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. An HMO must be registered with the local council it is in. If your property has 3 or more storeys AND is occupied by 5 or more people in 2 or more households. It is a good idea to check with your local council if you have any doubts and if you can answer 'yes' to the following three questions you will probably need a license.
1. Does the house have 3 or more storeys?
2. Does the house have 5 or more tenants?
3. Do your tenants share their facilities?
What are the new laws to deal with tenant deposits?
As of April 6th 2007, the law regarding tenancy deposits changed.
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? Renting a property or rent a room is a business and like any business there are risks involved. However if you use a little common sense and forward planning, you can minimise them. You have to have special Landlord Building Insurance, as tenants are a higher risk then homeowners. 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.
Can I find and keep good tenants? Make sure that your accommodation is of a good standard and make a little effort up front before they look at it. This way you should attract the kind of tenants who will want to stay and will look after the property while they live in it. Here are a few simple tips to help you keep your tenants:
Make sure that your property is clean and comfortable. This will command a higher rent with longer-term tenants. Think what you would like. People who rent a room want a comfortable home just as much as people who rent the whole house or flat.
Clean and decorated your room before tenants move in, if you start with a grotty property it will probably stay that way. You might want to leave a supply of cleaning products in the property to get them on the right track.
Make sure you have everything covered in the tenancy agreement before they move in.
They must know who is responsible for what so there are no disagreements later on.
Must sure that you are approachable. If you are not, you may not realise that there are problems until they are blown all out of proportions.
Sort out any problems quickly and have a list of reliable tradesmen you can call on for repairs.
When they move in leave a pint of milk and a loaf of bread (or even a bottle of wine) for incoming tenants. Moving into a new property is stressful enough, so little inexpensive touches like this will be remembered.
If you are renting a room in your residential property then you have more rights Take some time advertising your property. Taking a few more minutes on your advert will pay off in the long run so don't rush it. Look at the other ads that are out there and see what you like and how they have worded them. What would you rent, what wouldn't you rent.
Good Luck with your rent a room
By Colin Warburton
Monday, January 19, 2009
Should You Rent a Room Or Your Property by the Room?
Relationship Between Home Prices and Rent Amounts
It is widely accepted that rent amounts are a fundamental factor in determining the value of housing. If housing prices rise too far out of line with rents, a combination of declines in home values and increases in rent amounts will ultimately occur and enable these two averages to correct back toward each other. Although this relationship between housing values and rents has endured the many peaks and valleys of past real estate cycles, the events of the years from 1996 to 2006 strained this interconnection to unprecedented extents. However, just as gravity causes objects to eventually fall to the earth, subsequent years have shown that this correlation between housing prices and rent is destined to survive.
An examination of Freddie Mac's conventional mortgage house price index reveals that United States home prices doubled from 1996 to 2006. Alternatively, the consumer price index shows that rent amounts only increased half as much as sales prices over the same period of time. This created an identifiable imbalance in this typically synchronized relationship, which then served as a reliable predictor of the paths that both home values and rental amounts would follow in the years to come.
As if imitating a cinema production featuring two lovers involuntarily forced apart, the years of 2007 and 2008 set the scene for housing prices and rents to once again be reunited. Nationwide housing values tumbled by approximately 35% in these two years according to the market tracking company MDA DataQuick. Responding on cue, the real estate research firm RealFacts Inc. reported that rents increased by approximately 10% over the same period.
It may seem illogical that rents could actually increase amidst falling home prices and the economic downturn that usually accompanies a poor housing market. Yet it is actually a poor economic environment that often acts to stimulate the residential rental market. For example, the decline of economic conditions from 2007 through 2008 brought the construction of new housing and apartments to a virtual halt, thereby stunting the supply of available rental property. Simultaneously, the demand for rentals was enhanced by a dramatic increase in the size of the available tenant base. Families displaced from foreclosed properties, growing populations, potential buyers refraining from purchasing until home prices stabilize, difficulties in obtaining financing, and widespread job losses all contributed to make renting a very attractive option for large segments of the population.
As evidenced above, housing prices and rents remained interconnected despite the intense pressures that pulled them apart. Although often overlooked, this durable relationship should be utilized to help predict housing market conditions and prevent the occurrence of economic crises well into the future.
By Brian Icenhower
Your Landlord Guide to Important Rental Property Terms and Words
Are you looking for a landlord guide to unravel the big words and confusing terms used by rental property owners? Our plain English landlord guide will explain every common word and crucial term that you will need to know.
1031 Exchange - Refers to the section 1031 of the U.S. revenue code. What makes it important is that it allows you to avoid paying capital gains taxes when selling your rental property if you use the money to buy another like-kind property.
Capital Gains Tax - The taxes you have to pay if you sell your rental property for a profit. Some countries do not require landlords to pay capital gains taxes.
Eviction - The legal process that rental property owners use to remove nightmare tenants who don't pay rent or break the terms of their rental agreement. As this can be a costly and messy process, it's highly recommended that you look for a landlord guide to do it property.
Fixed Term Tenancy - A popular type of rental agreement where there is a fixed starting and ending date.
Landlord Liability Insurance - Insurance that protects you in case you are being sued by your tenant for injury or losses. This insurance will cover your legal costs and any claims that are made by your tenant.
Notice to Quit - This is a written note that is commonly given to tenants in advance to end a periodic tenancy. Before you can file an eviction lawsuit, you will also have to give your tenant a written notice to quit as a final warning.
