Key Summary
- Manchester’s property market favours landlords due to high rental demand and lower property price growth, achieving up to 8% rental yields.
- Renting a house can provide steady income, property appreciation, tax benefits, and flexibility, despite potential property management challenges.
- Selling a house might be ideal due to personal finances, future plans, or property conditions, but market conditions and interest rates must be considered.
Manchester Property Market
Manchester’s property market offers opportunities for sellers and landlords due to shifts in the city’s property landscape.
The cost of living crisis that the country is currently gripped by has reduced people’s ability to afford to buy property which has led to a boom in the rental market. Demand now outpaces supply for rental properties. For those that own property, there is now a strong opportunity to consider renting out their properties rather than selling up.
Meanwhile, property price growth has slowed, with only a 1.9% increase in prices year on year as of May 2023, a significantly slower growth rate than in previous years. This slowdown could motivate potential sellers to consider becoming landlords to capitalise on high rental demand.
Landlords can currently enjoy average rental yields of 5.17% in Manchester, with some parts of the city garnering up to 8% in rental yields, demonstrating that it is a lucrative market that can offer a steady income stream.
Should I Rent or Sell My House
Deciding whether to rent or sell a flat or house is a decision that requires comprehensive evaluation of factors, including market trends, value, possible rental income, expenses, and potential appreciation. Before making a final decision, you should find out how much your house is worth to rent or sell and work out which is financially better for you right now.
The current Manchester rental market is achieving some of the UK’s highest rental yields, making it a sensible investment area for those looking at renting a house out.
You may also find yourself in a situation where you need to rent your house out. It’s estimated that up to 30% of landlords are ‘accidental,’ letting out their homes due to being unable to sell or temporarily working away.
For many who have ended up as an accidental landlord, it has been a success and led to successful buy-to-let portfolios. For others, however, it has resulted in financial losses because of property damage or delayed rental payments.
How Much Can I Rent My House For?
The amount you can rent your property out for is going to depend on factors such as size and location but, ultimately, the rental market is a lucrative one.
A letting agent or property management company can properly advise on an accurate price, but as a rough guide, the average rental price for properties in Manchester is £1079 a month.
As a guide, here are some of the most popular areas of Manchester and their average rental prices:
| Area | Average Rental Price (Per Month) |
|---|---|
| Didsbury | £1287 |
| Chorlton | £1008 |
| Salford Quays | £962 |
| Northern Quarter | £1088 |
How Much is My House Worth to Rent?
The worth of your property on the rental market will be influenced by the area it is situated in, for example, closer to the city centre is likely to increase the value.
You will also want to think about the condition it is in. A well presented home presents a far more appealing prospect so you may want to think about a revamp before putting it on the letting market. Investing in design elements such as modern technology, new flooring, kitchen and bathroom suites, can all help to increase the property’s rental value.
Is It Worth Renting Out a House?
The decision to sell or rent a property can impact on your financial stability and future wealth, making it crucial to understand reasons to rent out a house. Here’s the main ones:
Steady Income Stream
Renting out a house can provide a consistent income every month, which can contribute to your financial stability. Of course, how much you can rent your house out for will depend on numerous factors, such as location and number of rooms, but this income can be used to pay off your mortgage or invested elsewhere.
Property Appreciation
If your property is in an area experiencing growth or expected to grow, renting out the house can allow you to benefit from increased property value over time. By holding onto the property, you could potentially sell it for a higher price in the future.
Tax Benefits
Landlords often enjoy various tax benefits. The income generated from rent is taxable, but you can often deduct expenses related to the property, including mortgage interest, property taxes, insurance, maintenance costs, and even depreciation.
High Demand in the Rental Market
With more people unable to save for a house deposit due to the current cost of living crisis, the rental market’s demand is currently high. By renting out your house, you are likely to find tenants quickly and maintain a low vacancy rate.
Potential for High Rental Yields
Depending on the location and type of property, you may be able to charge a substantial rent that results in high rental yields. Areas with higher rental demand often yield higher rental income.
Flexibility
Renting out your house provides you with flexibility. If your circumstances change, you can decide to move back into the house, sell it, or continue renting it out.
Wealth Building
Renting out your property allows you to hold onto a valuable asset while another party (the tenant) helps pay off the mortgage. This arrangement can contribute to your overall wealth and act as a stepping stone to additional real estate investments.
