How to rent out your main residence header

Considerations when renting out your main residence

There can be any number of reasons people choose to rent out their main residence while living somewhere else. They could do so for personal reasons, financial reasons or simply because they plan to move out to a new home.

For many, the idea of renting out your home can seem quite complicated and not a little daunting, especially if you have an existing mortgage in place. With buy-to-let mortgages, letting agents and tenant searching, there's a lot to work through. To help you set up your property for rentals, we've outlined the below guide to renting out your main residence - read on to find out how you can get the most out of your time as a landlord.

Getting the right mortgage

If you're renting out your home, your mortgage, in its current form, will need to change.

The first thing you should do is get in touch with your mortgage provider or mortgage broker/Independent Financial Adviser (IFA). If you just start renting out the property without letting them know, chances are, doing so will go against your agreement with them and that would likely mean 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 mortgager that signifies their permission for you to let out your property. The consent to let is only a short term agreement that is normally approved on the conditions that you are up to date on your regular mortgage payments and that you have a plan set out for the duration of the tenancy.

Getting the right insurance

As a homeowner, chances are you'll already have home insurance in place. Since you'll be letting out your property to a tenant as a landlord, this insurance will need to be changed from home insurance to landlord insurance.

Landlord insurance covers not only the property and its furniture, but also the tenant. There are various forms of landlord insurance that cover specific things, but there are also packages that cover almost everything. Be sure to carefully research your options before you start to rent your residence out.

Choosing a 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 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, and can help 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 get an idea for how fair and respectable they are.

Some letting agents provide a full and 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.  

Vetting 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.

Buy-to-let mortgages

You may find, after your initial consent-to-let period is up, that you enjoy being a landlord and that you can afford to maintain your old home as a rental property after you've moved into your new home. 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. You do need to have one in place if you intend to rent for the long term, because as we mentioned earlier, you can face penalties if you rent out accommodation 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.

This is our guide to renting out your main residence while you live somewhere else. The process is more complicated than what we've outlined above, but getting a grasp of the basics is important so that you know the various steps involved before you get started. For more guides and articles about renting out property and other topics, be sure to visit our Berkeley Inspiration page.