As transactions dip while buyers who aren’t in a hurry to move sit on their hands and wait to see what the coming months bring, some would-be sellers are renting out their homes instead.
Rather than accept a lower offer from a buyer, if indeed one is even on the table, they are taking advantage of rising rents as the exodus in landlords from the sector puts the squeeze on rental supply. The average rent paid in the private rented sector is now at a record high, according to the latest survey from Homelet, with every region in the country seeing an increase in rents in July. The average rent is now £1,243 per calendar month.
Landlords are facing multiple challenges, as rising mortgage rates, increasing taxation and further compliance requirements heap on the pressure. A recent survey by Right move reported that 16 per cent of properties currently for sale were previously available to rent, with many landlords particularly concerned about properties with lower EPC ratings ahead of changes to EPC requirements from the government.
This exodus from the market presents opportunities for experienced landlords wanting to expand their portfolios as well as those homeowners who are struggling to sell. Rental properties are letting quickly, despite rising rents, so void periods are not the issue they may have been in the past. Tales of tenants competing to rent properties are commonplace.
If you can’t or don’t want to sell your property at the current time, it’s worth exploring the other options available. These may include turning the property into a holiday let, although there may be regional restrictions which you need to be aware of, restricting the number of days a year you can rent the property out if you don’t have planning permission. Holiday lets also need to be fully furnished and available for at least 210 days of the year. Owners should also watch out for a premium on the council tax in some areas, as well as factoring in maintenance and running costs.
If you are considering renting out your property and have a mortgage, you will need to get consent to let from the lender which may involve paying a premium on the rate or moving onto a buy-to-let mortgage. This may require remortgaging to another lender so it’s worth seeking advice from a broker such as AWS Private Finance. It’s not necessarily just about opting for the lowest rate – each lender has its own criteria which you will need to meet, so advice on this is crucial.