Do your research

Look at 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, start looking around at the 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.

Weigh up the costs

It's worth doing the maths to make sure it's 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 need to cover the mortgage payments on your property, at the very least.

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.

Talk to your mortgage lender

When you decide to rent out your house, you must let your mortgage lender know.

Failing to tell your mortgage lender could mean you are breaking the terms of your mortgage contract, so ask their permission before you do anything else.

You will usually have to obtain something called a consent for lease from your lender before you can get started.

Sort out insurance

It's 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.

You will also now have to arrange a landlord insurance policy.

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.

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

Find an agent

You don't have to use a letting agent when renting out your property, but it means you can cut out a huge amount of legwork, 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 do not want to

Agents will generally charge around 10-15% of the rental income you receive, although you may feel this is worth it for the work they do for you.

Ask your letting agent how much they feel you should charge for rent, but remember this decision is down to you. 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. Otherwise, you will need to do this yourself.

Find a lodger and rent out a room

If you don't want to move out, you could rent a room in your home to bring in a little extra money.

Under the government's Rent a Room scheme you can earn up to 7,500 each tax year, tax free by renting a furnished room in your family home.

  1. 1.

    Find a lodger: Advertise your room on notice boards or sites like Gumtree or SpareRoom.co.uk.

  2. 2.

    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.

  3. 3.

    Protect your home: Draw up an agreement including rent amount and due date, let period, notice period and house rules.

  4. 4.

    Inform your home insurance provider: This may increase your 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 you go from being a homeowner and occupier to a landlord. Your new status as landlord will mean you have to:

  • Be responsible for all repairs, maintenance and refurbishments

  • 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 using a letting agent, but this will come at a price.