I wrote last month about an alternative investment decision my brother had made about buying a property as a holiday let in Thailand, giving a better result than investing in property in England.
I am very much in favour of private renting and have no wish to decrease the properties available to those that need them, being the poorest or those of the professional ‘Generation Rent’, who establish a home until careers have settled and they are in a better position to purchase, but it has to be said, the sector will get smaller and smaller as landlords see that they can get better returns on alternative investment with a lot less bureaucracy, if they just change their client group.
An example of this, without the worry entailed with having a property abroad, thousands of miles from you, the landlord, is to try short-term letting in Britain.
Despite homes being necessary for families, there is no incentive to provide these under the British tax system. Whereas landlords of long-term tenancies find that the mortgage interest relief is set at the basic rate of tax (irrespective of how much it is, actually) this does not apply to holiday/short term lets.
There is far less legislation around short-term lets without the rights associated with a tenancy. The person living in the property is there under licence, with the permission of the owner. Once that permission is withdrawn, there is no right to remain. The landlord can still ask for a generous deposit, which does not need to be protected under one of the tenancy deposit protection schemes, because it is not a tenancy.
The drawbacks of this alternative are that the property must be furnished. It is intended to be viewed in the same way as a holiday let, so that means everything – from plates and cutlery to towels and bedding, with everything in between. It means taking a deep breath and having the courage to strip everything out, decorate and then take a few trips to IKEA.
Furniture need only be functional, and a stripped-back look is very much in style now. You take the same references if you are offering this on a short-term let basis, have the same discussions about how you expect them to behave in the property and any prohibitions about animals etc.
This alternative may not seem possible for some properties. After all, who wants a short-term let in the middle of Salford? Well, here’s a few thoughts.
Television centre at the Quays – do they need to accommodate people occasionally?
What about the two universities? Short-term lets are not appropriate for student accommodation, but what about parents visiting, parents bringing their children for a taster of the area?
There is a large and very good hospital – do they have visiting registrars, students on short-term placements?
Much as Salfordians love Salford, they may not see its’ attractions as a place for holidays, but there is a market for short-term lets and there are probably many equally unlikely areas/towns/cities when it might be an option worth trying.
Alternative property investments that may bring a better return are always worth considering.