The rise in homeowners renting out their properties is on the increase. This may be to allow them to move without selling or to help with financial difficulties due too the economic downturn. Whatever the reasons you need to find out what you need to know about renting out your property, so follow 5 top tips – how to rent out your home.
1. Do The Sums
Obviously before you can rent your home you need to plan finances as regards how much you will rent out your home per month compared to your mortgage plus other costs.
Research and get to know your local market, see what similar properties are asking in rental price. Having done this invite three agents to give you an estimate of rent that you could receive. This will then give you a broad base in which to pitch your rental price per month, this carries no obligation to go with any agent involved.
Once you have an estimated monthly rental price, compare with your mortgage and other costs. Taking into account any rental commission taken from the agent and property repairs that you will be responsible for. Also be aware that renting your property and moving to another one means you will be maintaining two homes, although the tenants will be paying utility and council tax bills on your rental property.
2. Get An Agent or do it yourself
Using a letting agent means they will find you a tenant and manage the rental for you. They will charge for this usually at 15% of the monthly rental. Check charges carefully and always look for hidden extras as these can be high especially in London.
Compare agents and choose a good one rather than a cheap one, this will save you a lot of hassle in the long run.
If you decide not to use an agent then be prepared to sort all relevant paperwork, such as tenancy agreements, your own tenancy insurance and have all repairs done promptly.
When choosing an agent be prepared to use a firm that has a good reputation, this does not necessarily have to be a big firm as smaller firms with years of experience will go that extra length to help you out.
Letting agents are not regulated but there are trade organisations such as the Organisation of Residential Letting Agents. If any firm is not regulated then do not hesitate to ask them why.
3. Speak to your mortgage lender
Many people rent out their property without requesting permission from their mortgage lender, this should not be done. Technically you should request permission from your mortgage lender and receive consent from them to let your property.
Explain to your lender why you need to let out your property. You may not be able to afford to sell at the present time and need to move as a temporary arrangement. The lender should be reasonable and should not force you into a higher rate buy-to-let mortgage product, although they may charge for a consent to let the property.
Lenders do have the right to turn down your request but you do have the right to complain in writing and if necessary contact the financial ombudsman.
4. Find out about buy-to-let and know the rules
Your home may not be let out as an investment, but you need to know the rules, its financing and the regulations. This can be especially important if you lender keeps you on the same rate but transfers you to a buy-to-let loan.
Rules and regulations also include gas, fire and electric requirements, tenancy deposit schemes, supplying an energy performance certificate (EPC), up to date tenancy agreements and knowing the law on access and notice periods.
5. Get Insured
You will require different buildings insurance when letting your property than as an owner occupier. This can be more expensive than traditional home insurance but do not skimp. It is essential to have buildings insurance and is a requirement along side your mortgage, if you are letting out a furnished property then contents insurance will also be required.
This is an optional insurance but another good cover would be to have an insurance policy that covers the rent if tenants default on payment and do not pay up. This can be important especially in these times of recession. Enquire with your existing insurance cover about this or just have a stand alone policy in place.
I am sure even before the profits reach your bank account you have thought of many ways in which you would like to spend it, a well earned holiday with your family, or simply saving it for a rainy day. But investing it in your long term future could be a sensible option. Why not investigate and start your own online business that will generate a generous residual income stream for years to come.