Letting your own home what you need to know
What you need to do to let a home is constantly changing, partly due to market changes and new services offered and partly due to legal and tax changes from the government. So whether you are letting a property now or thinking about letting one, especially your own home, here is an update of all the main things you need to know.
As a landlord you need to make sure you let the property legally and safely and it’s important if you are doing this for the first time to know, you can’t simply move in tenants, or you risk facing fines and prosecution, not to mention a damaged credit record.
1. Make sure you finance the property correctly
If you have a standard residential mortgage on your home, speak to your lender before taking any steps towards letting it. That’s because the type of loan is different, depending on whether the property is your own primary residence or an investment, as the source of funds for repayment and risk profile are different.
You have two options:
- Ask your lender for consent to let
If you’ve had a change in circumstances and need to let your home as soon as possible, see if you can seek approval to do so under the existing mortgage agreement. You’ll have to complete an application form for your lender, who will be looking at three main things:
- Why you’re asking for consent to let
- Whether you can afford to keep making the mortgage payments
- The expected rental income
- Apply for a buy to let mortgage
If you don’t need to let the property immediately and/or are intending to let for at least 12 months, it is worth considering applying for a buy to let mortgage. This will involve having the property valued and the potential rental income assessed, and you may need to pay a higher interest rate than you had when it was your home.
Crucially, depending on how much equity you currently have in the property, you may need to invest some capital to meet deposit requirements, as the maximum loan to value will almost certainly be lower than for your standard residential mortgage.
As such, it’s advisable to speak to a mortgage specialist. Our partners at Embrace Financial Services will be happy to give you a free initial consultation – you can contact them via our website.
2. Preparing to let your property legally & safely
There are currently more than 400 rules and regulations set by 150 laws that landlords and agents need to abide by when letting. Fundamentally, the property must be ‘fit to live in’, meaning it must be safe, with services and utilities in good working order and free from fire and other potential health hazards. You may have to undertake works to bring the property up to standard and must have various checks to gain certification – all of which can take time and may be costly.
Here are just some of the things you need to know and criteria you have to satisfy:
Do you need a licence or to be registered to be a landlord? There are different rules for England, Wales, Scotland and Northern Ireland. In some countries and for certain types of let, the properties need a licence; in others, it’s the landlord or managing agent that needs to be registered
- Ensure the property meets the minimum EPC rating. Currently in England and Wales, the property must be rated ‘E’ or higher
- Secure a Gas Safety Certificate (which must be renewed annually) from a Gas Safe registered engineer
- Ensure electrics are safe – ideally by having the installations checked by a ‘Part P’ registered electrician who belongs to NAPIT, NIEIC or ECR, and securing an Electrical Safety Certificate
- Carry out a fire risk assessment and comply with the relevant fire safety regulations, which vary depending on the type of property and how it’s let
- Make Legionella checks
- Ensure the property is free from damp, mould & condensation
If a property is going to be let by the room rather than in its entirety, it’s likely to be classed as a House in Multiple Occupation and more rules and regulations will apply, such as minimum room sizes, the need for fire doors and the likely requirement for the property to be licensed. In some areas, you may need planning permission or might not be allowed to have an HMO at all, so don’t assume you can let your property as an HMO.
There are then specific legal criteria you have to satisfy when securing a tenant, including:
- Making Right to Rent checks
- Issuing the correct paperwork at the right time
- Protecting a legally appropriate level of deposit
You must also ensure:
- The tenant understands their legal rights and responsibilities.
- You protect yourself by having an inventory of the property and its contents.
- You take out appropriate Landlord Insurance.
- The property is managed ongoing in a way that is legally compliant.
Essentially, there is an awful lot to know and, with some rules being updated and other new ones being introduced every year, you need to be able to stay up to date. Unless you are a professional, full-time landlord, it’s highly advisable you use a letting and managing agent that is a member of ARLA or RICS. That will take much of the legal responsibility off your hands and you can be confident you will always receive the best advice and the highest level of service. A good agent will also have the advertising reach and negotiating experience to find and secure you the best tenant at the best market rent.
If you are thinking of letting your own home, please do come and speak to us about how to go about it the right way. You can find your nearest branch.