How Do I Let My Home?

Whether you’ve been letting a property for a while, or you’ve just been thinking about it for a while, it’s important to know what you’re getting yourself into. After all, you can’t just move tenants in right away and start charging rent. There are currently over 400 rules and regulations, set out by over 150 laws that landlords need to abide by when letting a property. That’s a huge amount to wrap your head around!

But the good news is, a lot of the things you need to consider will break down into 2 categories – your legal obligations, and the financing of your property. And to give you a better idea of what that means, we’re going to talk you through a broad overview of those today.

Preparing Your Home for Letting

Before you do anything else, you will need to make sure your property is up to scratch for renting out. There are a lot of different regulations around the standard your property needs to meet in order to be a legal rental home. The main one is that the property must be ‘fit to live in’ – which means it must be comfortable, free from fire and other potential hazards, and the services/utilities must be in good working order. This means you might have to carry out some work to get this done, or get professionals in to bring things up to code.

Once you’ve done this, you will also need to take care of the paperwork side of things. This includes:

  •  Having documentation of all appropriate safety checks and certificates
  • Creating an inventory of the property and its contents
  • Taking out the appropriate landlord insurance
  • Finding an agent to manage the property for you, in a way that is legally compliant
  •  Making right to rent checks
  • Issuing the correct paperwork
  • Protecting a legally appropriate deposit
  • Ensuring tenants understand their rights and responsibilities.

Of course, if you don’t want to do all of those things yourself, you can partner up with an estate agent (like us) to help guide you through the process, from start to finish.

Make Sure You’ve Got the Right Mortgage

In most cases, a standard residential mortgage probably won’t be right for you if you’re planning to rent out your property. And when we say that, we don’t just mean it won’t have the right interest rate – it probably won’t be legal. So whatever mortgage you have, you should speak to your lender before putting the property up to let. This is mainly because the way lenders view mortgage loans differ:

  • When it’s your own home, you usually repay the mortgage out of your personal income and it’s viewed as a fairly low-risk loan.
  • When you have an investment property, the lender assumes the mortgage will primarily be repaid out of rental income, and the loan is therefore seen as a higher risk – because there may be void periods and tenants might stop paying rent.

So when it comes to mortgages for rental properties, you have 2 options:

1.   Buy to Let Mortgages: If you don’t need to let the property right away, or don’t plan to let it for at least 12 months, then it’s worth applying for a buy to let mortgage. You will have to go through the full application process in order to do this, which is why we say if you don’t need to right away. You’ll also probably end up with a higher interest rate than a standard residential mortgage – but it gives you full flexibility to let out your property for as long as you like.

2.   Ask Your Lender for Consent to Let: If you have a standard mortgage and want to rent quickly, you can ask your current lender for consent to let. This tends to be a short-term solution, usually used if you’ve had a change of circumstances and need to let your home as soon as possible. If you ask this, you will need to tell (and prove to) your lender:

  • Why you’re asking for consent to let
  • Whether you can afford to keep making the mortgage payments
  • The expected rental income

If the lender agrees, they could raise your interest rates, and the ‘consent to let’ clause usually lasts for a maximum of 12 months, to allow you to apply for a buy-to-let mortgage.

At Northwood, we regularly work with new landlords first starting out on their journey. We are always happy to give advice and guidance, helping you understand what being a landlord is, and taking the strain off your shoulders with things like our guaranteed rent service. If you would like to know more, just get in touch with the team today, and we would be more than happy to help.