During the third quarter of 2011, some 47% of ARLA member agents surveyed reported a rise in the number of ‘unplanned’ lettings as home owners turn to the PRS because they are unable to sell their property, or holding off until a higher price is achievable. This figure has risen from 40% at the beginning of the year.
In England, this trend was noticeable in the North East and North West in particular, where higher proportions of respondents reporting an increase in rental property coming onto the market because it cannot be sold, 67% and 62% respectively.
More than 60% of members in Scotland, Wales and Northern Ireland also noted an increase. In contrast, the figure was lowest in Central London at 17%. According to ARLA, this means some homeowners will be turning landlord for the first time, many reluctantly.
‘Letting a property is an excellent way of generating consistent income from your property, if the correct approach is adopted by prospective landlords. However, lettings is an unregulated industry and there can be pitfalls for both landlord and tenant, including loss of monies. While we are, of course, happy to see an increase in the number of landlords, it is vital that every landlord, reluctant or keen, seeks expert advice before embarking on a rental arrangement,’ said ARLA president Tim Hyatt.
‘In particular, we would advise anyone considering renting or letting a property, to consult a licensed ARLA member. Licensed agents have to adhere to a strict code of conduct, and must have a number of consumer protection mechanisms in place, meaning that if things do go wrong, there is a way to seek redress,’ he explained.
ARLA agents report that the most likely types of home to be brought to market by a reluctant landlord are detached and semi detached houses, while least likely are studio flats.
ARLA points out that anyone letting a property for the first time must notify their mortgage and insurance providers as they may need to amend the terms of both if changing the use of a home to a rental property.
It also advises people to conduct thorough research, or better, seek professional advice, about your local rental market to ensure you're setting the rent a competitive but also realistic level and to put together a detailed inventory that includes the condition of features and fittings of the property as well as its contents, making a clear note of any wear and tear. This means taking photographic evidence throughout and ensuring that the final documentation is jointly approved by you as the landlord, and your tenant.
Also people need to remember that the property is no longer their home, it's someone else's home and this needs to be taken into account when making decisions regarding the decoration and furnishing in the property as not everyone will have the same taste.
It is worth consider enlisting a managing agent as they will be able to help you find and vet tenants, arrange documentation, and manage the property and if you do decide to use a letting and/or management agent, always use a regulated agent (such as an ARLA member) to ensure client money protection. This will secure both your money, and that of your tenants' and will give access to a redress scheme should it be required.
