Thinking of renting our house out, can someone with knowledge give me any information/advice

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Mortgage - you have to let you mortgage company know that you are renting out and they may change your t&cs (ie up your rate!). Are you currently on repayment? Would you need to go interest only for the rent to cover the mortgage as rents have plummeted recently I believe.

Insurance - again you will need to let your buildings and contents insurers know - they may change your policy and charge you more.

Whether you use an agency or not depends on a number of things - will you be living locally and on hand to sort out any problems? Are you capable of dealing with the legal paperwork? Do you have time to show people round, take up the right references etc? What if something goes wrong eg boiler blows up - will you be around to sort it out? Personally I would use an agency if you can afford it to manage the property as then you can just leave it all to them.

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You can only offset the interest on a mortgage against rental income for income tax, not repayments, so that is worth considering when remortgaging. Also you'd need to keep track of any maintenance expenses, insurance costs and fees to offset.

Insurance need ot be informed and if you need some cover for whatever contents remain (including carpets, white goods etc) and buildings. There are fire regulations for soft furnishings and upholstery , plus an annual gas safety inspection and one off electrical inspection and now an energy rating to organise.

Letting agencies charge between 5%pcm (for finding a tenant and collecting rent/deposit) up to 15% for full management (organising small repairs, inspections etc). You may also be charged separately for per contract and inventory.

hth

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What it means is this

If you have a repayment mortgage, each month you are paying off some interest and some capital

If you have an interest only mortgage the capital remains and you only pay off the interest. Some people save separately to pay off the capital sum at the end of the term. others might just remortgage that

If you are renting out, your rental income is taxable. However that part of your income that goes to pay the interest on the mortgage will not be taxed.

If you pay off capital, it will have to be from taxed income

htth

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You'd have to complete a tax return at the end of each tax year (ends in April) on whcih you state it as part of your total income and are able to allow for the expenses. If an agent collects the rent for you you would have to complete a form to allow this to be paid exempt of any standard tax reduction otherwise they do so automatically. The Tax Returnthen confirms that you have paid enough.

If you and your other half co-own and receive the rental income jointly you can decide to split it for tax purposes 50:50 . That way if one of you is normally a non-tax payer or pay at a lower rate than the other you can benefit.

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Still counts as part of your total income however you manage your finances, so yes it is liable to tax regardless.

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Not necessarily as the interest element of a repayment could be similar, but you could at least compare the two. It is swings and roundabouts tbh. Remember by the time you have offset the mortgage interest , expenses and fees against the rent you may not have much net rental income left to be taxed anyway, unless you have a significant amount of equity in the property.

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Tax percentage depends on how much each of you earns

If you are both already top rate tax payers then you will pay 40%

If one of you is lower rate and one higher then you can apportion income to lower rate person (depending on how the mortgage is structred) and then you would only pay 25% ish

If one of you isn't earning you could put the house in their name and apportion to them then no tax would be payable up to the tax free allowance £6k ish I think.

yes
repairs and maintenance
cost of re-decoration etc between rentals

Remember you need to allow for periods between rentals when the property may be empty for some time

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If you are both paying basic rate then there is no advantage in splitting it. You deduct the agent fees(they would do so before passing the rest on), mortgage interest payment, and any maintenance costs to the property (which obviously you may only know in retrospect) ie,we left our British Gas service contract in place so the annual check was included in that, house and contents insurance etc. Whatever you are left with as a figure after all these is your net rental income on which you are taxed.

In between lets you also become liable for council tax (possibly at 90% even if empty) and utilities.

The agent has a responsibilty to sort out the tax and will notify the Inland Revenue whether they take it off before passing on to you or you nominate to receive it gross and pay later. Either way I think you'd have to do a return.

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We've recently done this too. Tips:
You can negotiate the letting agency fee down (they want the business - 10% for full management would be reasonable imo, more if you have multiple lets)
Permission of your mortgage lender - don't be surprised if they charged you an 'admin' fee to allow you to let your house out. Abbey certainly does! However painful, this will still be cheaper than remortgaging in today's climate. You need it otherwise you're breaching the terms and conditions of your mortgage contract. Remortgaging to an interest only mortgage makes sense normally in order to be able to offset the entire mortgage payment against your rental income to reduce your income tax liability BUT...in today's climate, this is not easy nor will it be cheap or even possible. Landlord's insurance is required and is normally covered by specialist insurers so shop around. Just to give you a taste of figures, we command a monthly rent of approximately which is 1.4 times our mortgage payment. However, because we can only offset the interest element of it (roughly half the actual figure), we obviously get taxed on the rest (40% for us). Basically, we make a few hundred pounds loss every month so what looks to be fine on the face of it, actually isn't! So do your sums carefully before you decide to let unless you have no choice.

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