Should You Sell Up or Rent Out?
So you’re looking to move on to a new home and you’re not sure if you should sell your current home or rent it out.
There are a growing number of people who are looking to move, but who either can’t or don’t want to sell their house.
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While traditionally home owners would sell their current home to finance the next one (which would usually be larger or in a nicer location) there is another option available that enables you to buy a new home, while renting out the old one.
Why might you want to rent instead of selling?
There are a lot of reasons why choosing to rent rather than sell might be a great option for you:
- Move more quickly. If you are moving because you want to go to a completely new area, perhaps for a new job, choosing to rent out your property could make that quicker than waiting for the right buyer to come along
- Build a portfolio. Maybe you’ve always wanted to invest in property and this is a much easier than starting to save up and house hunting for that first buy-to-let
- Slow market. Demand usually outstrips supply, but it could be that your property just isn’t selling. So renting it out could be an option here, allowing you to move on without waiting
Whatever the scenario, renting rather than buying could be the perfect solution.
What steps do you need to take?
There are few things you need to do before you can get your house on the rental market:
- Update your mortgage. Give your mortgage advisor a call and find out about releasing equity from your property and changing the mortgage to a buy-to-let one. While on this call, find out as much as you can about that process, how long it may take and if there are any fees involved
- Sort out your legal requirements. If your chat with the mortgage advisor is positive, then you need to start making plans to become a landlord. As a landlord, you have to have certain certification before you can rent out your property. Make sure you get your Gas Safety Certificate, your EICR and EPC. You can upload them to the Mashroom Doc Storage tool, so they’re all in a safe place and you’ll get a reminder when they are up for expiry. If any of your certifications fail, you will need to make any updates required in order to pass.
- Install fire alarms. Another legal requirement is making sure there is a fire alarm on every floor and a carbon monoxide alarm in any room with a solid fuel burning appliance. You probably do have fire alarms, but make sure there is one on every floor and that they’re in good working order
- Find somewhere for you! Given that you’re renting your place out, you’re going to need somewhere to live! The mortgage advisor who helped with getting that buy-to-let mortgage will be able to advise on what you can borrow so you can start house hunting!
- Find a tenant. Once you’ve got a moving date and your property is ready to be rented out, it’s time to find your first tenant! You can list with Mashroom for free, including 30 days free on Rightmove and Zoopla. We’d recommend making sure you reference them, to prevent any nasty surprises down the line and, if you’re not sure what to charge, our free Market Valuation Calculator can help with that too
- Cover yourself. Make sure you have all the insurance in place that you need to ensure that any issues won’t hit you in the wallet. Home Emergency Insurance will cover the property in the event of broken keys or a broken down boiler, while Rent Guarantee Insurance will cover you in the event of rent arrears
What are the advantages of renting over selling?
There’s a reason the phrase ‘safe as houses’ holds true even today – property is one of the most reliable investments you can make!
- Invest in your future. Owning your own home is great, but owning property that you can rent out is a great investment in your future. When you retire, the rental income can boost your pension or you could sell the property and enjoy the lump sum
- Easy step on the buy-to-let ladder. You’ve done the hard work of buying the property already, so now you don’t have to plan and save to become a landlord, you can use what you already have!
- Additional income. Depending on the property and your outgoings, you could earn a little extra income every month from it!
Even if renting out your property isn’t something you’ve considered before, it could be a great solution for you!