How to rent out my house

When selling up seems impossible renting out can be a handy alternative. We take you through what you need to consider if you are thinking of renting out your home.

Updated on 4 June 2015.

estate agent handing keys office

If you have been unable to sell your house in a slow market then renting the property instead of trying to sell it can be a gainful alternative.

You might not want to sell your property but wish to live elsewhere for a while, for example taking 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.

Whatever your reason, anyone can rent out a property with the right know-how.

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Do your research

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, how much they charge, and so on.

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 out more about how but to let mortgages work by reading our guide.

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 extra work they do for you. For more information read our guide, Letting Agents: Are They Really Worth the Cost?

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 tenants

If you are using one, you may prefer that your lettings agent does this completely on your behalf, or you may want to meet potential tenants before deciding on who you would be happy with living in your property.

If you are 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.

If you are worried about picking the wrong tenants, read our guide that explains how you can protect yourself against the tenants from hell!

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. but remember that if you do leave some of your own furniture or belongings in the rented property these should be minimal.

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 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 will also now have to sort out a new type of insurance known as landlord insurance. This covers your home when you are not living there and have tenants living there instead. You can explore landlord insurance products using our comparison table to find a suitable policy that will not only protect your property, but your tenants and your investment as a whole.

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. Read our guide for help finding the cover you need.

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 will really have to sit down and do the maths 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 are not receiving any rental income.

Remember, if you are moving to a new house and now have two properties to look after, there is double the chance one of them could need sudden expensive repairs, so you will need to keep some money by for this too.

Make sure you are aware of these 10 profit draining landlord costs costs before you decide to rent out your house, and read our guide outlining the pros and cons of having a buy to let property.

Find a lodger and rent out a room

If you do not want to move out you could rent out a room of your home and bring in a little extra money while you try to sell your house.

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. This roughly equates to a tax-free income of 354 a month or 81 a week.

Here is what you will need to consider:

  • Finding a lodger - advertise your room on notice boards or sites like Gumtree or
  • Vetting 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?

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:

  • 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.

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Further reading...

Should you invest in a buy-to-let property?

Investing in property is still a great way to make your money work for you, but as attractive as it may seem, getting a buy to let property is not a one-way ticket to riches. We take a closer look at the pros and cons.

10 profit draining landlord costs you won't see coming

Being a landlord could make you a tidy profit, but it's easy to get carried away being a mini-entrepreneur and overlook some of the costs. Here are 10 unexpected expenses you need to plan for.

How Section 21 and eviction work

Around 7 in every 10 notices served under Section 21 are rejected in court due to mistakes or improper conduct. Here's what you need to know to protect yourself.

Are letting agents really worth the money?

I'm one of those money-grabbing vultures responsible for inflated house prices and preventing first-time buyers getting on the housing ladder. Yes, I confess, I'm a buy-to-let landlord.