Hi all,

I’ll soon be moving into my partner’s house on a permanent basis and will be looking to rent mine out for a couple of years until we buy a house together. Assuming the mortgage lenders approve this (discussions previously means this shouldnt be a problem) what do I have to consider?

I have a landlords certificate for the boiler and the electrics will be certified this coming week. Any other items I need to get tested or approved?

The property is furnished at present and we dont need any of the stuff at my partners house. Is it best to flog it and rent as unfurnished or rent as furnished? Im concerned that the cost difference will be minimal in terms of income but will have the aggro of continually replacing things.

Would it be best to go through a management company to minimise the hassle of setting up contracts or should I do all this myself? They also offer guarenteed income options even if the property is not let, obviously they take a greater monthly percentage. Is the rental market buoyant enough to mean I wont need this option?

I’m also in the process of decorating the living room which requires a new floor finish, shall I go laminate or carpet?

Thanks in advance.

I did this last year. I had to register myself / the property (can’t remember which) with the council, but I live in Scotland so may be different for you. You will also need BTL buildings insurance (I used Direct Line). I also had to have an ‘energy audit’ type thing done (like a home report).

I took most of my furniture with me, left some basics and white goods. I let the house as unfurnished and then verbally spoke to the tenants saying the items left were for their use, but I wouldn’t replace them.

I let the property through an agent, but just for a fixed ‘finders fee’ and now ‘run’ the let myself. The first year there have been a few hassles, three late payments to chase up, mold in the bathroom due to zero ventilation and the garden had been left to go wild. My first tenant has now given her notice and after my first years experience I think I would consider using an agent / management next time. If you do let it yourself be sure to do the six monthly checks inside the property and and talk to your tenant if anything bothers you – its no good if you tend to avoid conflict or don’t like dealing with people.

Good luck – it was certainly the best move for me as I kept the security of having my own house if things went pear shaped, and the income has easily covered the interest payments, and repairs and still some to go towards paying off the capital.

EDIT – I re let my property just by word of mouth this time, no need to advertise or for an agent. Market certainly buoyant in central Scotland.

Is it best to flog it and rent as unfurnished or rent as furnished?

I rent out a couple of properties, one I manage myself and one I manage through an agent. The one I manage through and agent is 200 miles from home, the other 20 miles away. I use an agent to find the tenant for the one I manage myself.

Furnihsed is better from an income tax perspective – yeh remember you have to declare than on your tax return. Wear and tear hasn’t ben too bad in my properties, I had one tenant in for 5 years and replaced most of the furnishings after he left but thats not bad going.

Other than sit back and enjoy someone else paying your mortgage.

Oh and as above I use Direct Line for Landlords insurance too.

Key is finding the right tenants : management company will do this effectively and also save you the hassle of hanging around waiting for prospective tenants.
I’ve been letting 2 different houses (sold 1 recently) for 6 years or so.
Never had any real problems, (such as non-payment) but plenty of small quibbles about normal housing things going wrong such as damp in a victorian house etc.
Make sure you get the legal docs done properly I cannot over emphasise this!!

I took most of my furniture with me, left some basics and white goods. I let the house as unfurnished and then verbally spoke to the tenants saying the items left were for their use, but I wouldn’t replace them.

+1, although IIRC white goods would still need PAT testing even if they’re not on the inventory?

And you only have to keep the property habitable, you can’t claim on the deposit for fair wear and tare on the sofa or carpets, but then neither can the tennant force you to replace the sofa or carpets if they wear out. White goods would be different as they just stop working rather than wearing out. So if you provided them they’d have to work for the whole tennancy.

Your best bet might be to sell the washing machine, fridge, freezer etc to the tennants (if they want them) then if they still work at the end of the tennancy buy them back at the same price? That way they get a washing machine and you avoid any hastle with it.

Ohhh and accept that for the next few years it’s not your house, it’s someone elses. There’s nothing more irritating than an overbearing landlord who insists on inspections every other week followed up by pissy letters abont washing up in the sink or the grass needing cutting!

