I need to rent my house out. Do I need insurance? Does mortgage provider need to know? thanks!

[firstchoice]

Hi

I need to move my children's school by mid-August and move to a different area.

I don't have time to sell my house (unless anyone can recommend a 'buy any house' firm????)

The only way I can see of doing it is to rent my house out.

I currently have buildings and contents insurance.
Do I need different insurance, and still for both??

Do I need permission from my mortgage holder (Santander)???

I think I asked about 3 years ago and they said permission cost around £3K? I don't have that but I do HAVE to move.

Would the insurance Co inform them? Could they find out?

Don't want to bend any rules but do need to move and in a very tight place financially, so trying to do what is best.

Any advice would be welcome.

oh dear...

yes, you must inform the lender. To do otherwise could result in foreclosure - bye,bye house.

your current insurance won't be valid if you don't live there. You need landlords buildings and contents insurance, legal expenses insurance, malicious damage insurance, possibly rent guarantee. There was a thread a while back where the owner had not changed the insurance and the house burnt down. Bye, bye house.

you need tenant referencing, gas safe cert , deposit protection, inventory, proper check in and check out. You need to declare income for tax purposes. You need to clear out all your possessions.

you need a decent agent and to get fully informed - and as you appear to have a month to do all this, you may have a big problem.

sorry - but better to know now.

Yes and yes!

If you are renting unfurnished you can drop the contents insurance, but you will always need the buildings insurance. Insurance costs may change because you have a tenant.

The mortgage company may force you to move to a different mortgage deal with a higher rate of interest. Or they may even refuse to give you permission to rent it out. But either way they have to know, as they have a financial interest in your house.

Yes. Landlord's insurance isn't much of a difference in cost to buildings insurance.

How much you pay for your mortgage will depend on the lender. Some don't charge anything. Ours added 1% to the interest rate. You could always remortgage and get a buy to let mortgage (although rates aren't as cheap as residential)

Oh, crap.
A month isn't going to be long enough, is it?

Can anyone recommend a specialist landlord insurance firm, or do most firms offer this as a specialty? We are currently with LV, I guess I could call them as a start?

And, would I need to do all this if I were renting to holidaymakers via a holiday rentals site too?

Thanks.

Endsleigh do good landlord's insurance, fret not, will all be ok!

Thanks, LIzzylou

I know I am coming across as really flaky - whereas in reality I am really panicked by the timescale.

I have a local person coming to view shortly who wants the place for 4m between properties - which would be a good start.
Also, I just listed on Holiday lettings and have had lots of enquiries (in scenic part of Scotland) so that seems promising too???

Don't want to break any rules or put any tenants / holiday makers in a less than ideal position, just trying to work out if it is feasible financially and time-wise!

thanks for the advice above.

Will come back if any more Qu's.

Your lender will probably find out, even if you don't inform them, because of how all this info is stored. So do inform them or you could be in trouble.

You need Landlords Public Liability Insurance.
If you are letting it furnished, they can add Landlords Contents Insurance to this, because your current Contents policy is probably invalid.

You need buildings insurance too, just check your current one is still valid if you let. Otherwise, add to the Landlord policy.

Legal Insurance is really useful and didn't cost me extra when I added it to the LL Policy, because I was under the minimum premium.

I'm with these specialists, very reasonable total premium: www.letrisks.com

I am legally required to have an Energy Performance Certificate, but I rent for 6 months minimum. Not sure about shorter periods or holiday lets.

Safety certificates for gas and electrical appliances are not mandatory, but if something goes wrong, they are a good defence. Your choice.

Finally, don't forget you have to declare your rental income later on your annual tax return.
Avoiding that is a criminal offence.
However, you can set off mortgage interest, all letting expenses, repairs etc, so shouldn't be much tax.

Okay, thanks.
Well I have recent gas cert (entire gas CH and boiler recently replaced).
Also have electrical cert. Both of which around a year old but could be updated easily enough.
Also have hardwired smoke alarms.
So, that's all a good start.
I wouldn't want anyone at any risk whatsoever, so that is a priority for me.

Yes, understand any income would need declared.

Understand now about insurance.

Just hope mortgage co would be helpful - not sure what you mean about 'how info is stored' - do you mean on here??? or just generally???

The financial services industry store and swap a lot of info.
Your lender, insurance company etc supply information to certain databanks and companies. They can also access information from these sources.

It is a very inter-connected world.
You assess the risk and the possible consequences

You do need a gas safety certificate but don't have to have an electric cert. I use Simple Landlord Insurance which has excellent cover and I pay around £12 pm, for holiday lets you may need a different type of insurance but doubt it would cost more than a Landlords policy.

As for telling your mortgage provider, I enquired when I was looking into renting out my place and they said it would be fine, I could initially keep the same mortgage product and it was around a £100 fee. In the end I didn't bother to inform them as a mortgage broker I know advised it would only really matter if I applied for a second residential mortgage. My house has been let for 8 years and I assume my mortgage provider still don't know.

It is easier to let unfurnished as there are regs re furniture and appliances which you would have to check.

It's really easy to find an AST doc online to use and you would need to use a deposit protection scheme if you take a deposit.

Check out the National Landlords Association. I get my insurance through them and it is reasonable.

My mortgage lender gave permission to let for three years for £100. I've never heard of a fee that high but I'm not a fan of Santander either so I wouldn't put it past them.

