How to Rent Out Your Home or Main Residence
5 Considerations for Renting Out Your Home
Should you plan on renting out your home, there are some important things you need to consider. This ranges from legal considerations, such as mortgages and insurance, to getting the right letting agents and tenants for your property.
To help you rent out your home successfully, we’ll cover five essential topics you need to know.
1. Choose the Right Mortgage
Before renting out your home, it’s important to get in touch with your mortgage provider or mortgage broker/Independent Financial Advisor (IFA).
If you start renting out your home without letting them know, you’re likely doing so against your agreement, which could result in financial penalties on your side.
What you’ll need from your provider is ‘consent to let’. This is a formal agreement between you and your mortgage provider that signifies their permission for you to rent out your home. The consent to let is a short-term agreement that’s usually approved on the condition that you’re up to date on your regular mortgage payments. This includes having a plan set out for the duration of the tenancy.
Can I Rent My Home if I Have a Mortgage?
2. Select the Right Insurance
As a homeowner, you’ll likely have home insurance in place. However, if you’re renting out your home to a tenant as a landlord, your insurance will need to be changed.
This requires changing your home insurance to landlord insurance. Landlord insurance covers the property and its furniture, as well as the tenant. Various forms of landlord insurance cover specific things, but some packages can cover almost everything. Be sure to carefully research your options before you start renting out your home.
3. Pick the Right Letting Agent
Letting out your property can be made much easier by going through a letting agent. These professionals can take on admin elements such as property advertising, viewings, tenancy agreements and maintenance. Since we're talking about renting out your home while you make a new move, it's a smart choice to let your letting agent know this before you get started so they know how best to advise you.
It's normally a good idea to hire a local letting agent because they'll know the letting landscape around you, helping you set a reasonable rent level for the area you live in. Carefully check through each agency, learn as much as you can about their prices and their reputation, and read both landlord and tenant reviews to understand how fair and respectable they are.
Some letting agents provide a complete service that handles every aspect of your rental property while others allow you to get a bit more hands-on with the job of being a landlord. Others offer a sliding scale for you to choose how much involvement you have.
4. Vet Your Tenants
Since you'll want your property to be well taken care of by whoever moves in, you'll want to make sure you properly vet your tenants. If you have a letting agent, they'll normally do this for you with your approval. If you don't, you can do this yourself by reaching out to credit and reference agencies to check up on your potential tenant's background.
You may also wish to meet your tenant face-to-face. This is a great way to get to know them before you rent out your home to them, and it also makes for a good start for your landlord-tenant relationship.
5. Think about a Buy-To-Let Mortgage
You may find that after your initial consent-to-let period is up, you enjoy being a landlord and that you can afford to rent out your old home after you've moved into your new one. If this is the case for you, you'll need to switch your residential mortgage with a specific buy-to-let mortgage.
Buy-to-let mortgages are specialist products that you take out for rental properties and will have different deposit levels and monthly payments to a residential mortgage. Should you intend to rent long-term, you’ll need to have a buy-to-let mortgage as you can be penalised if you rent out your home beyond a consent-to-let on a residential mortgage.
Many mortgages offered by high-street banks will be interest-only, which means that your monthly payments will only pay off the interest you accrue on your mortgage. You'll still need to pay the rest of the money you borrowed from the mortgage provider in the first place.