Right now, in the United Kingdom, we are living in generation rent.
Statistics from 2021 showed there were 4.6 million homes that were privately rented in England alone, while it is estimated around one in five live in rented homes.
With the cost-of-living crisis still engulfing us, and interest rates up to 4.5 per cent as of May 2023, there is little wonder people have reservations over buying homes right now.
All of this might make you wonder about entering the world of property ownership and becoming a private landlord.
There are certainly plenty of positives from doing so, not least the fact you could make some handy extra cash.
But there are some things that you might not have considered yet too. So before diving in head first, take a look at some of the pros and cons of becoming a landlord.
Income: It goes without saying that the primary reason people look to become a landlord is to do with income. You’ll receive money every month from the tenant, which can help pay off a buy-to-let mortgage, while returns on your investment will be higher if you own the property outright.
Security: Naturally, a regular stream of funds from tenants offers protection for landlords. Property investment can provide long-term security, even at times when house prices are fluctuating.
Tax deductions: All income you earn from rent is taxable and there is no longer tax relief on mortgage interest rates anymore, but there are still plenty of expenses that are tax deductible. Professional services, such as the use of a reliable letting agents, building repairs and buildings and contents insuranceInsurance that covers damage to the contents of a property., repainting, replacing damaged furniture, and cleaning and gardening services are all things where you can get tax deductions.
Flexibility: In many ways, owning a home that you rent out is almost like having your own business, insofar as you hold all the cards in terms of costs and contracts, while you also have the ultimate say on when to sell a property.
Costs: There are plenty of financial elements to consider when deciding to become a landlord, such as tax on rental income, purchasing furniture and decorating. tenancy deposit schemes, gas safety and energy efficiency certificates, landlord insurance, and letting agency fees.
Tax: As mentioned above there are some tax breaks, but you will have to pay tax on rental income and file tax returns on any money earned.
Maintenance: It is your responsibility as a landlord to deal with the maintenance of the home. Whether that be a broken drawer, a leaking tap, or loose floorboards, all maintenance repairs will have to be covered by you.
Emergencies: Similarly, the more expensive issues are on you to fix. A broken boiler, burst pipes and damage caused by storms are all common occurrences panicked tenants might phone you about.
Legal issues: You need to be clued up on all the relevant legislation and property law, especially if things go awry with a tenant.