When selling up seems impossible renting out can be a handy alternative. We take you through what you need to consider if you’re thinking of renting out your home.
Renting can be a cost-effective and even lucrative tack to take when, for whatever reason, selling your house doesn’t suit you.
For example you might not be able to sell your house in a slow market or might not be able to get the asking price you originally wanted for it – in these cases renting the property instead of trying to sell it can be a gainful alternative.
Otherwise, you might simply not be ready to sell your property but wish to live elsewhere for a while, such as for example to take a career break and live abroad for a number of months. You would want to come back to your house at the end of this time but meanwhile you could be earning rent on the property.
On the other hand, you may simply have a second property that would otherwise go empty, and you want to earn a second income on that property by renting it out.
Whatever your reason, anyone can rent out a property with the right know-how.
Talk to your mortgage lenderFirst and foremost, when you decide to rent out your house you must let your mortgage lender know of your intentions. Failure to tell your mortgage lender you are renting out your house is likely to mean you’re breaking the legal terms and conditions of your mortgage contract, so before you do anything else, approach your mortgage lender and ask their permission. You’ll usually have to obtain something called a ‘consent for lease’ from your lender before you can get started.
Do your researchBefore you start setting the wheels in motion to make your house a rented property, it’s a good idea to do a bit of your own research into the letting market. Look into the sorts of properties being let in your area and how much rent they are asking for.
You should also start looking around at the different lettings agents in your area, the sort of service they offer, how much they charge, and so on (if you decide to use a lettings agent rather than a DIY approach, of course).
Find an agentOf course you don’t have to use a lettings agent when renting out your property, and you can do the whole thing yourself (although if you decide to do this it is likely to be a good idea to seek the advice of a solicitor, accountant, or at least someone who has done it before).
Using a lettings agent however can cut out a huge amount of the legwork of renting out your property as they will advertise your property for you, show prospective tenants around, draw up a tenancy agreement, and can deal directly with the tenant on your behalf if you’d prefer to keep things at a distance.
Agents however will generally charge around 10-15% of the rental income you receive, though you may feel this is worth it for the extra work they do for you. Ask your lettings agent how much they feel you should charge for rent, but remember that this decision is down to you so it may be useful to gather opinions of two or three agents before settling on a figure.
Vet prospective tenantsYou may prefer that your lettings agent does this completely on your behalf if you are employing the services of one, or you may prefer to meet potential tenants before deciding on who you would be happy with living in your property. If you’re using an agent they can also perform reference and credit checks on potential tenants to ensure everything is above board - if not, you will need to do this yourself
You’ll need to decide whether to let your house furnished or unfurnished, but remember that if you do leave some of your own furniture or belongings in the rented property these should be minimal – it’s also a good idea to remove anything from the property that’s precious or fragile; at the least they’ll show wear if you keep them in the property and at worst they could be damaged or stolen.
Before the new tenants move in you’ll have to make sure any repairs on fixtures and fittings have been carried out and all appliances are in good working order, plus it may be a good idea to give the property a mini-makeover to ensure everything is well-presented and up-to-date.
Sort out insuranceIt’s very important that your current insurer knows of your intention to let your property, both in terms of your buildings and your contents home insurance. These policies may need to be amended or added to as necessary now that your home is becoming a let.
Crucially, you’ll also now have to sort out a new type of insurance known as landlord insurance. This covers your home when you aren’t living there and have tenants living there instead. It may also be worth looking for landlord insurance that would pay out in the event that your tenants default on making payment if you are worried about this happening.
What are the drawbacks?While you might be making a tidy second income from your tenants’ rent, any rental income you receive may be taxed at your usual rate (20% if you are basic rate taxpayer, and 40% if you are a higher-rate taxpayer). You would have to take into account this deduction as well as any deductions from your agent if you are using one, then see how much you are left with.
This net figure would have to at the very least cover the mortgage payments on that property, and ideally leave you some surplus in case you need to do any maintenance and repairs on the property. As such you’ll really have to sit down and do the math to make sure it is worth it financially before you decide to rent.
You may also need to factor in a back-up fund in case you need to continue paying the mortgage between tenants when you aren’t receiving any rental income. Remember, if you are moving to a new house and now have two properties to look after, there’s double the chance one of them could need sudden expense repairs, so you’ll need to keep some money by for this too.
What else should I consider?Ultimately the decision to rent out your house will mean that you go from being a home-owner and occupier to a landlord, and with your new status as landlord you will have certain new responsibilities. For example, as well as being responsible for all repairs, maintenance, and any necessary refurbishment to your rented property, you’ll have to make sure your home is up to scratch before you rent it out.
You’ll need to fit smoke alarms and extractor fans if you don’t already have them as well as have any gas appliances tested by a CORGI-registered engineer.
You’ll also need to make sure any upholstered furniture is fireproof. Landlords must also now have an Energy Performance Certificate arranged for their tenants, as well as register with the Tenancy Deposit Scheme which holds the tenancy deposit independently to then be returned to the tenant at the end of the tenancy as long as everything is still in good condition.
i am renting my house for housing association ,i would like to know the best deal for home insurance please.
