letting my house out(13 Posts)
I currently live in a house and will likely move out of soon, going overseas. I am thinking of keeping ownership though, and letting it out, probably Aug 2017.
What are the steps in renting the property out? Some things to think about...
1) I currently have a normal low rate mortgage where the preferential rate ceases in January. So, if I remortgage, do I need to get a buy to let mortgage, or can I just get the best mortgage I can find? Keep in mind, I will be living in the house for several months after I remortgage.
2) I guess i need to tell my insurance company.
Firstly you'll need to think about using a letting agent if you are going to be overseas. They'll charge you a percentage of your rent (8-15%ish) but should manage things with the tenants in your absence. They will advertise, conduct viewings and find tenants for you. They will also sort maintenance and certificates (and take any costs from your rental), plus they will credit check and regency your prospective tenants. They will also ensure the tenants deposit is held in the correct manner.
Speak to your current lender about 'permission to let', some will let you continue at your current rate if you only have one property and are moving for work reasons. Some may add a percentage to your existing rate. They will want to contact your agents (usially habe to be ARLA regiatered) to verify the rental income will cover your mortgage. There will be a charge for this. If they won't let you rent at all you may need to look for a buy to let mortgage which will be more costly.
You'll need to speak to your insurers, depending on if you let furnished or unfirnished you'll need just buildings or bulldogs and contents. They may or may not cover for letting so you could need to change, they'll most likely add some stipulations such as only working tenants and couples or families only (No students or HMO).
If you get a good agent it should all be quite stress free and you'll still have your home if or when you decide to come back to this country. Good luck!
*reference your tenants
*buildings and contents ..... not bulldogs...I need to start wearing my glasses
Agree with everything dotcotton said. We rented out several properties whilst living overseas. Please heed the advice on using an agent. It will cost a percentage but it is well worth it for less hassle. Do not rent to 'friends'...seen way too many people get let down through this. And also if you have a garden, it is well worth paying somebody to come in every couple of weeks to mow lawn and do general upkeep. Tenants are rarely bothered to look after the garden.
Thanks. OK. Will check. Glad I won't be needing bulldogs!
So, as I said, there will likely be about a six month gap between remortgaging and leaving. Remortgaging will be done in January. Leaving will happen in June. I can enquire about my current mortgage. I have owned the house for six years, and had a mortgage with the bank for 4, so hopefully that will help. Rent should well cover the payment.
Hmmmm, about "friends". There was a vague plan to rent to a young family member (mid-twenties cousin, very responsible, I trust her) and filling the rest of the rooms with other people and getting her to help manage it. But 10 percent doesn't sound terrible. Is the list above exhaustive of the services I would expect from an EA?
Thanks for the advice. If you have any more, please give it!
I think that expecting a young family member to manage your house is unreasonable. Also you may be lucky to get full management from an agent for 10%. We never have! There are lots of other additional costs such as finders fee, inventory and maintenance as you go along for example.
Were you expecting the family member to find random tenants? An agent does a financial check on a tenant and will chase up non payment although you should have direct debit. Are you having benefits claimers? They now do not get the rent paid directly to the landlord so you need to think about that. A deposit holding scheme is a legal requirement. Also if you want good tenants, the house must be in tip top condition. Is your family member up to managing this?
There are different rules for multiple occupancy so you really need to do your homework and consult an agent on your plans or you could be falling foul of the law.
Your agent should find tenants, do a financial check, take a deposit and legally get it held, get an inventory done, prepare a contract, deal with maintenance after contacting you about costs and agreed Work, check tenants out, do the exit condition survey, take money from the deposit for repairs, answer queries from tenants, check the condition of the house if need be and produce monthly statements for you and pay the rent into your bank account. You need to build up a good relationship with them.
There are legal responsibilities that any landlord assumes. Regardless of whether you use an agent or not, the buck stops with you. Even if you know the person you are letting to get a Assured Shorthold tenancy set up. Be prepared to lose the friendship if things turn sour, they may believe you are going to be lenient if the rent is late or something goes wrong. If that worries you don't choose to rent to them. Your property ceases to be your home when you let, you need to detach emotions and not expect the tenant to treat it preciously. Wear and tear is inevitable. If you move overseas there is a specific tax office to deal with, with which you need to register and an agent can ensure relevant deductions are made each month.
The set up with a relative handing renting out other rooms for you would turn it into an HMO and your council may make specific requirements to do so.
I think in my area you'd need more than five people to turn it into an HMO, and that would be too many for this house.
Sorry reluctantlandlord but the idea of having a 'young family member' etc...would be a definite nono for me.Would not even let my own DC do that.We currently letting out 3 properties whilst still overseas, 2 in London and one in a different city and would never even contemplate not going through an agent. You would be letting yourself open to all sorts of trouble and could you really be bothered to handle the hassle from overseas?
And you will have to fill in a tax return annually for the rental income
- electrics OK? Mandatory checks coming soon.
- do not even think of an HMO
- legal expenses and rent guarantee insurance
All your possessions out. Everything fixed. Dissociate. It may get trashed.
You must have an agent if you are abroad.
- agent does right to rent, gets tenant to sign all docs as received (otherwise tenant is un evictable regardless ) , takes and protects deposit, does gas safe, gets repairs done promptly. Any failures are down to you so you need to monitor it all.
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