How to rent out my house

More homeowners are renting out their properties, whether to allow them to move without selling or to try and make ends meet, find out what you need to know about letting your home.

The high cost of moving, the property slump, recession and the buy-to-let phenomenon have all contributed to more homeowners considering letting out their home rather than selling it.

Those choosing to do this have been dubbed accidental landlords, but before you decide to join this group there are vital things to consider. Follow our five step plan.

1. Do the sums

Before deciding to rent out your home you will need to make sure the plan works financially. Firstly, you need to know how much you can rent your home for and how this compares to your other costs and mortgage payments

Get to know the local market and see what similar properties are asking in rental. Having done this, invite three rental agents round to assess your property and give you an estimate of the rent you could receive. This will give you a broad base to work out the rent you can expect from and carries no obligation to go with that agent.

Once you have an estimated monthly rent, compare this to your mortgage costs and other costs. Take into account any rental commission taken by an agent, your monthly mortgage payments and also the cost of maintaining the property, as you will be responsible for repairs and maintenance etc. Bear in mind that by renting out your home and moving to another you will be maintaining two houses, although your new tenants will pay utility and council tax bills.

2. Get an agent or do it yourself.

A lettings agent will find you a tenant, do all the paperwork and manage the rental for you. They will charge for this, typically up to 15% of monthly rent and may also ask for a tenant finding fee. Check charges carefully. They can be high, especially in London, and make sure there are no hidden extras such as landlord charges for contracts, inventories, cleaning etc.

Compare agents and choose a good one rather than just a cheap one, this will save you a lot off hassle in the long run. Also beware those offering excessively high rental estimates, they may take longer to rent your property and in the meantime you’ll still be paying the mortgage.

If you decide not to use an agent, be aware that you will need to be able to sort out any problems, do all the leg and paperwork and get repairs done swiftly.

When choosing an agent experience and reputation is vital. It doesn’t have to be a big firm – small independent letting agents with years of experience will often go the extra mile for you.

Lettings agents are not regulated but there are trade organisations, such as the Association of Residential Lettings Agents. Often you will be told to always choose one of these organisations’ members, however, some long-standing small agents choose not to be members and should also be considered. If you have any concerns as to why they are not members, ask them to explain why.

3. Speak to your mortgage lender

Many people rent out their property and do not tell their lender. They should not do this. Technically your lender must be told if you want to let out your property and the best way to do this is to request permission to let.

Explain why you need to do so, and if you run into difficulties explain that it is because you need to move but cannot currently afford to sell, or have financial constraints that would not let you do so or continue to live in the property. Explain it is a temporary arrangement.

The lender should be reasonable on this and not force you onto a buy-to-let deal on a higher rate and allow you to let out the property for at least a year or two. They may ask for a fee for permission.

If your lender is unreasonable, complain in writing and if necessary contact the Financial Ombudsman. However, be aware they do have the right to turn you down.

4. Find out about buy-to-let and know the rules

You may not be letting out your home as an investment but you should still get familiar with buy-to-let, its financing, the tips for landlords and its rules and regulations.

This is especially vital if your lender says you can rent out your home on the same mortgage rate but it will transfer you to a buy-to-let loan.

5. Get insured

You will need different buildings insurance as a landlord than as an owner occupier and potentially contents insurance. This is more expensive than traditional home insurance but do not skimp, it is essential to at least have your building covered and usually a mortgage requirement and is also advisable if letting a furnished property to get some contents cover. You can search for insurance with This is Money’s landlord insurance finder.

Another good insurance policy is one that covers the rent if tenants default and do not pay up. This is especially important during a recession when people are losing their jobs. You can get this either through your landlord insurance or a standalone policy.


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