Are more people choosing to rent their home rather than buy? Perhaps another question might be: are people being forced to rent out their homes?
Some people would like to buy a home, but are finding it difficult to do so. The high price of property and the large deposits required by lenders is pricing many would-be buyers out of the property market, leaving them with no option but to continue renting. The majority of these people tend to be young, potential first-time buyers.
However, there are people who choose to rent out their home in favour of committing themselves to a mortgage.
The reasons for this vary
There is no requirement for a deposit of many thousands of pounds and mortgage fees and stamp duty to be paid.
There is also the benefit of freedom. Anyone with a mortgage wishing to move has to find a buyer for their property and rearrange another mortgage if they wish to buy another home. A tenant can just see out their tenancy agreement or come to an arrangement with their landlord.
Some people prefer to rent
On the continent, long-term renting is the norm. Take Germany for an example. Finance for buying property is difficult in Germany. Lenders are wary about who they lend to, and often demand proof of substantial earnings over several years and a deposit of 20% of the purchase price. This puts the opportunity of buying a home out of reach for most buyers.
However, this problem is alleviated by the amount of good quality property available for rent. There is also the added advantage of transparency in the German rental system. In Munich, it is possible for a tenant to make sure they are paying a fair rent by checking it against a rental index. If they feel they are being overcharged, the tenants association will step in and help solve the problem. There are tighter rent controls. Rents cannot usually be raised by more than 20% over three years. Contracts are unlimited, and tenants have the right to demand continuation to the contract if the landlord serves them notice.
So it appears tenants get a good deal in Germany. Can landlords in the UK learn anything from this?The best thing UK landlords can do is give their tenants a good deal.
Here are three tips to make this happen:
1) Build a good rapport
If you are a landlord managing your properties you should be approachable to your tenants. You should make it clear that you will respond quickly to any queries or problems – then make sure you do respond quickly when a problem occurs.
2) Be flexible
You want your tenants to feel like your property is their home. So if they ask your permission to do some simple decorating, give them the nod of approval.
Many people are very attached to their pets but find it hard to find a pet-friendly property to rent. If your property is suitable and you are happy the pet is house-trained and unlikely to cause any damage, allow the pet to move in with its owner. You may find the tenant will stay in the property for a long time as a result, providing you with a steady, secure income.
3) Charge a fair rent
Charging a fair rent is probably the best way to keep a tenant in the longer-term. No matter how good your property is, if your tenant thinks you are overcharging them, they will leave. So make sure the rent you are charging is in line with what the market thinks is fair.
These are just a few of the things you should be doing if you want to be a successful landlord.
If you need more advice on how to keep your tenants and prevent void periods, call us today.