Tuesday, 21 February 2017

Is Let to Rent a good idea for Edinburgh owners?

A landlord of mine from Murrayfield phoned me up the other day to ask my advice on whether he should ‘Let to Rent’.  Now, I thought that I was fairly up on all these different terms (eg build to rent, buy to let) but this was a new one on me.  My landlord explained that basically he was looking to move to Abu Dhabi to work for a couple of years and was wondering if he should sell or rent out his house in Edinburgh. 

Once he said that I understood him perfectly as this concept is not new in fact it has been around forever.  There are many reasons why people do this:
  • Schooling often features heavily.  Families who want to live in a specific catchment area of a particular school let out the home the own and rent another one close to the school. 
  • Also, working abroad or in another part of the country for a limited time or even taking a sabbatical is another reason to ‘let to rent’ as is the case with my landlord.
  • Finally, having to move but not being able to sell your existing home could be another reason.  This is known as being an ‘accidental landlord’.  This was far more popular after the financial crash of 2007/8 but, thankfully, is becoming less popular as the economy has recovered.

There are huge benefits to let to rent. Selling and buying is a big step both emotionally and financially so if you know that the move is short term or if there's any doubt that it's the correct long term decision, letting to rent makes a lot of sense.

However, before you do then you need to think about a few things:
  • Emotions.  It is not often that I talk about emotion in this blog other than to say “keep emotion out of buy to let investing”.  Well in this case, this advice is still correct but it is harder to take because, quite literally, it is your home!  You need to get over the emotional hurdle of somebody else living in your home and all that that entails.
  • When you want the property back.  You may not be able to get the property back when you want it depending on the terms of the lease.
  • Financial.  Like any other buy to let investment, you will be taxed on any net income you receive from the property.  Also, depending on the property, you may not get the sort of yield you could achieve in a purpose bought buy to let investment.  This was particularly the case with my landlord who had a lovely big house in Murrayfield.
  • Costs.  As with any first time rented buy to let property, there are a bunch of costs involved eg making the property itself ready for renting, landlord registration, EPC, gas safety, EICR, PAT etc.
  • Boring .... but important .... things like consents.  If you have a mortgage on your house, you will need to get the mortgage companies consent to change the ‘use’ of the property from residential home to buy to let investment to be able to rent it out.

So whether to ‘let to rent’ is a personal choice.  In this particular case, I  advised my landlord to ‘go for it’ mainly because he loved his house, he was sure that he would be coming back to Edinburgh long term in a couple of years time.

If you would like advice on ‘let to rent’, ‘buy to let’, ‘build to rent’ or any other these property matter, get in touch.  Phone me on 0131 603 4570 or email me on news@thekeyplace.co.uk.

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