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Should You Rent a Room Or Your Property by the Room?

Aug 27th 2015 at 1:47 AM

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.

Aren't HMO's a high risk?

HMO (House in Multiple Occupation) usually refers to a house that is split into separate bed-sits, that is, a flat share where each tenant has their own tenancy agreement or students living in shared accommodation.

What are the new laws to deal with tenant deposits?

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 regarding 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 whilst 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?

But you may wish to also look at Landlord Insurance, which can cover anything from a replacement boiler 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.

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