With the unpredictable market making it difficult to sell a house at the moment, you might be considering renting out your second property in order to bring in some income. You may also simply want to get into the rental business and make an extra living as a landlord. Whatever your reasons, all landlords need to follow the same few steps to ensure they do everything by the book. Here are five of the best pieces of advice to get you started.
1. Calculate the Viability
The first thing you need to do is your calculations, and this means working out if renting your property out is not just economically viable, but also something you will be able to manage time-wise. If you are working full-time, perhaps have a family and an active social life, then dealing with tenants can get in the way of all of them.
If you have the time to commit to it, then make a financial plan to ensure you can afford it. Calculate into your plan any changes you need to make to the property beforehand, and also prepare for the inevitable void periods where nobody is living there. You should speak to as many local estate agents as possible to get a good estimate of how much rental income you can expect when you find a tenant.
2. Spend Money!
Obviously there’s no need to go overboard and create a luxury house to rent out, but do ensure it is as tempting a proposition as your budget allows. You’ll also need to have some knowledge of the type of tenant you are likely to have and ensure you meet their requirements. For example, young adults sharing the house together will not care about the exact things that a family with young children will.
You will also need to obtain a gas safety certificate from a CORGI registered engineer, plus get the wiring checked out by a qualified electrician.
3. Offset Specific Expenditure Against Tax
Your rental yield will be counted as income and taxed accordingly, so be prepared for that. Also try and take advantage of any particulars that can be offset against the tax. These items might include any letting agency fees that you have paid, mortgage interest payments and most maintenance costs.
4. Get the Right Insurance
As landlord, you are still solely responsible for acquiring buildings insurance for your property, as well as insurance for the contents, fixtures and fittings you have installed. Your insurance company will also need to be informed that you are renting out the property, and they should have landlord-specific policies which will cover such things as landlord liability and losses of rent.
5. Inform Your Mortgage Lender
Some mortgage companies require you to change your mortgage should you rent out the property, so you will need to inform your lender that this is what you are doing with the property. It may be that no changes are necessary, but it is better to inform them straightaway as your mortgage conditions might legally require you to.