In the current market, selling isn’t the easiest option. This is a quick guide on what you need to consider if you are thinking of renting out your property.
Renting can be a good option and can make you money in both the short and long term. In a slow sales market, it is not unusual for activity to increase on the rental side and means that while you rent your property, you can expect long-term gains from house price increases.
There could be several reasons why you may want to rent out your house; You may want to move somewhere for work, take a career break or you are simply looking to keep your property as a long term investment or as part of your pension plan.
Whatever the reason, you can rent out a property by getting to know a few things about property rental.
How to get started
Speak to your mortgage company
If like most people, you have a mortgage on your property, the first thing you need to do is talk to your lender. You do not want to be breaking the legal terms and conditions of your mortgage and this will likely be in the small print in your mortgage agreement. All is takes is a phone call or a written letter to obtain their consent to let your property.
Find out what the market is doing
As with any market, it is always a good idea to get a picture of how much money your home can rent for in the current market. Have a look at similar properties in the area to get an idea of how much they are renting for. Compare like for like properties so if for example you want to let your property as an unfurnished one, compare with unfurnished properties of a similar size and location to get as close a figure as possible.
You should also contact local letting agents, most of whom will offer a free valuation service to get a professional opinion as to how much you can expect to get. This doesn’t mean you have to rent through them, but it will give you a better idea of where you should set your expectations. Try to get at least a couple of valuations that way.
Understand your responsibilities
Being a landlord comes with some responsibility. You will be responsible for maintenance and repairs on your property as well as making sure that your property is fit for rental. Some of the things you will need to do are:
- Fit smoke alarms and extractor fans
- Have your Gas appliances tested by a CORGI registered plumber
- Ensure any furniture is fireproof
- Obtain an Energy Performance Ceritificate (EPC)
- Provide your tenants with a Tenancy Agreement
- Get an inventory drawn up
- Register any deposit from your tenants with the Tenancy Deposit Scheme
Letting through an agent
If you are busy or just don’t want the hassle of letting out your property, then using a lettings agent will save you a lot of time and effort. They will advertise your property in their shop window, to their registered property seekers as well as newspapers and the like. Agents will also arrange viewings, show prospective tenants around, draw up the tenancy agreement and even deal with your tenants should you ask them to.
This obviously comes at a cost and this can range between 10% and 15% of any rental income from your property. It is up to you how much you rent your property for so make sure you do your research and remember that going with an agent who values your property higher does is not always the best option. Do your research, find out how much properties like yours are renting for and then make an informed decision on how you want to proceed.
If you would rather maximize your returns and save on agency fees, doing it yourself privately is a valid option. For some landlords, this is the preferred approach as they like to be in control of who lives in their property and after renting our privately the first time, it becomes a relatively straightforward experience.
As a private landlord, you need to be doing pretty much what agents do: advertising your property to potential tenants looking for a property like yours. As well as your local papers, you should also consider putting up an online ad for your property along with some nice photos, and the date it is available for rent from to start getting enquiries and viewings.
Make sure your photographs are taken in good light and show off the best of your property as good photos make all the difference.
Some good sites to advertise your property online are:
- www.placebuzz.com : Allows you to create your ad for free and notifies potential tenants about your property. It also provides you with handy built-in messaging so you can keep all your property communication in one place.
- www.gumtree.com: A popular free classifieds site where you can list your property with up to 9 photos.
Tax, Insurance and other considerations
Whether you are looking to be a full time landlord, or you want to rent out your property in the short term, you will need to consider taxes, arranging insurance (landlord and content) and having some money aside for unexpected repairs and any periods when your property might not be rented out.
Whatever you decide to do, It is always a good idea to put all the figures into a spreadsheet to do the maths properly so you can work out your net income.