Renting a Property | Pros and Cons
Pros
- Steady income stream
- Property appreciation
- Tax benefits
- High demand in the rental market
- Potential for high rental yields
- Flexibility
- Wealth building
Pros
- Property management responsibilities
- Potential issues with tenants
- Costs associated with property maintenance
- Risk of vacant periods
- Legal obligations
- Dependence on market conditions
Is Now a Good Time to Sell My House?
We’ve looked at reasons to rent, but now let’s look at the reasons to sell as well as the pros and cons:
Market Conditions
Reports from iNews reported a 2.6% drop in house prices this year to June, which are less than encouraging, but it’s essential to remember that real estate markets can be cyclical. The fall in prices could be a temporary setback before a potential upswing.
Interest Rates
Higher interest rates generally make mortgages more expensive, which can lead to a decrease in demand from potential buyers, however, if you’re planning to purchase another property after selling, these same high-interest rates could impact your new mortgage.
Personal Finances
If your financial situation has changed for the better or worse, it might be a good time to reevaluate your assets. Selling a house can either inject your savings with a significant boost or relieve you from a costly mortgage.
Future Plans
If you’re planning to move out of the area or downsizing, selling your house could be a good step. Similarly, if you anticipate a change in your lifestyle or family size, selling now might be a good move.
Property Condition
If your property is in excellent condition and you’ve made recent upgrades, you might be able to get a good price despite the overall market conditions.
Real Estate Demand
Even with the fall in house prices, demand in certain areas or for certain types of properties might still be high. If your house falls into one of these categories, selling now could be profitable.
Tax Implications
Depending on your circumstances, selling a house could have various tax implications. It’s essential to consider potential capital gains tax and the impact on your overall tax situation.
Selling a Property | Pros and Cons
Pros
- Potential for significant capital
- Freedom to relocate or change living conditions
- Positive impact on personal finances
- Opportunity to capitalise on property improvements
- Alignment with future plans
- Potential high demand for your specific property type
Pros
- Impact of falling market prices
- High-interest rates reducing demand
- Possible tax implications
- Dependence on real estate demand
- Risk of property not selling quickly
How Do I Rent Out My House?
To rent out your house, there are several key steps to take. Each step involves meeting legal requirements and ensuring health and safety measures. Here is a step-by-step guide:
Understand Landlord Responsibilities
Familiarise yourself with the rights and responsibilities of being a landlord. This includes understanding the terms of leases and how to handle tenant issues.
Comply with Legal Requirements
Ensure you meet all necessary legal requirements. These include obtaining relevant landlord licences, registering your property with the local authority if required, and complying with health and safety regulations.
Prepare the Property
Make any necessary repairs and ensure your property is safe and habitable. It’s also advisable to present your home in the best possible light to attract potential tenants.
Set a Competitive Rent
Research the local market to set a competitive rent. Factors to consider include location, property size, condition, and local rental rates.
Find and Screen Tenants
Advertise your rental property and screen potential tenants. This process can include credit checks, tenant references, and interviews.
Create a Rental Agreement
Draft a legally sound lease agreement that details the terms and conditions of the rental. This includes the rent amount based on fair rental value, payment details, lease duration, and tenant responsibilities.
Manage the Property
Ensure ongoing property maintenance and respond to tenant issues. This can be a time-consuming task, and hiring a property management company can ease the burden.
Frequently Asked Questions
Why do people rent instead of selling?
Renting offers a form of monthly security in the fact that it provides a stable income stream, but it also has the potential of property appreciation too.
Are more landlords selling properties?
There has been an increase in sales by landlords in the last few years which is likely to have been as a result of the high property prices, but as prices look set to dip in 2023, sales of rental properties may also falter.
There may be some landlords selling up in 2023 as a result of the cost of living crisis which may see some landlords being forced to sell up to free up their equity for personal use.
Conclusion
The decision to sell or rent your house requires thorough consideration of various factors including market trends that are specific to Manchester, rental yields, and your personal situation.
Whether you choose to step into the shoes of a landlord or embark on the path of a seller, both routes present unique opportunities and challenges that must be thoroughly evaluated to ensure they suit your needs.
If you are looking to rent out your home but need some help managing your property, contact MMC Management to see how we can help!
