What to consider when thinking about letting your home.
Choosing to become a private landlord is a big step. There are plenty of things to think about. Not least the financial aspects. But, if you're thinking about letting your home here's the most pressing things you should consider before taking the plunge.
Where will you live?
Pretty obvious really. But people let out their homes for a variety of reasons.
- You may be unable to sell your property.
- You are moving away but don't want to sell your current home.
- A new job means you have to temporarily relocate.
- A family emergency means you have to move in with a relative.
Whatever the reason you're considering letting your home you need somewhere else to live when your tenant moves in. The minimum assured shorthold tenancy is six months. Once let you won't be able to take your property back until the end of that fixed period.
Do you still have a mortgage on your home?
If you own your home outright there's no obstacle to immediately renting out your property. However if you still have a mortgage on your home you need to inform your lender of your intentions.
The terms of a normal residential mortgage usually forbid the borrower to rent out their property. This is why you need to tell your lender about your plans. The likely outcome is your lender will switch you to a buy to let mortgage. But this could mean an increase in your monthly payments. You will need to factor this into your rent calculations.
Do you have adequate insurance?
As a homeowner you'll know the logic and benefit of buildings insurance. But what you may not be aware of is that once you become a private landlord you will need specialist insurance. Your homeowner’s policy will no longer be valid.
At the very least you need buildings insurance. But you should also look into adding contents (if the property is furnished) and rent protection. You should note your policy will not cover your tenant's possessions. They will need to take out their own contents insurance.
Is the property ready to let?
Remember you will soon have tenants coming to see your home. They need to be impressed. The property needs to be clean, freshly decorated and with good condition appliances. Before trying to find tenants consider how much work you'll need to do to get the property ready. Then consider how much that work will cost. And how long it will take. Does that fit in with your financial projections?
Are you able to charge a high enough rent to cover your costs?
Whether you're thinking about becoming a full-time private landlord or are just looking for an additional income you need to carefully calculate the rent you'll charge. It must be enough to at least cover your expenses. And that includes the all-important mortgage payment. But of course you do want to make a profit.
However, setting the rent isn't straight forward. Pitch it too high and you run the risk of scaring tenants away. Set it too low and you will find yourself in the red. To help you find the ideal level check out this article.
Do you have the knowledge you need on legalities and compliances?
The private rental sector is highly regulated. And rightly so. But it does mean you have to keep abreast of current regulations and new legislation. Your letting agent can help with this. However the things you need to be aware of include:
- Deposit protection scheme. This is a legal requirement and non-compliance can lead to severe penalties.
- Energy Performance Certificate. Before you can market your property it must have a valid EPC. It must achieve a minimum efficiency rating of 'E.'
- Gas Safety Certificate. As a private landlord you have a duty of care towards your tenants. Part of that is ensuring all appliances are safe. You must have your gas appliances checked by a registered engineer every twelve months.
- Right to rent checks. This is another legal requirement. You must check your tenant has the right to rent a property in the UK.
Research all these compliances to ensure your career as a private landlord starts on the right footing.
Will you manage the property yourself or use a letting agent?
Most private landlords will use the services of a letting agent. Though you may want to go down the do it yourself route. But the final decision will depend on how involved you wish to be with your tenant and your property. If you prefer to be hands off your letting agent is able to manage your property for you. But you may prefer to take on more of the day to day management yourself.
However, you should certainly consider using a letting agent to help find a tenant. You must keep void periods to a minimum. Private landlords who list their rental with MakeUrMove typically find a tenant in an average of just 12 days.
Private landlords can find tenants fast by listing their property with MakeUrMove the original online letting agency.