With the continued drop in property prices and ever tightening of mortgage lending, more properties ‘available for rent’ are coming on to the market.
An increasing number of property owners faced with plummeting prices are no longer prepared to accept ‘silly offers’ for their properties. Instead of yielding to modest offers they are now welcoming tenants as a new breed of landlords.
This means that instead of selling in the current market, would be sellers are taking advantage of the market slump by letting the property out and then biding their time for property prices to increase again before selling.
Although this may sound like a sensible strategy, these new landlords need to fully understand their roles and responsibilities.
For example they need to make sure that:
– Their mortgage lender will allow them to let the property
– The insurance policies are changed from residential to buy-to-let related policies
– They have the correct safety certificates and energy performance certificates in place
– They understand that they need to protect tenant’s deposits
– etc…
On top of this they are playing a risky game, as they could end up being landlords longer than they expected. It is unlikely that property prices will recover in the short term and they will continue to fall.
Therefore thinking that they can become short-term landlords i.e. for six to 12 months could well prove to be a major oversight.
In reality it could be several years before they are able to sell their properties at the prices reached in late 2007!
Therefore accepting a lower offer for the property might be the best way out of the present impasse, especially if you are banking on property prices to increase quickly.
Perhaps with the property sales proceeds a better property can be purchased in the buyer’s market to bring back smiles to the seller.
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