There are many advantages to renting out your property, such as building your portfolio of buy-to-let homes, generating additional income, or keeping a property in the family even if you do not wish to live there. However, renting a property isn’t something that you should jump into, and it’s important to understand that there are many issues to consider.
Here are 11 things to have on your mind when letting your home:
1. Your property
The first consideration when renting your home must always be your property. Have you made the necessary changes to your property’s policies, such as informing your Local Authority council tax department that you will be renting your home, or speaking to your insurance company? It’s also worth taking some time to ensure that your home is properly prepared for rental, such as updating very old appliances (if renting as furnished) to reduce the risk of your tenant encountering issues down the line. If you do wish to make new purchases, use discount codesto help keep the costs to a minimum.
2. Your right to let
While you may own the property, you must consider whether you have the legal right to rent it to others. If you own the property with a regular mortgage, rather than a dedicated buy-to-let mortgage, for example, you will need to obtain consent from the mortgage provider. Similarly, if your home is a leasehold property, the freeholder will be required to provide consent for the letting. Some leasehold agreements do have clauses that prohibit the rental of the property, so understanding your legal right to let is essential. If your lease or mortgage agreement is unclear, use our Ask a lawyer service for advice
3. Your location
It’s important to remember that there are different regulations surrounding rental properties depending on location, with England, Wales, and Scotland all having their own set rules. In England, for example, landlords must provide tenants with the How to Rent guidebook, while in Wales all landlords and properties must be registered with Rent Smart Wales. Renting out property in Scotland is also different to renting in England, and all landlords must be registered with the Scottish Landlord Register. Before renting out your home, it’s important to understand what rules apply to the region your property is in.
4. Your documentation
It is essential to have the necessary documentation that’s needed to ensure you meet your legal obligations as a landlord. For example, you must provide your tenant with a free energy performance certificate, or EPC. The EPC is relevant to the property as a whole, and not to the individual tenant, which means that you will only need one EPC per property, even if you rent to multiple occupants. Currently, an EPC for a rented property must show a minimum Band E performance (in England and Wales) for new tenancy agreements, with this law extending to existing tenancy agreements from 1 April 2020.
5. Your type of rental
‘Renting’ has become an umbrella term, and there are actually many different ways that you may be able to let your home, such as a tenancy letting, a student letting, a holiday letting, a lodger letting, or as a room rental. Due to the different natures of these lettings, there are different legalities, regulations, and renter expectations that come with each form, so deciding how you want to rent is an important consideration to have on your mind when renting your home. Different agreements are available depending on the type of letting you choose, such as holiday letting agreements for short term rentals.
6. Your expectations
It is important to consider what your expectations for the rental and for your new tenants are, and ensure that you are able to communicate these expectations clearly. The best way to do this is to complete a tenancy agreement for a house or a tenancy agreement for a flat depending on the type of property you are letting. This agreement forms a contracting between you and your tenants, and outlines who will be living at the property, any obligations of the residents, details of required upkeep and maintenance, an inventory, details of deposit and rent payments, and expectations upon exit.
7. Your tenant
Once you have considered your property, your letting preferences, and your expectations, it is time to think about your tenant. Picking a tenant isn’t always easy, and it’s important to understand that it is illegal to demonstrate any sort of discrimination against potential tenants. You may wish to appoint a letting agency to help you select a suitable tenant, although you can opt to do this yourself if you have the time to do so. Asking for a credit report, references, and proof of employment are good starting points when it comes to finding a ‘good’ tenant, although there are no hard and fast rules here.
8. Your tenant’s rights
The legal rights of your tenants can be broken down into four distinct categories:
- a right to safety
- a right to rent a house in good repair
- a right to quiet enjoyment and
- a right to deposit protection
Your tenants also have a right to file a complaint if you do not maintain your end of the agreement, so it’s important to understand what rights your tenants have and ensure that you are handling the rental in a way that does not violate or jeopardise these rights. If you do need to access the property to check the condition or make repairs to improve safety, written notice of entry must be provided at least 24 hours in advance.
9. Your tenant’s deposit
You should have your tenant’s deposit on your mind when renting your home, ensuring that you are taking measures to abide by the regulations and expectations surrounding a tenancy deposit. Your tenant has a right to know how their deposit is being looked after for the duration of the tenancy, how they can apply to have their deposit returned upon the end of the agreement, and how they can raise any disputes should you decide to retain a percentage of the deposit as outlined in the tenancy agreement. You must also provide your tenant with details of the Tenancy Deposit Scheme.
10. Your legal obligations
In addition to providing details of deposit protection and protecting tenant rights, you will also have further legal obligations as a landlord when renting out your property, and you must ensure that you understand these obligations. Gas, electrical, and fire safety are three of the most essential obligations, along with the proper handling of your tenant’s details in line with the new General Data Protection Regulation which states that you must only store necessary information, and that you must handle and use this information only in ways in which the tenant has provided permission for you to do so.
11. Your ability to expect the unexpected
While many property rentals are successful and problem-free, you must keep in mind that things can and do go wrong sometimes. Cases of tenant abandonment aren’t unheard of, and this can create some hassle for the landlord as there is a need to be sure that the tenancy has been surrendered before you are able to rent your home to someone else. The official process of providing notice to end the agreement can take as long as 8 weeks, so while it’s important to remain positive when renting, it’s also essential that you have a solid grasp on what can go wrong, and to always expect the unexpected.
Of course, these are just a few of the things that you should keep in mind when renting out your home. If you have further questions or are unclear about anything, always Ask a lawyer.