Downsizing has become common practice in freeing up capital, but selling off the family home may not be the only way to subsidise hard-hit pensions, according to the Association of Residential Lettings Agents.
"With many potential buyers struggling to secure a mortgage, letting your family home rather than selling offers a strong alternative," said ARLA's President, Tim Hyatt.
"Rental returns stand at an average of 6.1% this year, according to research from Knight Frank. This substantially beats the returns on many other current investment opportunities.
"ARLA members also report that achievable rent levels are increasing, while demand for good quality rental properties remains high. While market conditions remain so inclined, it could be prudent to let out the family home, and use the monthly rental income to invest in renting a smaller retirement home."
According to ARLA research, "renting to retire" is also a key motivating factor in the buy-to-let market. For example, more than two-fifths (42%) of today's landlords originally invested with a view to creating a retirement "nest-egg".
ARLA's tips for anyone "down-letting" a property to rent for the first time are:
* Notify your mortgage and insurance providers: letting out a property requires a different form of mortgage from owner-occupation so consulting your mortgage lender on their terms. The same applies to insurance, as your buildings and contents may not be covered unless you discuss this change with your provider first. Taking out insurance to protect against a tenant defaulting on rent is also a sound investment in a tough economic climate;
* Sign up to Deposit Protection: this has been mandatory for all landlords since April 2007. Deposit protection legislation requires deposits on all Assured Shorthold Tenancies to be protected under a scheme licensed by the Government. For more information, visit the Communities and Local Government website, www.communities.gov.uk/
* To furnish or not to furnish: It is possible to charge more for a furnished property. However, a home furnished with second-hand or "leftover" furniture may deter prospective tenants and may even contravene Furniture and Furnishing Regulations.
There are also regulations governing the installation of electrical equipment in rental properties - ensure that these are being followed and that any equipment in the property is regularly tested, as you will need to prove your property is safe. The same is also true for gas appliances, which must be certified and checked annually.
* Hands-on: Enlisting a managing agent to oversee the property can be of great assistance, especially if you are moving away from the area. At the very least, working with a lettings agent to advertise and fill your home should make the process smoother.
Select the agent carefully, always use a regulated agents (such as ARLA members) to ensure client money protection, thereby securing both your money - and that of your tenants' - and access to a redress scheme should it be required.
* Let go: Finally, in all the decisions you make about letting out your home, remember that it is no longer your home - no matter how much you love it, it is now a home for someone else and, hopefully, an income stream for you. The chances are that accidental damage or wear-and-tear will happen, and tenants will complain - so try and keep a clear, detached head when dealing with those kinds of issues and don't take it personally.
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