inventories Are Important
The association also said it is worth giving your property a thorough look-over before the tenancy begins to make sure everything is clean, tidy and in working order. This is also a good time to prepare an inventory of the property: the inventory should be a full list of all the furniture, fittings and valuable items in the property, including their location and the condition they are in. Take photos to give yourself extra protection in the event that you have to pursue a damage claim against a tenant.
When it comes to payments, ARLA said; “Offering a variety of payment options can help to attract tenants, but this should be used with caution.”
How To Take Payment
Taking card payments involves some degree of risk for short-term landlords, and you should always ensure that funds have been cleared prior to the start of the tenancy. Additionally, first-time or ‘reluctant landlords’ should take the time to meet prospective tenants and follow any references they provide, and take them on a tour of the house to explain how everything works.
ARLA operations manager Ian Potter said:
“It’s likely that many of these reluctant landlords will be attracted by the flexibility of a short-term let. Renting a home on a shorter basis can be a good option for anyone who has found a buyer for their home, but not found the right property to buy themselves.
Equally, for anyone ‘testing’ a new area before committing to move there, or working away from home for short periods, renting can offer more stability and home comforts than a hotel.