It’s not just in the UK that would-be property vendors are suffering from the effects of a slow market, elsewhere abroad the picture is similar – from Austria to Australia – and those who have second homes overseas are finding it harder and harder to find a buyer, any buyer, let alone one who will pay the desired asking price.
So the question is, are there alternatives for those who can’t sell their property abroad? And we are here to tell you that there absolutely are! Rather than face a situation where you are constantly cutting the price of your property to bag an elusive buyer, why not become a landlord instead?
Whilst the leap from homeowner to landlord might be quite a large one in many people’s minds, in a market downturn such as the one we are facing at home and abroad, it can be a very wise leap to make – after all, it could keep the wolf in bank manager’s clothing from your door. What’s more, better a reluctant landlord than a desperate seller, and if your rental tenants can keep your property abroad ticking over – if not profitably then at least helping you to break even – when the time is finally right and ripe for a sale, you will hopefully find a buyer more easily and one who is happy to pay a non-reduced asking price.
Naturally enough not all homes abroad are well located or even suitable for long-term letting. However, those that are offer the would-be vendor the best options if they are looking for the lowest fuss rental solution to their situation. Long-term lets can be relatively low maintenance once a suitable tenant has been found and a rental management agency employed to collect rent and keep up with essential maintenance work etc. For those whose only hope of rental is tourism based, an aggressive approach has to be taken to rental because there is so much competition. Better to undercut the competition and get some form of income that to risk losing your property as it sits idly empty and unsold surely?
The first thing to remember is that renting is not 100% profit. You need to set some rental income aside for taxation, you need to pay a percentage to any management company you employ to look after your property abroad and you need to factor in a certain amount for repairing any wear and tear that your real estate suffers at the hands of your tenants. Next up you may have to face the fact that if you are serious about letting you will have to invest some more money into the property to make it attractive to tenants.
This is the point at which reluctant landlords become even more reluctant! But think about what we have said above – better a reluctant landlord with a property earning a bit of an income than a vendor facing rapidly falling property prices and increasingly invisible buyers. Think about who might rent your property, and fix the home up accordingly. If you have a home that could be let long-term to a family, open up as many rooms as possible as bedrooms and make the property child friendly. If on the other hand you have a city-based pad that might corporate let or let to a professional couple, up the ante with the décor!
Get insured and ensure any mortgage lender with vested interests in the property is informed of your intentions to rent. The majority of mortgage companies will not have a problem – as long as you continue to meet their mortgage payments! As for insurance, you need to cover yourself against third party damage and also any liabilities you have to your tenants as a landlord for example.
Vet any agents you consider using for finding tenants and managing your property and vet your tenants too. You want references! Of course, the latter is not feasible if you short-term let to holidaymakers! But it is certainly advisable for those long-term letting their property abroad. Finally, take any deposit you are given and bank it in an account where it will not be touched. You do not want to find yourself in the position where you are desperate to find money to return a deposit to a tenant who has given you notice. What’s more, you can place the deposit in an interest earning account and any interest earned could go towards any redecoration or repair costs you may incur.
Whilst letting a property out is not for the feint hearted, it can be a suitable solution and acceptable alternative to those who find themselves in a position where they need to make some money out of a home abroad in a fast falling market.