Moneyfacts.co.uk have published an article on taking pets in rental property.
Last year saw a boom in pet ownership, but for many people having a four-legged friend can make finding rental accommodation a challenge which could prove a lucrative investment opportunity for landlords.
Allowing pets in rental homes has become a growing issue and government statistics estimate that just 7% of private landlords advertise pet friendly properties. Although earlier this year the Government aimed to tackle this issue with its Model Tenancy Agreement that makes it easier for tenants with well-behaved pets to find rented accommodation, the growing number of pet ownership means that many tenants with pets still struggle to find suitable accommodation.
As a result of this, those considering a buy-to-let (BTL) investment may find that that their investment is more successful if they allow tenants to have pets in the property.
The advantages of allowing pets in BTLs
One way that allowing pets in BTL properties can be to the landlord’s advantage is that it opens the property up to a wider market, making it easier to find new tenants when previous occupants move. This may help to reduce the time the property stands empty, during which time landlords may find themselves having to cover mortgage repayments and bills without rental income.
Another advantage of allowing pets in BTL properties is that it may encourage good tenants to stay in the property for longer, especially if finding a new rental property is a struggle, helping to save the landlord the potential hassle and money of finding new tenants.
For landlords with multiple bedroom BTL houses, allowing pets in the home may also help to attract families to the property, who are likely to stay in the property longer than those in a house share.
The disadvantages of allowing pets in BTLs
While there are advantages to allowing pets in BTL properties, there are also a number of disadvantages. The main one being that a pet has the potential to cause damage to the property. Landlords can mitigate against this by pet-proofing the home, such as removing rugs and expensive furniture from the property. As well as this, landlords should keep in mind that tenants are normally obliged to return the property in the same state in which it was initially rented, as such tenants should pay for any damage their pet causes or the money can be removed from their deposit.
As well as this, landlords should look to ensure that their insurance policy covers accidental damage caused by pets to ensure that they are not out of pocket if the pet does cause damage to the home.
How to fund a BTL investment
Clearly there is a demand for BTL properties that allow tenants with pets, which means that this could be a lucrative investment for landlords. Those considering investing in BTL should read our guide 5 steps to becoming a BTL landlord for more information on how to start investing in a BTL property.
The usual way to fund a BTL property is with a BTL mortgage and right now the market is highly competitive with rates from as low as 1.19% in the two year fixed BTL mortgage chart and 1.59% in the five year fixed BTL mortgage chart. Saying this, when looking at BTL mortgage deals, landlords should consider a range of factors, including product fees, and not just the rate. For many landlords it may be worthwhile speaking to a mortgage broker who will be able to help them select the right deal for their investment requirements.
Another way some landlords choose to fund their BTL property is with a bridging loan. A bridging loan is more expensive way to fund the investment compared to a BTL mortgage but it has the advantage of often being quicker to get approval, so can be a good option for landlords looking to purchase a property in a hurry, for example through an auction, or those who have purchased a property that needs renovating. More information about bridging loans and the rates available can be found on our bridging loans page.