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Renting Out Property In 2021: Why Do People Become Landlords?
Renting out property is a big decision and can be challenging. So why do people become landlords? Some fall into it accidentally, whilst others choose a buy-to-let for extra income or a retirement fund. In fact, 38% of landlords told us they let property as a long-term investment (UK Landlord Survey 2021).
There are many other reasons people may choose to let their properties. But what are they?
Renting out an inherited property
Sometimes, landlords fall into renting because they inherited a property from a relative (5% according to the UK Landlord Survey 2021). In 2017, Royal London estimated that £400 billion worth of property was set to be passed from grandparents to younger generations. With an aging population, this figure looks likely to increase.
If they already have a home of their own, many people in this situation choose to let it out. Some decide to sell a home they’ve inherited, but this can be difficult if the property is old and needs improvement. Renting the property out, whether short or long term, generates income to pay for repairs and redecorating whilst the property value increases over time. Plus, if it has a particularly sentimental value such as being a childhood home, some may prefer to keep the property ‘in the family’ rather than sell it on.
Letting a property for additional income
In our UK Landlord Survey 2021, 31% of landlords said they let their property as a second source of income. If you already have a full-time job, renting out a property can provide a steady secondary income on top of your monthly salary.
If you own the rental property outright, the monthly rent payments can be a big boost. If you don’t, the money can cover the mortgage and maintenance of the property. Any money left over after expenses goes straight into your pocket.
A huge benefit of receiving a rental income is the financial security it can provide. Getting a consistent monthly recurring revenue is a number one priority for 43% of landlords (UK Landlord Survey 2021
Renting out your property instead of selling
If you’re ready to move, but the market conditions aren’t favourable, you can rent out your property instead of selling it for a loss. Renting gives you time to reconsider your options, whilst making some extra cash, then you can sell once you are in a position to make a profit, or at least not a loss.
Renting out property as a long-term investment
Demand for rental properties is high, especially amongst the younger generation. The UK’s rental sector is continuously expanding, with a sixth of the population now living in rented accommodation from private landlords. As such, there is plenty of scope for making money from buy to let properties
According to our UK Landlord Survey 2021, 35% of landlords let their property as a means to fund their retirement or pension. Investing in property allows you to invest without risking too much capital, as you can secure finance. The value of your property will still increase based on the entire investment, which can result in significant profit, giving you options and providing further financial security.
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One of the many reasons to use a professional Letting Agent to manage your Investment property as we at Cooksleys provide a full 24 hour service with much trusted qualified Contractors who cover all fields including out of Hour services and competitive quotes where needed pre works to be carried out .
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Landlord Causes of Stress:
Handling maintenance issues Solving maintenance issues can be a significant cause of stress for landlords. Keeping the property and the tenant safe is a landlord responsibility, but arranging maintenance work can be tricky, particularly for emergencies that require a fast response. 59% of landlords revealed they found managing maintenance issues to be moderately or extremely difficult. Specifically, getting a good price from contractors proved most challenging, with 78% of landlords finding this difficult. A close second was finding a reliable contractor at 72% (UK Landlord Survey 2021). Preparing a list of reliable tradespeople makes things much easier. We recommend having at least two dependable professionals for each maintenance area. Whether a plumber, electrician or gardener, relying on a single contractor is risky. And if they’re good at their job, they aren’t likely to be available at short notice. .If it’s a big emergency – like a burst pipe or broken boiler – Home Emergency Cover is a real lifesaver. Instead of contacting you, your tenant can ring the emergency helpline and get a contractor out straight away.
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Rents are rising fastest in the north east and the south west amid high levels of tenant demand and a shortage of homes to rent.
Rents outside London are rising at their fastest pace for four-and-a-half years boosted by strong tenant demand as lockdown eases and offices reopen.
The average cost of renting a home in the UK outside London rose by 3% year-on-year in the first three months of 2021 to stand at £780 per month.
Meanwhile, in London, rents were down 9.4% compared with a year earlier.
The high levels of demand from tenants, combined with a shortage of rental homes, meant the average property took just 16 days to let, according to our latest Rental Market Report.
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UK Rental Market Report Latest insight on the UK rental market, based on our Rental Index. Headlines this quarter In this quarter’s Rental Market Report, we reveal our latest research on:
• The regions seeing 10-year highs in rental growth
• An update on city centre rental demand figures
• The three distinct markets emerging in the rental sector
https://buff.ly/3hfndO2
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What is the average rental value in the UK?
For March 2021 the data shows that the average rental price for a new tenancy in the UK was £922 per calendar month (pcm), which is up by 3.4% on last year.
Latest Rental Index data: March 2021
- The average rent in the UK is now £922, up by 0.8% from last month, and up 3.4% on last year.
- When London is excluded, the average rent in the UK is now £847 which is up 0.8% on last month and 6.8% on last year.
- Ten of the Twelve regions showed an increase in annual variance, with the largest, as last month, being the East Midlands at 10.5%.
- The South West shows the highest yearly increase of 8% between January 2020 and January 2021.
- Average rents in London are down YOY, showing a 5.2% fall between March 2020 and March 2021; this is the tenth decrease in annual variance in subsequent months.
- However, the average rental value in London (£1,586) was still 87.2% higher than the rest of the UK excluding London (£847).
