Take advantage of rising rental demand by letting out a property

For many people, the effects of the financial crisis are still cutting deep and are having a profound impact on their day to day lives.

Money is tighter for hundreds of thousands of people, with fuel, food, energy and other bills rising all the time, leaving them to look at ways in which they can either cut back or bring in more income.

Fortunately, UK property owners could have a ready-made solution to help them flourish once again – becoming a landlord of homes to rent.

Recent figures from the buy-to-let lender Paragon revealed that 34 per cent of those who have let out their property have increased the price of rent during the third quarter of this year. Of these, around four in ten decided to put rent up by over two per cent with only four per cent decreasing the monthly amount they are owed.

Couple this together with research from LSL Property Services which found that the average tenancy agreement charge in England and Wales now stands at £713 – up by 1.2 per cent from August – then letting out rental homes becomes a seriously interesting option. Furthermore, in the capital, tenants are paying on average 12 per cent more than this time last year.

Another interesting aspect that would-be landlords should look at is the trouble that prospective first-time buyers are having, with deposits for houses for sale having risen tenfold since 1991, according to figures from first direct.

"With it being so difficult for first-time buyers to save [a deposit] themselves, then the need for them to get help from other places, such as parents and grandparents, is ever greater," admitted FirstRungNow.co.uk's Helen Adams recently.

So, those are the bare facts, which all point towards letting a property becoming an attractive move – what should UK property owners do next?

Ian Potter, operations manager at ARLA (Association of Residential Letting Agents), advised that the process of becoming a landlord for the first time can be a "stressful experience", and he noted that there are some important steps to be taken before handing the keys over to the tenant.

Legal advice is one of those crucial aspects to be considered, according to Mr Potter, who said that terms and conditions and insurance should be sought.

"A tenancy agreement is probably going to be in excess of 15 pages long, so people are going in to legally binding contracts both with an agent or with a tenant. That's the key thing that people need to realise, that they are actually entering a legally binding contract," he added.

The expert also noted that landlords need to realise that insurance for lettings is "a specialist product" and the correct policies need to be signed up to or the consequences could be severe.

Recent ARLA guidance informed UK homeowners that in order to make the transformation from private abode to a suitable property for rent it is important to decide what level of furnishing will be provided.

It can be fully, partially or unfurnished, but landlords should be aware that they could potentially charge more for a property that is ready to be lived in. The same can be said for white goods, and it is imperative that regulations are heeded to with regards to testing, including gas appliances like the oven or boiler.

Property owners need to think about what kind of decor will suit tenants, with neutral colours often being the safe choice. This will make the home more desirable and again provide ammunition for charging more for monthly or weekly rent.

It is also important to consider how the rental property will be run, and choosing an ARLA-regulated member could be one way to take the stress out of things. This is also ideal if the landlord is moving away from the area or has a full-time job which prevents them from carrying out their landlord duties.

Finally, once the new tenants are in ARLA states that it is important to 'let go', as the property will no longer 'belong' to the landlord. It warned that wear and tear is likely to occur so it is important to react to call-outs or complaints from the tenant with a clear head.