Renting out your property is more than just receiving the rent each month and enjoying a new monthly income. There are a number of things you have to consider before allowing tenants to move in. When it comes to renting out your own home, here’s a list of things to think about.
Background research
Looking at other properties in your area is the best starting place. It will give you a good indication of average local rent charges. Letting agents offer another alternative, talk to a few to compare their costs and services they can offer you. A good letting agent will give you realistic market rents and expectations.
Consider the cost implications
While renting out your own home will see a fixed lump sum coming in each month, there are outgoing costs you will also have to take into consideration.
Rental income will be taxed anywhere between 20-40%, depending on the tax bracket you fall into. It also makes sense to have a fund on standby to pay for maintenance and repairs that may be needed during the tenancy.
After these deductions, you will want the rent to cover the mortgage repayments on the property to make the process worthwhile.
Get in touch with your mortgage provider
Your mortgage provider must be told you are planning on renting out your home. If you do not, it could be considered as breaking your agreement, which may lead to large financial penalties on your part.
In order to gain permission, you will have to apply for ‘consent’ from your mortgage provider. This usually means completing a ‘Consent to Let’ or ‘Consent to Lease’ form, an example of this form can be seen on the Halifax website here. This form must be approved by the lender before you can start renting out your home.
Alter your insurance policy
Renting out your home also means it is likely you will have to alter your insurance policy. Let them know as early as possible so there aren’t any delays in making the required changes.
Landlord insurance is also a requirement for anyone renting out their home. This will ensure the property and people who will be living there are protected against a range of possible incidents.
Prepare the property
The next stage involves getting the property prepared for rental. Do you want to use existing furniture, replace it with new items, or rent it out unfurnished?
Before anyone can move in you need to make sure the property is safe and in good working order. This means carrying out repairs where needed, ensuring appliances are in good condition and generally making sure the property is clean, liveable and presentable to prospective tenants.
Find the right letting agent
Whilst you don’t have to use a letting agent, their expertise in the rental market can make the process much easier on your part.
Not only will they be able to take care of the paperwork such as tenancy agreements, deposits, credit checks and references, but they can advertise the property to a wider audience, vet the tenants and liaise with the tenant before passing communication on to you.
There are some charges associated with using a letting agent, but it can prove to be a worthwhile investment when you find the right one to work with. Always ensure they are an Propertymark protected agent such as Regal Estates. Also ensure that have Professional Indemnity insurance before signing any agreement.