Provided you are not living too far away I suggest you pay the agent a flat fee for finding the tennets/drawing up lease only – don’t pay them a management fee (plus VAT) as IMO it’s a waste of money.

Furnished/unfurnished – I’d say go with furnished (don’t leave anything precious) – if you find a tennent who particularly wants unfurnished perhaps they’ll pay a little extra to compensate you for clearing the property. Keeping the furniture gives you an option if you find you do have to move back in (sorry to appear negative)

+1, although IIRC white goods would still need PAT testing even if they’re not on the inventory?

I’ve used a few agents and haven’t had the electrical items pat tested since around 2000 in one property and never on the other. Agent has never brought this up.

If you rent it yourself you need to get the deposit held by one of the government schemes. It’s also worth taking out insurance for non paying tenants, it can be very expensive / time consuming evicting them (been there, done that, cost over £1000 and took months, inc multiple court visits).

OK, some very useful input here.

Thanks for the heads up about the tax return, not sure how this works as everything, pay etc, goes through my work. Would I get taxed on the rental income even though it mirroring the mortgage costs?

Still not sure half of the furnishings are worth keeping and certainly dont want to be replacing, therefore flowepower’s suggestion seems sensible.

Before anyone moves in take several photos of every room so you can prove any potential damage occurred after the tenant moved in, in the case of any disputes.

I let a few properties in UK & live abraod so no worries re being close. Just get some good local people on board in case of emergency.

For tax if you are only covering costs then make sure you post the loss on the tax return (it will be a loss after allowable expenses), then in year 2 you carry forward that loss, year 3 ditto. The loss builds up so when you eventually start making a profit you net off the loss.

I use agents to find tenants & I do the rest.

The electrical safety cert is not a legal requirement. Mine passed & there was a bare cable in the bathroom!

Good luck, hope it helps

joeydeacon – i was only discussing this point about photos with my partner. Keep the tips coming.

OK, so is a gas certificate the only legal requirement?

/assumes England

OK, so is a gas certificate the only legal requirement?

No, smoke alarms too. As far as I’m aware, energy performance certificate still is too, though I haven’t checked recently, though I’ve never been asked to produce one (I have them, cost £35 for my last one).

I rent five places out. It’s easy, but not trivial. I’d go for unfurnished if I was starting from scratch. Get a standard form for the tenancy, six month assured shorthold is standard, and if you’re happy with the tenants, allow it to roll over at the end to become a periodic. Choose your tenants wisely by advertising a bit below full market rate so lots want it, then wait until people you like come along. Don’t be afraid to turn people away. Take references, see recent payslip or similar from work then call them up using number you obtain independently to confirm them. Trust your instincts, if anything feels wrong, say no.

Be prepared to be on call. If someone’s kitchen cupboard handle falls off, sure you’ll get around to it, but if it’s a water leak of the boiler’s out in the middle of winter, you want to be seeing to it right away. that means you could do with either some handy tradesman you can trust as backup, or something like British Gas homecare.

On tax, suck it up, the taxman sees rent as unearned income so you can’t offset the full mortgage, only the interest. Repairs , bank charges, solicitors fees and maintenance are allowable though, but not upfront costs in decorating/repairing before the first tenant. You can even allow for travel costs to and fro to do maintenance etc. If you’re a regular joe on PAYE you need to do a tax return as well, and pay the tax over as appropriate.

Edit: Insurance is vital, I’d not sleep at night without it. SimplyBusiness are good broker, DirectLine are OK. There will always be high excesses though so be handy or know handy people.

yes just the gas cert, I don’t bother with landlords insurance – Directline was 200 gbp & loads of cop outs so I just self insure.

Landlordzone is good – loads of tips.

I furnish the properties myself from Gumtree, I did a 2 bed flat last year for less than 1000, 2 double beds, leather sofa, dining table & chairs, bedside cabinets. Looks fab too.

Was a Landlord from ’95 to 2001.

So – Gas – legally required. Electric is not legally required by Agency’s will insist on it as a level of comfort for the Tenants AND if someone electrecutes themselves and takes you to court you have a defense of “reasonable care”.

