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 18 May 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.

If you only want to rent out a room of your home and find a lodger, this is the guide for you.

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Renting your property out can be stressful, especially if you encounter unexpected expenses. Compare landlord insurance to get the protection you need for less.
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Whatever your reason, anyone can rent out a property with the right know-how.

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.

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.

Written by at money.co.uk

Compare Landlord Insurance
Renting your property out can be stressful, especially if you encounter unexpected expenses. Compare landlord insurance to get the protection you need for less.
Compare Landlord Insurance

Further reading...

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Pros & Cons of Investing In a Commercial Buy-To-Let Property

Investing in property doesn't only mean buying homes to rent out. Investing in property that's let out to businesses can be a stable and profitable investment, but there are drawbacks too. Here's a look at the pros and cons.

Labour's Mansion Tax: What We Know So Far

Ed Milliband has unveiled a new "Mansion Tax" to help pay for the NHS should Labour win the 2015 election but his plans are still sketchy. We examine what we do know, and who might have to pay.

Buy to let taxes: what you'll owe & easy ways to pay less

Buy-to-let properties can make you a healthy profit from rental income, but they can also land you with a hefty bill from HMRC. This guide outlines taxes you'll be expected to pay and how you may be able to legally sidestep them.