What Type of Landlord Are You? - Part 2, The Reluctant Landlord
Over the past couple of weeks, I have been writing about the different types of landlords that I have come across and this week I thought that I would tell you about what I would refer to as ‘The Reluctant Landlord’.
This scenario involves a couple who are looking to move into a larger accommodation. They have outgrown their present flat or small house and want to move.
Perhaps they bought their property during a market boom and due to the property market prices having levelled off or even fallen, they are therefore unable or unwilling to sell their property at the price they expected.
They then decide to hold onto the property until the market improves and they can obtain a more favorable price for the property.
Either way, they decide to rent out their former home until the anticipated improvement in the market and / or their mortgage has been paid down.
This couple have fortunately saved for a sufficient deposit on a new home without having to sell the first. They are thus able to move up the property ladder, obtain an additional mortgage, let out their first property in the short term and even create additional income.
Here we have an individual or couple who need to move house due to financial difficulties in making mortgage payments. They do not have sufficient funds to purchase a new property and cannot or do not want to sell their present property.
What often happens in these cases is that they will let out the property that they own and thus become landlords. As a result, they will have to rent somewhere to live themselves which also makes them tenants.
They may well be receiving sufficient rental income on the property that they own to not only cover the mortgage but perhaps enough to allow them to start saving towards a future home.
In both of the above scenarios, the owners may well have an emotional attachment to the property that they are being forced to rent out. It is still ‘theirs’ - after all it has been their home.
Any tenants moving in certainly want have that feeling of attachment.
Hot tip for landlords:
Don't be emotionally involved with the property! It is still yours and has been your home for several years. You may have been reluctant to rent it out but during the life of the tenancy it has become the tenants home and it is essential to remember and respect this fact.
I strongly advise that you treat your first tenancy as you would any future tenancy - as a ‘business deal’. Separate yourself emotionally from your former home. Additionally, do not get to involved with your tenants. I have sometimes seen reluctant i.e. First time landlords choosing tenants or even friends on the basis of a ‘gut instinct’, assuming ‘these are the tenants that will love my home as much as I do!’ However, unfortunately this is not always the case! Choosing tenants on this basis often leads to regret.
My advice is to use a good reputable Estate Agent that will fully reference any prospective tenants and consider in the first year using the agency to fully manage the property until you have found your feet.