Be A Landlord Or Sell A Property

Property And Land

Many homeowners reach a crossroads where they must decide whether to let their property or sell it. Weighing up if becoming a landlord is better than releasing equity by selling is key. This guide examines the pros, cons and alternatives helping you judge which option best fits your circumstances and aspirations.

Weighing Up Being a Landlord

Generation Rent’s growth makes buy-to-let mortgages tempting. As more people struggle or prefer not to buy, demand for quality rental homes continuously rises. Over a quarter of the UK’s private housing stock now sits in the hands of landlords.

Against this backdrop, letting out your existing property or snapping up additional buy-to-lets can seem appealing:

  • A healthy yield and capital growth from the asset make holdings more valuable over time.
  • Surplus monthly rental income contributes towards paying off mortgages.
  • As mortgages reduce each year, net yields rise.
  • Tax breaks, including deductible costs, reduce tax bills for higher-rate taxpayers.

Licencing schemes in Scotland and Wales signal likely England-wide rules ahead too. And as more adopt eco-standards, upgrade costs add up.

Vetting tenants, managing contracts, keeping homes well-maintained and navigating rules all demand effort, time and skill. Using letting agents cuts into income – as do void periods between lets. And if things go wrong, procedures favour tenants over owners.

Reassessing Plans to Become a Landlord

So before rushing into buy-to-let, reflect carefully on the push and pull factors:

Positives

  • Generating monthly rental income from an unused home or additional property
  • Benefiting from any house price growth when selling eventually
  • Saving tax through allowable expense deductions

Negatives

  • Dealing with maintenance, legal compliance, tenant sourcing, moves etc
  • Affording agent fees to outsource admin if stretched personally
  • Funding repairs like boilers, dampness, appliances etc
  • Risks of rental voids and arrears hitting returns
  • Time sink detracting from family, work or leisure

If positives outweigh negatives, research lender criteria including expected rental coverage ratios before viewing homes or remortgaging. If negatives prevail, selling to extract capital for other plans may prove wiser.

What Does Selling a Property Involve?

Selling brings its checklist but ultimately hands back control of your asset. Preparing a house, picking agents, keeping show-ready, negotiating offers, surveying, exchanging contracts and completing sales make up the standard steps:

Pick a Conveyancer: A solicitor oversees the legal transfer, undertakes searches to validate what you sell and ensures funds transfer safely at completion.

Instruct an Estate Agent: Their apps, website portals and database contacts maximise viewing footfall from motivated buyers. Agents should know values and handle viewings.

Prepare the Property: Cosmetic upgrades like painting boost perceived value while removals and deep cleans ensure rooms seem spacious.

Host Viewings: Assuming an agent interface, be flexible on viewing times. Leave when potential buyers visit so feedback reaches agents promptly.

Negotiate Offers: Agents help negotiate if below asking price bids come in. Compromising on price is sometimes needed to secure a sale.

Once terms are agreed, the buyer’s mortgage valuation and legal searches progress. Both parties fix completion dates. The buyer’s funds arrive with the seller bound to hand over keys and vacate on time. A house sold ultimately means achieving ambition for both seller and buyer.

What Alternatives Exist Besides Selling or Letting?

Selling and entering buy-to-let leasing bring contrasting rewards or headaches. But other options also exist between these two poles.

Occasional shortlets via sites like Airbnb enable homeowners to test hosting guests in return for nightly fees without intensive legal commitments. If it goes well, this can morph into a permanent holiday let licencing.

Additionally, flexible ‘rent some, sell some’ models like Rentplus let owners retain 50% equity in a property while leasing the rest long-term to tenants with discounted purchase rights when ready. This middle ground suits those undecided between keeping or selling totally.

Converting houses into multiple occupancy flats or units to then rent also unlocks value. However, councils only grant permission if additions like separate bathrooms and kitchens meet stringent standards.

Ultimately, seeking advice from experienced property professionals helps clarify which direction works best for you, your assets and your financial aims. Gaining insight from several agents, developers, architects or financial advisers allows informed positions before electing to sell property or hold onto buy-to-let.

Key Deciding Factors – Landlord vs. Sell

Projecting whether becoming a landlord or selling is right for you means weighing up personal priorities. Which appeals most – generating income streams or taking profits? Will running properties fit your lifestyle? What investment return would warrant the responsibility?

Likewise, are you ready to sell and downsize or release funds for reinvestment elsewhere? Key factors homeowners commonly balance include:

Control

Landlords manage investment risks like voids and maintenance but relinquish control over assets. Selling converts properties to cash under your control.

Security

Letting provides solid volumes of rental income if sustained. Selling rather brings a one-off capital lump sum.

Costs

Letting requires initial furnishing and licencing costs followed by upkeep bills. One-off disposal fees apply when selling.

Time

Successful landlords immerse heavily in the role. Selling frees up time yet it still takes months.

Taxation

Letting attract allowances like wear & tear deductions against tax. Selling crystallises all capital gains tax obligations at once.

Becoming a landlord favours investors seeking incomes with a solid grasp of legal compliance. Selling assists owners wanting simpler lives or liquidating for other plans.

Reflecting on your financial situation and motivations determines which usually suits you best. It hinges on whether ultimate aims, be it retirement wealth accumulation or supporting home purchase deposits for loved ones are better achieved through retained properties or extracted sales proceeds.

Advice Services When Deciding Between Rental or Sale

Seeking unbiased counsel from property professionals aids decision-making. While agents may be inclined to suggest selling or unfavourably frame rival options, financial advisers and surveyors present scenarios neutrally.

Independent mortgage brokers also clarify what loan products suit investment lets or releasing equity from sales. Conveyancers explain legal impacts ranging from energy efficiency rules for landlords to capital gains tax from disposals.

Utilise such guidance to cross-check marketing agent claims or promises of stellar rental yields. Getting insight into local price trajectories, running cost projections and your financial strengths prevents choices from seeming overwhelming.

And importantly, assess options openly without self-imposed deadlines. Explore alternatives like short-term hosts or part-renting/part-sale agreements. Creative hybrids between outright letting or disposal could optimise outcomes. Keep an open mind.

Can I Run a Trial Before Deciding?

If genuinely unsure between becoming a landlord and selling, try each first. Rather than dive straight into buy-to-let, test hosting short-stay guests at your current home via online platforms. Equally, don’t instantly sell from a position of frustration at maintenance jobs.

Trialling lets or sales avoid knee-jerk reactions. Temporarily marketing your property through online agents and portals shows indicatively how much buyers may pay. Hosting short stays gets a flavour of guest receipts without intensive commitments.

Hands-on tasters inform better than guesswork. Feeling energised by hosting visitors or enthused by strong market demand indicates where your preference truly lies better than any profit projections.

Likewise, struggling with viewing coordination or the influx of letting inquiries should also guide. Adjust or abandon plans if reality fails to match expectations. Testing intentions briefly need not require long-term industry registration.

Conclusion

Many homeowners ultimately view property pragmatically as ‘places to live’ and romantically as ‘homes’. Rational calculations that becoming a landlord seems financially smarter can sometimes override emotional attachments. Yet frustration when tenant troubles or regulations invade ‘home space’ then follows.

Likewise, nostalgia around selling a forever family home rarely aligns with commercial high bids from eager buyers with less sentimental ties. Managing these tensions rarely proves easy.

We are proud members of...

  • NAPB
  • RICS
  • The Property Ombudsman
  • Trading Standards

We are proud to be the most regulated property buyer operating in the ‘Quick House Sale’ industry. We are an active member of the NAPB (National Association Of Property Buyers) and are RICS regulated, which means you can have every confidence of selling your home with us quickly & easily.