Do your research
If you struggle to sell your house, renting the property can be a handy alternative.
You might also wish to live elsewhere for a while (such as travelling or working abroad). Meanwhile, you could be earning rent on the property.
Before you start setting the wheels in motion to make your house a rented property, it is 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.
If you plan to use a letting agent you should also start looking around at the different options in your area, including the service they offer and how much they charge. If any of your friends or family are landlords, ask them for recommendations.
Talk to your mortgage lender
When you decide to rent out your house you must let your mortgage lender know your intentions.
Failure to tell your mortgage lender you are renting out your house is likely to mean you are breaking the legal terms and conditions of your mortgage contract, so before you do anything else, you need to ask their permission.
You will usually have to obtain something called a consent for lease from your lender before you can get started.
Find an agent
You do not have to use a lettings agent when renting out your property, but it will mean you 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
Deal directly with the tenant on your behalf if you don't want to
Agents, however, will generally charge around 10-15% of the rental income you receive, though you may feel this is worth it for the 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 the opinions of two or three agents before you decide.
Vet prospective tenants
You may want to meet potential tenants before deciding on if you would be happy with them living in your property, or you may prefer to leave it to your letting agent, if you use one.
If you use 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.
Get your property ready
Before you make your property available for rent, you will need to decide whether to let your house furnished or unfurnished.
Other things to consider before any tenants move in include:
Remove anything from the property that is precious or fragile
Make sure any repairs on fixtures and fittings have been carried out
Ensure all appliances are in good working order
Give the property a mini-makeover to ensure everything is well-presented and up-to-date
Sort out insurance
It is very important that your current buildings and contents insurer knows of your intention to let your property, as these policies may need to be amended.
Crucially, you will also now have to sort out a new type of insurance known as landlord insurance.
Landlord insurance can protect your property itself, your tenants and your investment as a whole. Some can also pay out if your tenants miss rent payments.
Drawbacks to renting out your house
It is worth doing the maths to make sure it is worth it financially before you decide to let out your home.
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 will have to take into account any tax deductions as well as letting agent fees, 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.
Ideally, it should also leave you some surplus for a back-up fund in case you need to do any maintenance and repairs on the property. This could also cover paying the mortgage between tenants when you are not receiving any rental income.
Find a lodger and rent out a room
If you do not want to move out, you could rent out a room in your home and bring in a little extra money.
Under the government's Rent a Room scheme you can earn up to £4,250 each tax year, tax free by renting a furnished room in your family home (due to rise to £7,500 each tax year from April 2016). This roughly equates to a tax-free income of £354 a month or £81 a week.
Here is what you will need to consider:
Vet potential lodgers: ask for references, preferably from a previous landlord, so you can verify their identity and ensure they will make a reliable tenant
Protect your home: draw up an agreement including rent amount and due date, let period, notice period and house rules
Inform your home insurance provider: this may increase you premiums but will also ensure you policy is valid and will pay out for any claims you make
What else should you consider?
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:
You will be responsible for all repairs and maintenance
Taking care of refurbishment when required
Fit smoke alarms and extractor fans where required
Have any gas appliances tested by a Gas Safe registered engineer
Make sure any upholstered furniture is fireproof
Arrange an Energy Performance Certificate for your tenants
Register with the Tenancy Deposit Scheme
As well as these responsibilities you will need to be prepared to be on hand when you get a call from your tenants, as many issues will need attention immediately (a gas leak, for example). You can avoid this stress by handing the reigns over to a letting agent - but this will come at a price.