Things To Consider When Renting Out Your Own Home
Have You Considered Renting Out Your House?
There are lots of reasons why you may consider renting your own home out rather than selling it, from failing to find someone to buy it, to being in negative equity and choosing to hang on to the property, but whatever the reason, there are a few things you need to consider:
Self-Let or Letting Agent?
Whatever the reason, once you have made the decision to rent out your own home, you will need to choose whether to manage the property yourself, or employ a letting agent to find and vet prospective tenants, conduct the regular property inspections and collect the rent for you. By working out what your profit margins are likely to be, a realistic decision can be made as to whether you can afford to employ an agent, or whether the margins are too tight and you need to do it all yourself. You should also consider the amount of time you have available to carry out all the tasks involved yourself, both planned (such as inspections) and unplanned (such as burst pipes). Renting out your own home, or a property you have lived in can seem a great deal more personal than solely purchasing an investment property, where there is little or no emotional attachment.
As with any new business venture, a business plan is advisable, highlighting all of the possible expenditure and projected income. Some landlords will still need to make mortgage repayments on the home, regardless of whether there is a tenant making regular payments, or if the property remains empty. As the landlord you will be responsible for most of the repairs that are necessary, as well as ensuring the safety of your tenants. Some repairs and maintenance can be planned for and should be allowed for in your budgeting, while others may be completely unexpected but should still be prepared for through the inclusion of a contingency amount in your budget. Unexpected costs could, if not planned for, blow a serious hole in your profits, and could in extreme circumstances make the continued rental of the property financially unfeasible.
You will also need to decide whether to rent out your home as furnished or unfurnished. If the house is furnished, you will be responsible for the fire regulations and correct safety requirements for the furniture, plus its replacement and repair should anything happen to it. As a landlord, certain health and safety requirements will be mandatory and finding out what your legal obligations are will help you decide what you need to do, who you wish to rent your property to, and for what sort of monthly rental fee.
Other Benefits For Landlords
There are a number of benefits to renting out your home apart from the potential financial ones. If you are unable to live there, or no longer wish to, it is a good idea to have someone else living at the property rather than leaving it empty. By having the property occupied, you reduce the risk of vandalism and burglary, and the tenant will be responsible for taking good care of the property, paying the rent and also paying the council tax. These are all advantages of renting out a property that could otherwise be empty.
Protection For Landlords
If you go ahead and let your property out to a tenant then there are certain laws that will help protect you as a landlord. It is usual to have an `Assured Shorthold Tenancy` agreement. This will ensure that you can reclaim the property after 6 months – should you need to. If you have not received rent from the tenant for at least 8 weeks, you are entitled to get your home back from them. If the tenant causes a nuisance to neighbours or is disruptive in the neighbourhood, then you will be able to start proceedings to have them legally evicted.
Before you rent out the property, it will be necessary to inform certain authorities. Your mortgage company may not allow you to rent out a house that is mortgaged with them on the same agreement, and your current home insurance will need to be informed. It is most likely that it will be inadequate for renting out your house, and could make the insurance `null and void`. You will need specific landlord insurance to cover your building, contents, accidental damage, and even loss of rent – speak to a specialist broker to get a quote today.