Should I Sell or Let my Second Property?

If you’ve ended up with a ‘spare’ property – perhaps because you’ve inherited one or moved in with your partner – you might be wondering whether to sell it or hang on to it and become a landlord.

There are pros and cons to both, but if you don’t need or want to sell, letting can be a good long-term investment.

Rental profits can provide extra income

Of course, there are ongoing maintenance and management costs that come with letting property, but the rent can more than cover those, leaving enough for you to take a monthly income.

(Make sure you set aside part of the profit for tax, remembering that some of your costs will be deductible!)

You benefit from the capital growth over time

The property market naturally goes up and down, but it’s always grown over time. So, as long as you take a long-term view, you’re likely to see your equity grow – on top of the ongoing profits from rent!

Property can give you better returns than other investments

Even though you’ll probably have to put some money into getting the property ready to rent and may need to add deposit funds if a buy-to-let mortgage is required, the rent and capital growth together can give a much better return on your money than other investments. Speak to a financial adviser about how property could work well for you.

You may be able to release equity

Some people sell simply because they don’t want a rental; others sell because they want to spend the money on something else. But if you’d like to get hold of a lump sum, you may be able to do that without selling.

If you own the property outright or there’s a relatively small mortgage on it, speak to a financial adviser or mortgage broker about releasing equity by taking on a buy-to-let mortgage. Although you’ll have to make monthly repayments, you can let the property in a way that means it covers its own costs – and still leaves you with some profit on top!

To help make sure your rental is a success, take advantage of all the professional advice and services that are out there. An experienced letting agent, financial adviser and property tax specialist can make the difference between an ‘okay’ investment and a great one.

If you’d like to chat through your options or if you have any specific questions about letting, we’re here to help. Call us directly on 01268 955001 or email pippa@baillie-white.co.uk, and one of the team will be in touch.