Tax – becuase youo’ve lived in the property you’ll get extra (Taper) relief, and you can claim for fair wear and tear to carpets and other items you leave in the house. Once its rented EVERY expenses including mileage to visit the house is a business expenses you can claim on through Self Assessment so keep all your reciepts / write down the miles it all adds up.

Agency/no agency. No Agency less fees but you need to deal with EVERYTHING yourself. I used an agency, and still found it a lot of effort so gave up renting out in the end.

My experience, which may not be everybody’s, was that Tenants expect a lot more than you do in your own house – ie the slightest dripping tap, or squeaking door and if you are not careful the agency calls a man out to fix it – which you pay for. So keep control of that Agency or no agency.

Also, take pictures of everything and attach them / make them an evidential part of the contract. The tenants are legally bound to return your property (and the gardens) to the condition they were in when they moved in. Any work to remedy that when they move out comes off thier deposit / can be claimed from them, so ensure both you and they agree the standard by using the pictures worded within the contract as a reference.

Don’t accept council tenants. 9 times out of ten they are undesirable and won’t treat the place well – “young professional” is the way to go.

Finally if you do use an agency, find one that promises to pay the rent if the house is empty until they find a new tenant. THAT really helps in times of drought becuase you’ll still have to pay the mortgage / bills when its empty.

Would I get taxed on the rental income even though it mirroring the mortgage costs?

You still have to submit a tax return stating your earnings though. But interest on your morgage is an allowable expense, but only interest not the whole mortgae payment, so if you’ve got a repayment mortgage its the interest element only that’s allowable. Plus you can claim for either 10% of rental income as wear and tear on fixtures and fittings on if you’re buying a load of new stuff then claim actual costs – whichever is greater.

If you use an agency to manage it, or to just find tenant, pick a good one. Too many are ***** who will do as little as possible for their fees.

Full inventory if leaving it full or part furnished .
With photos of everything / every room .
Might even be worth getting a full professional clean before tennants move in .
CO alarm for peace of mind .
Spare keys for all the locks .

I rent out a couple of houses. I use an agency but arrange or carry out all repairs myself. Rented houses empty which seemed to be easier for me. Left some white goods on understanding I would not replace if broke down. Think I advised tenant it was good will as I know moving into a house is expensive.
Had one DSS single mum tenant for 2 years and was absolutely no problem but I think its luck of the drawer. Young “professionals” description best taken with a large dose of salt.
Floors a mixture of laminate and carpet in mine depends which is cheaper and how much cash you have.
Only have a gas cert nothing needed for electrical but its coming soon!
If your’re tenants are O.K. best to remember they are people who need somewhere decent to live not just a cash cow. When I go to fix stuff I ask their permission to enter, go upstairs etc. I may own it but it’s their home.

Google Bedroom tax strtarts next april, basicly anyone on benefits is only allowed one bedroom, as is a couple, and HB want pay any more.

So if you rent out a 2 bed flat to a couple, then the HB will be reduced to the level required for a single bedroom flat, and the tennants will be expected to move or pay the extra rent.

There will also be a flood of flats and houses for sale and rent as tennants move more often and landlords try to sell up quickly, to avoid al the hassle.

We rent out Mrs Nano’s flat and based on the experience to date:

Rent unfurnished
Don’t bother with white goods

Both of the above means less hassle for you and some (not all) lettings agents recommend it.

Budget for redecoration whenever tenants move out. We have had 3 in nearly 4 years and the property has needed it every time (no tenant will treat the house like you would) .

Management fee is worth it if you don’t want to have to sort things yourself but bear in mind that you will still have to fork out when things go wrong. In the last 6 months we have had to deal with damp caused by the tenant but still our job to fix. We pay the fee but find our own trades if we aren’t happy with the quote from mgt co.

Have a zero tolerance policy to non payment of rent.

If you get good tenants its pretty much hassle free and we have only lost tenants due to pregnancy (its a 1 bed) and the couple renting splitting up.

