Moving on and moving up by letting your home and renting a bigger house
Letting to let is helping desperate sellers to get moving. Sharon Dale reports on a new answer to an old problem.
WHEN Karen Appleton bought her two-bed terraced house in Bingley six years ago, she was thrilled to be on the property ladder.
But now she’s a mother with a 16 month-old child, she has begun to resent what she calls her former “bachelorette pad”.
“It’s too small and there’s baby stuff everywhere,” says Karen, a risk management consultant, who has been trying to sell the £110,000 house for a year.
“I used to love the place but now it’s getting me down. What I really want is a bigger house with a spare room and a garden for my daughter, but there doesn’t seem to be much chance of me selling the house to a first-time buyer at the moment.”
Rather than lose money by selling her home at a cut price, she has decided to let it out and rent a bigger place herself.
This letting to let solution is one being used by a growing number of desperate sellers stuck in homes that no longer suit their needs.
“It seemed like the best idea. I’d like to sell my house and buy a bigger one but not at a loss,” says Karen.
After consulting Dacre, Son and Hartley’s lettings department she is doing some minor repairs before advertising her home for rent.
The costs of letting a property for the first time also include an electrical safety check costing between £100 and £150, an annual gas safety check, which should cost between £70 and £100.
Properties to let also need an energy performance certificate costing about £75, but if you have already had your property for sale you will already have one.
Voids, the periods between one tenant leaving and a new one moving in, and maintenance should also be factored in when calculating finances.
The cost of finding a tenant is relatively small if you do it yourself via an advertisement in the local newspaper, but if you don’t want the hassle of phone calls from would-be tenants followed by reference checking, not to mention the ongoing management of the property then hiring a professional letting agent is an option.
Their management fees are typically 10 per cent of the rental income.
You should also inform your mortgage provider and check your buildings insurance before letting. You will also be liable to pay tax on any rental income though you can offset mortgage interest and other costs.
All this preparation hasn’t put Karen off. She says: “With the safety checks and repairs, it will be £500 to get the house ready. I’ve been told I should have no problem finding a tenant, then the rent should just about cover my mortgage.
“I’ll be paying up to £200 more in rent for a bigger house than I
I should have no problem finding a tenant, then the rent should just about cover my mortgage.
do in mortgage payments so I will have less disposable income, but it’s worth it to me.
“I’m hoping to let my own house long-term, and maybe even keep it as a pension pot. Meanwhile, I will try to save for a deposit to buy a bigger house of my own.”
It’s a strategy being employed by others who have been unable to sell their homes.
Kathryn Burton, of Linley and Simpson lettings agency in York, says: “It’s something we are seeing more of. We have a couple at the moment who bought a house and realised it was the wrong location for them. Rather than sell, they are letting it out and renting in Harrogate.”
Julie Craven, head of residential lettings at Dacre, Son and Hartley, has also seen the letting to let market substantially increase during the last year, and she is a prime example of how it can work.
“Becoming a landlord and tenant at the same time is definitely on the increase.
“Those who can’t sell for the price they want, but who really need to move, are finding that it is a good solution,” she says.
“I am dealing with a couple who are divorcing and they are planning to let their large home, go their separate ways and rent smaller houses until the sales market recovers.”
Julie and her partner both have cottages, which they have let out so they can rent somewhere bigger together.
“Renting can be a good way of getting a bigger and better home for less.
“We are renting a fourbedroom home, worth £300,000, in Bingley, and the rent is £700 a month. If we had a mortgage on a place like this it would be much higher. I think we’re getting twice the house for half the money.
“People think renting is dead money, but we don’t see it like that.”
Rents vary depending on area. Two-bedroom homes range from £400 to £550 a month. A family-sized house ranges from £650 in Keighley to £1,000-plus in Harrogate.
Figures show that the rental market is booming. Tenant demand is high, rents are slowly rising and the trend looks set to continue.
“I think more people who can’t sell will decide to let and rent somewhere else,” says Julie Craven.
“I don’t see any problems with doing that for a couple of years. As far as I can see, everyone’s a winner.”
Church Farm, Barlby, a four-bedroom farmhouse, is to rent for £1,250pcm; contact Linley and Simpson, 01904 611722. This twobedroom apartment with parking at Crownwood Lodge, Otley Road, Baildon, is £525pcm; contact: Dacre, Son and Hartley, 01274 515766