With the current love affair with buy to let slowing down due to the lack of decent buy to let mortgages many rental markets are becoming stagnated and renting a room is becoming more popular. A high level of competition is keeping down rents from desperate amateur landlords. By-the-room lets are one way of avoiding this and there are several reasons why you should consider renting by the room.
For a start you can get more rent for you property let by the room compared with as a whole, up to twice as much. Also, you'll have less chance of having your whole property empty at any one time. When one-tenant leaves you'll still have rent coming in from the others while you find a replacement for your rented room.
At the moment the average sharer is more likely to be a young professional who's looking for a high standard of accommodation until the point they are able to afford to buy. With mortgages as they are currently and no one buying, there's a strong market in many areas for good quality accommodation to let by the room. Or indeed letting out a room in your residential property.
Are not HMO's a high risk?
HMO (House in Multiple Occupation) usually refers to a house that is split into separate bed-sets, that is, a flat share where each tenant has their own tenancy agreement or students living in shared accommodation. An HMO must be registered with the local council it is in. If your property has 3 or more stores and is occupied by 5 or more people in 2 or more households. It is a good idea to check with your local council if you have any doubts and if you can answer 'yes' to the following three questions you will probably need a license.
1. Does the house have 3 or more stores?
2. Does the house have 5 or more tenants?
3. Do your tenants share their facilities?
What are the new laws to deal with tenant deposits?
As of April 6th 2007, the law concerning tenancy deposits changed.
A Tenancy Deposit Scheme is designed to protect all the deposits taken by landlords. A lot of landlords think this is an unnecessary extra burden and cost, and some even take a few months rent up front in lieu of a deposit. The scheme applies to all assured shorthold tenancies and is intended to protect deposits and help settle any disputes relating to the return of deposits when a tenancy ends.
Just to confuse things even more, there are two types of scheme available. The landlord can choose which to use.
- The deposit is given to a custodial scheme during the period of the tenancy.
- The landlord keeps the deposit while paying a premium to an insurance service that goes towards the schemes running costs.
Both of these add to the landlord's costs and can be claimed against tax.
Can I protect myself against the risks of renting?
Renting a property or rent a room is a business and like any business there are risks involved. However if you use a little common sense and forward planning, you can minimize them. You have to have special Landlord Building Insurance, as tenants are a higher risk then homeowners. But you may wish to also look at Landlord Insurance, which can cover anything from a replacement villa to loss of rent if your tenant does a runner. As with all insurance you're paying for peace of mind and hope you will never have to use it.
Can I find and keep good tenants?
Make sure that your accommodation is of a good standard and make a little effort up front before they look at it. This way you should attract the kind of tenants who will want to stay and will look after the property while they live in it. Here are a few simple tips to help you keep your tenants:
- Make sure that your property is clean and comfortable. This will command a higher rent with longer-term tenants. Think what you would like. People who rent a room want a comfortable home just as much as people who rent the whole house or flat.
- Clean and decorated your room before tenants move in, if you start with a grotty property it will probably stay that way. You may want to leave a supply of cleaning products in the property to get them on the right track.
- Make sure you have everything covered in the tenancy agreement before they move in.
- They must know who is responsible for what so there are no disagreements later on.
- Must sure that you are approachable. If you are not, you may not realize that there are problems until they are blown all out of proportions.
- Sort out any problems quickly and have a list of reliable tradesmen you can call on for repairs.
- When they move in leave a pint of milk and a loaf of bread (or even a bottle of wine) for incoming tenants. Moving into a new property is stressful enough, so little inexpensive touches like this will be remembered.
- If you are renting a room in your residential property then you have more rights
Take some time advertising your property. Taking a few more minutes on your advert will pay off in the long run so do not rush it. Look at the other ads that are out there and see what you like and how they have worded them. What would you rent, what would not you rent.
Good Luck with your rent a room