Is it anywhere near a student area? If its a suitable property rent it to students. You’ll make a lot more money. Students get absolutely ripped off on renting. I’ve seen prices from £250-450+ pp/month. If you choose some suitable students they’ll take care of the place and it should be low maintenance. Write up a good contract and you should see any damage repaired by them. Speaking from 4+ years of experience, renting many different places as a student.

go unfurnished.
if it has a gas fire cut it off..( one less thing to certificate go wrong). get an electric shower ( cover for the boiler going bang) make sure the stop tap is working.
re decorate through out in magnolia, keep the house clean/simple.
get an agent to find the tenant then manage yourself..

Update – It looks like I’ve lined up a tenant myself, seem OK and happy to proceed with them. They’re coming for another look tonight and I’m confident that they will go ahead and rent the property. Assuming they do what are my next steps, from what they have said they look like they will be able to move in at the end of this month.

Things I would like to know:-

– When do I request the deposit, I was going to ask for 6 weeks deposit and then a months payment ahead?
– Anyone know where I can find a good tenancy agreement?
– Where can I find details of what are allowable expenses?
– How do I calculate the interest amount of my monthly mortgage payment?

Thanks!

Kev – I’ve got a Tenancy Agreement I could send you. It was the one I signed via an agency when I was last a tenant so should be legal. Let me have your email and I’ll send it over.

Get the deposit and 1st months rent when you hand over the keys.

I was told recently you also need an EPC to rent a property out. Not sure if 100% true or not.

Edit…looks like it’s true:
https://www.gov.uk/government/publications/energy-performance-certificates-epcs-and-renting-homes-a-landlords-guide

Only £35 to £50 to get one though. I had one done recently before selling my flat.

Tenancy agreements are standard documents, available via dowload or stationers’ shops.
Gumtree is a good place to advertise, cheap & effective.
You will need to put the deposit with the DPS, or risk mahoosive fines & a guarantee of losing any disputes with the tenants.

dooosuk – if you don’t mind, that would give me something to relate to, my address is kevhowmanATgmailDOTcom

I have an EPC certificate and landlords gas safety certificate, so that’s all done.

I was intending to put it into one of the schemes, I’m trying to do everything by the book! Just worried that I’ve missed something. Guess if they confirm I need to take out relevant insurances etc.

Kevster,never forget all your doing is exploiting people for easy gain.The bible condemns people like you.Sell the house and live an honest life.

Most lenders don’t allow you to rent to students.

Update, tenants in, deposit paid to the deposit protection scheme, tenancy agreements signed, first month rent received, all I have to do now is sort landlord insurance. Just had a long call with direct line who were helpful enough and quoted a fairly reasonable figure. However I asked about rent guarantee insurance and legal assistance cover and these weren’t options. Are the worth getting? Are they available on their own somewhere else? The tenant is an old friend of mine and seems co-operative but as its my house I’m concerned I’m not covered if things go wrong or they lose their job etc.

http://www.simplybusiness.co.uk/

are a decent broker for landlord insurance, I’ve used them for years and they have been competitive for me, and weren’t any hassle when I had a substantial claim to make a couple of years ago. Whether you insure against loss of rent or anything else depends on how risk averse or lucky you feel. Also now you’ve taken money to provide accommodation, do you need to insure yourself to rehouse the tenant if it becomes uninhabitable?

Thanks midlifecrashes. The last point is covered within the policy proposed by direct line. I will get a quote. I’m sure things will be OK. Only problem is the insurers who offer rent loss and legal expenses require a proper tenant check to be carried out. I only obtained a reference from previous landlord as I knew them.

What sort of fees have agents offered to people for managing tenancies? My estate agent came back with 12% which seemed a bit steep.

After all the fees and tax I reckon I’m better off just keeping the house as a big private self storage facitlity until it sells 🙁

I saw someone mention smoke detectors earlier – as far as I know there is no obligation to have them BUT if they are fitted then the landlord is obliged to keep them in full working order 🙂

(I have rented out my house for about 5 years)