Ed Mead
Follow Ed

Q.I’m struggling to sell my flat and was wondering whether you would recommend letting it out and using the income to rent or buy something else?

A. Given the difficulty everyone is having getting a mortgage at the moment, the rental market is increasingly busy. Indeed, I’m amazed that several commentators have now stopped giving average sales values and have started giving rental figures instead. The average is around £710 per calendar month at the moment. So renting your property out may be an attractive option. But being a landlord is not necessarily all it’s cracked up to be. Some parts of the country can command returns on capital of 10 per cent, but in London it can be less than half that.

Remember you will end up paying income tax on the rent and up to 15 per cent on management fees. This is clearly not an investment strategy that adds up unless you intend to downsize. In fact, it’s a mistake many potential buy-to-let investors make.
Most professional investors look for long-term capital growth using their rental income to keep the property in good condition.

Get some advice on what your property would let for. Talk to three agents and get a good spread of values. Also, check what they think the occupancy will be in order to minimise void periods. If they say there is demand in the area, ask to see proof. Also, ask to see details of similarly let properties – don’t take any fluff answers.

Do your research in the area before you try to find a tenant. The rental business tends move quickly. It should be possible to find someone who will be happy to rent your property over the long term, often for years, meaning that hopefully you might then be able to sell your property at a better time, and possibly for more money.

But I would be wary of clocking up more debt on a second mortgage. That is, of course, if you can get one at the moment.