OP, we let out our house in central Scotland and you have to register with the local council as a landlord, with some exemptions I think. The website www.landlordregistrationscotland.gov.uk tells you about it. It doesn't cost anything I don't think. And yes, do declare income; we had to do self assessment for tax as a result and were taxed on the rental income, even though it didn't cover our mortgage. Good luck, hope you get it all sorted. We had a good agent managing the property, made it a lot easier although of course you have to pay for that.

OP, we are currently letting our house. We are with nationwide and had to complete a 'consent to let' request form. There is no additional charge for the first six months and you pay an extra 1.5% on top of your interest rate after that. We have ended up remortgaging with a BtL mortgage but we plan to let it out for the medium to long term; consent to let on your current mortgage might be sufficient if you are only looking for short-term tenants.

We rented our house for about 2 and a half years, because we couldn't sell it. We didn't inform the lender because when I asked them about it, they said they would add on xxx% to the interest which would have made the repayment about £50 pm more. The rent we got was £550 and the mortgage repayment was already £610 quite apart from any potential increase.

We did pay proper insurance though, and we did pay tax on the rental income.

I didn't like to 'cheat', but quite frankly I couldn't see any way round it. And on the other hand I felt that they'd shafted us by causing the credit crunch (artificially keeping Libor rate high, the bastards - if it hadn't been for that, our mortgage payments would have gone down a long way much sooner).

Luckily we had lovely tenants, but I am aware that the risk we took could have had much worse consequences. I also felt that as long as we kept up our mortgage payments, the mortgage company probably couldn't give a stuff what we did.

Letting a house out as a holiday let is very different from letting it on a longer-term basis. You would have to inform mortgage lender and get appropriate insurance whichever option you went for. However, if it was let as a holiday let then your tenants would have much higher expectations. eg clean towels and bedding every week, house cleaned to a high standard etc.

Don't think you could get round not telling the mortgage company, because there would be serious penalties if they found out anyway. I once inadvertently dropped a landlady in it when I was renting a property. Someone from her mortgage company phoned, I explained that landlady didn't live there any more and I was the tenant.

My mortgage is with A&L/Santander and they charged me £95/year for permission to let (2010-12).

landlords gas safety certificate IS mandatory - it may not be the certificate that you have.

holiday let needs a lot of work. Who will do cleaning, check in etc etc? Doesn't sound practical at all.

libra glad you had no trouble but you broke the terms of your mortgage and could have had the mortgage foreclosed. Bye, bye house.

OP - if your tenants have problems/need things fixed, you'll need to sort that. Not 'right this minute' but quickly - you can't leave them with broken heating (for instance) because you are away on holiday.

also; rarely, but sometimes, there are rogue tenants who move in and don't pay. Or who breach leases in other ways. To get them out you need to go through the right legal processes. This costs lots of money so get insurance. Also check that you have malicious damage cover on the insurance - many of the 'big names' (e.g. Direct Line, Aviva) do NOT include this.

most tenants are normal honest people; but some are not and if you are not protected you will suffer huge financial loss.

We rent out our house (it is our only owned house so counts as our main residence).

We have our mortgage with Santander and they gave us "consent to let" - I think it was £300 - maybe not even that much. I don't think it was time limited, but clearly if we want to re-mortgage after our favourable fixed rate comes to an end (to get a better deal on our interest rate) we can't do that without going on to a buy to let - which will be a higher rate anyway so not worth it.

We have landlords insurance (incl a small amount for contents despite renting unfurnished to cover kitchen fittings, carpets and curtains).

I would highly recommend getting an agent as they will make sure everything is sorted for you. Personally I would advise against holiday lets as it is very high turnover and potential for problems IMO - not to mention having to organise the handovers, cleaning, etc.

Similarly - with the 4 months let you mention - you have all the hassle of managing that, and they may cause wear and tear to the house - then in 4 months you need to do it all again. We rent ours out for a minimum of 12 months. Although if you can get a significantly higher rate for 4 months it might make it worthwhile - we were advised that we should expect a much higher rate for short term lets as people will expect to pay more for their convenience of a short let (and the inconvenience to the landlord!).

Oh and you can easily manage it in a month - contact an agent on Monday and they will have it all sorted by the time you leave :)

you can't get a legal assured shorthold tenancy for less than six months, and without that you don't have any real protection against non-payers etc. Despite the abuse you get on here, the system is biased to the tenant (as it should be) so you need to protect yourself against what can go wrong.

good point about contents; that is carpets, curtains etc and you do need it. Most landlord policies will cover it.

oops, something else (sorry about this) - if you rent the place for more than 18 months you'll become liable for capital gains tax on it when you sell it. There are allowances which may negate this, but be aware.

special I believe that CGT doesn't apply until it has no longer been your main home for three years.

regret to advise that was changed in the small print of the last budget, and it is now 18 months.

not good for accidental landlords like our OP.

special very small print! Thank you very much for that. I literally looked it up on this page last week and I'm sure the 18-month details weren't there, although they are now. Very relevant to my situation so glad to have your knowledge.

how kind!

OP please take advice from a solicitor or lettings agent You need to register as a landlord with the LA, you need two find out about the Tenancy Deposit Scheme and you need to ensure that you enter into a proper lease to protect you as a landlord. You also need advice on how to deal with the end of a lease period to protect yourself. Tenants have considerable rights and remedies against a landlord so you need to be informed.