What are the two most common types of first time Landlords?
Let-to-Buy: This is when someone moves into a new residential property that they have bought and rent out the property they currently live in.
Let-to-Rent: This is when homeowners let their home to tenants, only to rent a property from another landlord. This type of renting usually happens when homeowners move to another area of the country.
The big question is, should you let out your home?
Is renting your property legal?
Before you do anything, check if you can legally turn your home into a rental property. Whilst this question mostly applies to leaseholders (not freeholders), if you are a freeholder - it is still prudent to take note.
Leaseholders: If you own a leasehold property and want to rent out your property, check your lease to see if you’re allowed to sub-let your property (in technical terms, you’re sub-letting if you let a leasehold property). If your rental property lease contains a clause that specifically refuses sub-letting, contact the freeholder to get permission to rent your property.
Leaseholders and freeholders: Check the terms of your mortgage. Make sure it is possible for you to rent your property to someone else. If it is, check if there are any restrictions (e.g. in terms of the amount of rent you should ask for).
How much will it cost to be a Landlord?
It's not just the mortgage you need to factor in when you want to rent your home, there will be costs for:
• Estate Agent fees/commission
• Landlords insurance
• Repairs and maintenance
• Income tax
Always do your homework and make sure you understand these costs before you rent your property.
Do you need a license to rent out your property?
Under the Selective Licensing Scheme, some local boroughs require landlords to obtain a license before they’re allowed to let their property. Failing to acquire the licence can result in hefty fines.
Check with your local council whether you need one, especially if you are planning to rent your home as an HMO.
How much should you charge a tenant in rent?
This is important, you want to be making a profit from the property, if your rent doesn't cover your mortgage, you should be seeing red flags.
The first port of call is to check websites such as Rightmove.co.uk and Zoopla.co.uk to look at the monthly rent for similar rental properties. i.e. the same number of bedrooms, parking spaces, garden etc
Importantly, internet research alone cannot always give you an accurate idea of what rent to set. Invite local Estate Agents to your home and ask them to value the rental worth of your property.
No one wants a tenancy with your tenant to end in dispute, but you need to plan ahead and when disputes happen, landlords and tenants should feel supported.