Hi Raesetja or anyone else who is currently looking to rent out there property please contact me for free advise on my web site www.pads247.com or www.facebook.com/Pads247
hi, i want to rent out my house 4 bedroom. what do i do.
I will help you you can drop me a email on my email I will give you some best deal to rent your houses
hi i like to rent my 5 bed house for rent can you help me ?
good afternoon I am a lettings Negotiator so in terms of lettings that is something I specialize withinShauna Thanks
You also need to get an Assured Shorthold Tenancy (AST) agreement etc
hi sally, great article, and as a landlord myself note it is easy to understand for any newbees there is only one thing that needs updating CORGI is no longer recognised it is now Gas Safe - registered engineer
Good advice, I'm thinking of renting out my house and its given me an idea about where to start and what to research. Thanks!
I want to rent out my 1 Flat sector-34, noida
I want to rent out my garden shed. Is this the same as renting out my house?
hi meandmyshed and welcome to the forum, not really, unless it's for someone to live in, in which case you would need to apply for change of use, if it's just for someone to use as a shed it would just be an agreement between you and the other person but remember you should declare it for tax purposes as it would be classed as income.
if i rent my house out and live abroad where do i get insurance from
hi selby16 welcome to the forum, you should be able to get insurance from any of the major insurance companies as it's the house you are insuring not you, it would need to be a landlord's insurance though and assuming everything else is ok, if there is a mortgage on the house you will need to check with the mortgage company to see if it is allowed, there are other areas you would need to look at i.e. having an letting agent, checking your tax liability etc.
hope this helps
I am renting my friends house as she lives abroad but it was a private contract and was not done through an agency. Now the house insurance has run out and she is having trouble finding an insurance company that will insure the property because there is no agency involved in the letting. Do you know of any insurance company that will insure a property on this basis, or is there some law preventing them? If so, how on earth is she going to get the property insured?
hi casacoco58, have you considered trying to insure it as a tenant, it may be a way around the problem, even if the premium is paid by her out of your rent.
i hope this helps
i am in need of a house in welkom freestate. from 1 July 2013. who can help me.
My property is not selling, so im seeking to rent this off as ive put an offer to buy another.Mine is leasehold, so I will need to sublet...Paying an agency i think helps with keeping it distance between the landlord and tenant.Some agency pay the rent even when it is empty, but I sure it will be alot less.
hi itchybeard, welcome to the forum, you will need to check the terms of the lease to make sure you can sub-let, if this is ok then it is basically the same as a buy to let BUT make sure you have the proper insurance in place as you will still be responsible for the property as you are the lease holder, a letting agent is a good idea as a good agent (depending on your package) will find, vet and manage the tenant for you.good luck and i hope this helps
Thanksthe management of the lease charges £180 just to apply, then extra once a tenant has moved in..!On a new mortgage, as seen as risk? interest will go up on the renting property, if they know...also landlord insurance and do it myself or get charged 9% monthly for estate agent to run this.
9% letting agent's fees is quite good, it can range from 7% to 15% for full management, which normally includes finding and vetting tenants, collecting rent, placing the deposit in deposit scheme, inventory, regular inspections of property, etc, etc i know it sounds a lot of money but it is worth it because if something does go wrong they will either get it sorted of help you get it sorted, i would also recommend a 6 month AST (Assured Shorthold Tenancy) with new tenants to start, this allows you both to see if you are all happy, then at the end of the term if this is the case you can if you both wish re-new the AST for another 6 months or increase it to 12 months.
Hi itchybeard, we run an on line letting agency that charges £299 for managing a property & then £39pcm plus we will give you for free an EPC or gas safe both of which you must have by law.www.pads247.com
Hi,I've been trying to sell my property without any luck. I'm now considering renting it out. Price I've been told I can rent out for is £525 PCM As I intend to move into and rent someone else's property at £600 PCM Do I still have to pay tax on the profit of property I own and am renting out? This will leave me well short.And also what sort of difference in mortgage prices are there usually from living in yourself and renting out? I'm considering changing to a pay interest only deal. Any responses would be very helpful and I would be most grateful.ThanksDan
quite frankly i dont see the point, if you want to rent out it should be to cover your expenses, where are you saving money
Hi Dan, you should be trying to make a profit but if that's not possible, then you should be at least looking to cover your cost so you could put your price up £25 on your property and the property your looking to rent negotiate a lower price Sometimes property's don't sell because they need a make over or the price is to high.As for the interest only mortgage get your calculator out.Check me out on www.pads247.com & www.facebook.com/pads247
Hi Sally, thanks for the great article and tips. We have a Landlord Advice guide available for free that we would love to share with your readers..http://www.lettingaproperty.com/landlord/advice. Happy Letting!
i hope this helps.
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If you want to rent your house, just look here http://london.localmartuk.com/flats-and-houses-for-rent/ My friend has recommended me this page and I posted there my advertising describing the house and added an eye-catching photo. There are thousands of people who search there. You should only choose the city, the price and that's all.
Hi i have family member living in house rent free we pay morgage but morgage company says we still need consent to let?
Hi i have my mum living in our house rent free we pay morgage but mortgage company say we need consent to let
Can any1 help
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