How To Rent Out Your House
While there may seem to be a daunting number of tasks to complete between now and achieving full landlord status, our guide breaks down how to rent out your property into 11 simple steps.
1. Investigate local letting prices
Get an idea of how much rent you could charge by taking a look at how much similar properties in your area charge. Try to look for homes within a mile radius that have a similar number of bedrooms, bathrooms and standard of design.
It can also be useful to understand historical letting prices and whether rent in your local area is increasing or decreasing.
2. Work out your finances
Once you have a rough idea of the amount your property could make, you can review your finances to see how worthwhile letting will be for you.
Like any other form of income, renting may be subject to tax and national insurance. You will be taxed at 20% if you’re on the basic rate, or 40% if you’re on the higher rate. Depending on your current earnings, your rental income may push you into the higher tax bracket.
You pay tax and NI in a lump sum when you complete a self-assessment at the end of the financial year.
Combine your estimated tax and NI with the property’s monthly mortgage payments, then take it away from your approximated letting price to give you a sense of your profit.
Remember, you may also have property management fees to pay, so getting a few quotes and taking that into your calculations can be helpful. However, you always have the option to manage the property yourself.
3. Inform your lender
Before letting your home, inform your mortgage lender of the change in circumstances. This helps make sure you don’t violate any of the terms of your contract.
Your lender may need to give you consent to let or require you to switch to a buy-to-let mortgage. Consent to let agreements are usually only for shorter periods of time; typically six to 12 months, but can be up to 24 months.
This is also a good time to check with your council if you require a landlord’s license. Selective licensing is on a council-by-council basis and requires some or all landlords to have a specific license.
4. Prepare your home
This includes all of the standard property maintenance, such as a working oven and boiler. However, you may be able to improve your property’s rental value with some renovations. This could be anything from a fresh coat of paint to updating your bathroom, depending on your budget.
You may also want to remove any valuable possessions or furnishings that you do not want to risk getting damaged.
5. Have your property valued
With a freshly updated home, it’s time to have it valued. A property valuation will give you a much more reliable figure of how much you can charge tenants for rent. Look for free, no-obligation property valuations by registered estate agents or valuers. With the right agency, it’s quick and easy to book a free, no-obligation valuation online.
6. Find the right letting agent
Explore local letting agents to find the right company to list your property with.
Things to consider when choosing could include:
- Fees
- What the service includes (property photos, where your property will be listed)
- Whether you have to be present for viewings
- If they complete safety, legal and tenancy renewals
- How many properties they deal with in your area – are they experts?
As well as finding the right company to list with, you may want the agency to manage the property for you. There are typically different service levels available, from part to fully managed. It can be useful to decide at this stage what kind of property management you want, if any.
7. Ensure the property’s safety and compliance is verified
Before letting your property, you must confirm your property meets certain safety standards.
These include:
Electrical Installation Condition Report (EICR)
The property’s electrical system, including plug sockets, light fittings etc, must be safe. You will need an Electrical Inspection Condition Report every five years.
Gas Safety Certificate (CP12)
All gas equipment must be installed and maintained by a Gas Safe registered engineer and you need to supply tenants with a gas safety check record. You will need a Gas Safe & Legionella Risk Assessment every 12 months.
Energy Performance Certificate (EPC)
This certification demonstrates the energy efficiency of your property. If you’re not sure where your EPC is, or if it’s valid, you can find your most recent EPC or request a new one through the government’s website. Your EPC is valid for 10 years.
If you are renting a property which requires a licence from the local council, further checks may be needed, such as:
Fire/Smoke alarm testing
The property must have smoke and carbon monoxide alarms on each floor and all furniture and furnishings must be fire safe.
Fire alarms and extinguishers are required for larger properties.
Portable Appliance Testing (PAT)
This examines electrical appliances and equipment to ensure they are safe for use, involving visual inspections and electrical tests.
Emergency lighting testing
These tests ensure that emergency lights function correctly during a power outage, providing reliable lighting to protect occupants and comply with safety protocols.
In many cases, your estate agent will take care of all of the above for you, depending on the level of service you request.
If it is not covered, your estate agent can still help you with a safety and compliance checklist so that nothing is missed.
The government has a useful how to rent checklist you can use too.
8. Decide the type of tenancy you want
Before listing your property, you will need to decide what kind of tenancy you would like. Your estate agent can support you in your decision making.
You may want to consider whether you would like:
- HMO (house of multiple occupancy)
- Single or joint tenancies
- Professional or students
- Short (six months minimum) or long term tenancies
- To rent your property furnished or unfurnished
9. List your property
Now that you’ve worked out the details, it’s time to list your property. Your estate agent should do most of the heavy lifting here, getting in touch when viable tenants are interested.
You may need to host property viewings, however, if you prefer you can ask your estate agent if they are able to do this.
10. Choose a tenant
In order to select the right tenant(s) for your property, there are certain compliance standards you must meet before they are able to move in.
References need to be gathered for your prospective tenant, including credit scoring, financial checks, their employment status and previous landlord references where applicable.
For legal compliance, a right to rent check must be conducted.
Your estate agent may cover all of this, we certainly do in our tenant finder service. However, it is worth clarifying if this is something you would like your agent to take care of.
11. Finalise the tenancy agreement and deposit
If all of the above checks come back good, it looks like you’ve found your tenant!
This is where the tenancy agreement is drafted and signed by yourself and all tenants.
Finally, the first month’s rent and damage deposit must be secured from your new tenant(s).
It’s worthwhile understanding from the outset whether this is something your estate agent will take care of.
We appreciate that this can feel like a complicated endeavour, and that’s why we’re here to help. If you’d like support becoming a landlord, find out more about our landlord services, including property management.
