6 Key Things You Need to Know Before Renting Out Your House
Needing to relocate for work? Struggling to sell? Want to be closer to family? Fancy travelling? If you’re a homeowner, letting your property can be an alternative to selling and a great way to earn passive income. Becoming a landlord and welcoming tenants into your home can be the stopgap you need to get a feel for a new area before putting your current home on the market.
Renting out your home gives security – you will always have a place to call your own and the financial asset can rise in value over time should you sell up in the future. The rental income can cover the mortgage payment or (if you’re mortgage free already) that’s money straight in your pocket.
It sounds idyllic, right? Before you pack your belongings and let your home we will highlight some key points to consider before you make a decision.
Do I need to discussing letting my home with my mortgage provider?
If you decide to let your home, you will need to let your mortgage lender know. Failure to do so could go against the terms of your mortgage contract by renting out your home. People have been caught out by mortgage fraud claims as they didn’t change from a residential to buy-to-let mortgage with their provider.
You may simply need your mortgage lenders approval, known as a consent for lease, which they will be able to provide you. However, this typically only covers short periods and is not intended for ongoing use. Even if there is no clause in your contract relating to letting it is best to touch base with your provider. They may be able to offer any advice going forward which could be valuable on your landlord journey.
If you are mortgage free you are able to do as you please.
Would I need to change my house insurance?
Landlord’s insurance is more expensive but is important if you will be letting your home. The higher premium protects you, your property, and your tenants. It is not a legal requirement to have a landlord insurance policy, but it is very likely that your mortgage lender would advise it is best practice before you take on any tenants. Failure to change your insurance may mean you’re breaking the terms of your mortgage. There are a variety of different landlord insurance policies available so you can shop around before settling on the correct plan for you.
Understanding your responsibilities as a landlord
Renting out your home can be as passive or involved as you like. There are traditional estate agents and online estate agents who will manage the nitty gritty of landlord life on your behalf – for a fee. However, you can handle everything yourself if preferred.
You have legal responsibilities to your tenants, these include:
Health and safety requirements
As a landlord the health and safety of your tenants would be paramount. It is your legal obligation to make sure any fixtures and fittings in your home (that will be remaining or installed) meet the health and safety requirements. This is paramount with gas and electric.
Fire safety checks will also need to be carried out reguarly, this includes checking smoke and carbon monoxide alarms are installed and working.
The government’s renting out your property guide contains everything you need to know.
Maintenance, repairs, and refurbishments
Unless you utilise an agent to manage your home you will be responsible for anything and everything that occurs in your home that is covered contractually. Gas leak? You will need to help your tenant. Boiler on the blink? You will need to pay for it to be fixed or replaced. Water leak? You guessed it, time for you to step in.
Sadly, this also means that you could potentially need to repair anything damaged by tenants. Whilst accidents happen (and wear and tear overtime are inevitable) some tenants can leave properties in disarray. Your insurance may cover some damages but, if not, you will need to pay out of your pocket to get your home ready for the next tenants.
You will need to have an Energy Performance Certificate for your home. It is a legal requirement to have a valid EPC whether you’re selling or letting your home as it needs to be available to interested parties.
Keeping your tenant’s deposit safe
You will need to store your tenant’s deposit in a government-approved Tenancy Deposit Scheme. This gives you both peace of mind that the sum is looked after and available to cover damages or returned in full when they vacate your home.
Is letting your home for you?
Above we have just covered the top considerations for anyone thinking about renting out their home. Whilst there are clear advantages and disadvantages, it is worth keeping in mind that any income generated by a rental property is subject to income tax and national insurance. The amount you pay will be dependent on the rent made from your home and you will need to submit all details with HMRC.
Renting your home may be an attractive option or we may have scared you off the idea completely. Should you decide to move on, you can sell your house online with SOLD.CO.UK. We are the UK’s fastest estate agent and choosing us to sell your home doesn’t cost a penny. SOLD.CO.UK will manage the sale from start to finish, always keeping lines of communication open and transparent. If you want to sell book a free online valuation with us or call 0800 566 8490 to talk to one of our property experts.