Occupant - An occupant is someone who is legally allowed to stay on your rental property as stated in your lease agreement. He is different from a tenant in that he is not responsible for paying you rent. An example of an occupant will be your tenant's children.
Periodic Tenancy - Another common type of lease that is renewed from one time period to another instead of having a fixed end date. A periodic tenancy can be week to week, month to month or year to year.
Section 8 Program - Also known as a housing choice voucher program. This is a U.S. government housing program that helps people with low income by paying 60 to 70% of their rent. As there are many rules regarding this program, read your section 8 landlord guide before accepting a section 8 tenant.
Squatter - Someone who is illegally living on your rental property. This usually happens when your tenant invites someone to stay over for a long time without your permission.
Subtenant - When your tenant re-rents your rental property to someone else, that person is known as your subtenant. In most cases, you will have little control over your subtenant so it is recommended that you do not allow them.
Surrender of Tenancy - When both the landlord and tenant agree to mutually end their rental agreement, the process is called a surrender of tenancy.
Tenancy at Sufferance - If the time period for your lease is over and the tenant continues living on your rental property without your permission, he will be known as a tenant at sufferance. In most cases, he has to continue paying you rent and you can file an eviction lawsuit to remove him.
Tenancy at Will - This is a more informal type of lease where there is no proper written rental agreement. It is commonly a verbal arrangement preferred by landlords who need temporary tenants.
Tenancy for Years - This is another name for a fixed term tenancy. For the full explanation, look for "fixed term tenancy" above.
By Teo Zhenjie
Why Should I Rent a Room in My House?
According to a recent survey conducted by the UK's leading flat and house share site, 58% of those who responded said they chose to live in a flatshare for both social and financial reasons.
One bedroom flats and studios flats are expensive and generally, the more of you there are, the more you'll get for your hard earn't cash. If you live on your own you still need the basics like a kitchen, a bathroom and a living room. If you share you are all paying a bit towards these rooms so sharing the costs. Also, and this is important to a lot of people, there will be other people around if you fancy some company and if you are feeling that you want to be on your own you can go to your room. Of course, there is always the possibility that you will not get on with them, but hopefully you will have vetted them before they moved in.
Who will I be sharing with?
Oh if the answer was that easy! It all depends on you and of course it could be anybody. When you rent a room you could end up with anyone from students and young professionals to families, couples and people in their 60s and over. This aspect of renting a room plus the fact that you can get a Tax Free income has led to the rapid increase of taking in a lodger.
Sharing a flat has increased on popularity with young professionals in recent years.
This is in part due to rising house prices but also to people generally choosing to settle down later in life than has previously been the norm. Also, employers often require builders, engineers, and accountants etc to work in another part of the country on contract work from 6 to 12 months. As a result the average age of flat sharers according to the leading UK flat and house share site is 33 and increasing. Nowadays, sharers are more often than not looking for comfortable, quality accommodation and unlike the old days in the 70's shared accommodation is unlikely to be cheap and nasty. If you search on rent a room sites you will find everything from rooms in shared houses in Brighton for as little as £300 per month at the bottom end to up to luxury en-suite double rooms in West London for £1250 per month and increasing.
What should you do to locate the best flatmates?
That is not difficult now we have the Internet. Look at for a good site, (there is one on our site) and have a look through the rooms for rent adverts. Take your time and see who creates an impression. When you have decided on the sort of flat mate you are looking for you can write a profile on the 'room wanted' ad. You can also tell them about yourself and make your accommodation sound like the best on the site.
By Colin Warburton
You Can Rent an Apartment Even With Bad Credit
It is now common knowledge that many landlords and apartment leasing office managers conduct credit and background checks to determine whether their prospective tenants are qualified to live there. A few years ago this was not the norm but we can more or less expect this when we attempt to lease an apartment. The apartments do this first and foremost to comply with their rules and regulations (these differ from complex to complex). They also do this so they can keep the rental rates high. The practice of conducting routine credit checks has caused a lot of good people to be denied housing simply because they have a spotty credit history. Let us examine how you can avoid getting docked and denied housing which is your basic right as a human being.
Do they absolutely have to do a credit check? I always recommend that before you begin your search for an apartment you pull your own credit. It can be very disheartening to be denied housing because of something in your credit that you know nothing about. It is now possible to get a free copy of your credit report in almost every state in the US as long as you have not received one within the last 12 months. Also if you have been denied credit in the last 30 days you can take that letter to any of the three major credit bureaus and receive a free credit report.
Apartments that do not conduct credit checks Believe it or not, there are apartments that do not conduct credit checks but you must search smart in order to find them.
One place to look is Craigslist which is a vast marketplace where individuals and companies place their property for rental or sale. Craigslist also has a search engine where you can search the vast array of properties being posted literally every minute. There are also excellent rental properties without credit checks on your local newspaper's classified sections.
Apartment finders Apartment finders are also one of the best sources on information regarding hard-to-find landlords that do not conduct credit checks. By virtue of their profession, apartment finders, otherwise known as locators, rub shoulders with numerous landlords and are in a position to know what criteria they use to approve their tenants.
Have someone recommend you If you have spotty credit, you may find that many apartments deny you housing and this can be very frustrating especially since many of them do not conduct a credit check until after you have paid the deposit. You may end up being denied and out of your deposit at the same time. While most of them will automatically refund you the deposit if you are denied, you may not get it until after 30 days because most refunds are usually processed by the "corporate office" and not the apartment itself. You can get over the huddle of credit checks by having someone with good credit and a good reputation write a letter of recommendation for you.
By Irene James
