If you are considering renting out your home and what it involves, you may want to read on. They are known as the ‘accidental landlords’ – recent trend of homeowners that have struggled selling their homes amid a housing crisis.
Instead, these savvy homeowners have adapted to the economic downturn and its effect on mortgage lending and property sales, and have turned to the private rented sector, to keep themselves afloat.
According to research from Countrywide last year, there has been a significant increase of properties on the rental market due to accidental landlords. With an estimated 80,000 properties that failed to sell, are now taking up the slack of reduced housing stock in the UK.
But before you are sold on the idea of renting out your home, or thinking of pitching that ‘to let’ sign outside your property, there are a few things you may need to consider.
- You must inform your mortgage lender that you wish to rent out your property. You do need permission from your mortgage provider when renting out your home, otherwise, any tenancy you have on the property can be deemed null and void, and your mortgage lender can insist that you pay the full amount owing on the property or reclaim it. It’s worth noting that most lenders will charge you to change your mortgage to a Buy-to-Let one;
- You need relevent landlord insurance when renting out your home;
- You will need the regulation Safety Certificates on any gas appliances, and you will need to fit and maintain smoke alarms and carbon monoxide detectors.
- If letting out a property as a house share-you should check with your local authority if you need a HMO (House in Multiple Occupation) license. Lack of relevant license can result in heavy fines.
- You must declare all rental income to the Inland Revenue;
- You will need to pay for ongoing maintenance to property;
- At present, tenancies start from 6-months. So, remember that once you find begin a tenancy, you cannot evict them to sell your house again until the tenancy is at an end and the necessary, legal notices have been served.
- If you purchase another home for yourself and sell one of them, you must pay capital gains tax on the property.
- You have an obligation to the tenant to provide them with a safe home and allow them to live there in peace.
- You cannot enter the premises unless given authorisation from the tenant to do so.
When dealing with tenants in receipt of LHA or Housing Benefit, it’s also worth noting, that rental payments from the local authority are paid direct to the tenant, and not the landlord. If you are finding paying back your mortgage repayments is difficult, a late or non- paying tenant can accrue arrears, and you can end up losing your property.