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Can I Rent Out My House?

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If you’re moving in with a partner and own your own home, then you may be asking ‘can I rent out my house?’

If you are a homeowner, the short answer is yes, you can, however, there are several factors to consider before renting out your home.

Here’s the key things you should keep in mind before becoming a landlord.

Reasons you may want to rent out your house

There are many reasons why someone may look to rent their home.

  • You might be moving temporarily for work
  • It may not be a good time to sell
  • You may not want to part with your property just yet
  • Maybe you’re moving in with a partner and aren’t ready to sell up
  • Or, are you simply looking for some extra income?

Things to consider before renting your house

Check your mortgage agreement

The first thing you should do before renting out your house is to check your mortgage agreement. Some mortgage agreements have clauses that restrict homeowners from renting out their homes without the lender’s consent to rent. If you violate this clause, you could face penalties. So, make sure you read your mortgage agreement carefully and consult with your lender if necessary.

This is where your lender grants their permission for you to rent out your home on your current mortgage. It will usually last for a set period of time, e.g., until your fixed-rate mortgage comes to an end. When deciding whether to give you consent to rent, a lender will look at:

  • How long you’ve been on your current deal – If you’ve just bought the property, they’re less likely to say yes
  • How much equity is in your home – you’ll likely need a decent amount, e.g. 25% of your home’s value
  • Your income – You’ll need to be earning a certain amount

If you’ve bought using Help to Buy or a similar scheme, it might be tricker, as there are different rules surrounding these properties.

Familiarise Yourself with Landlord Regulations

Before renting out your house, it’s essential to understand the laws and regulations that apply to you as a landlord.

Calculate Your Rental Income and Expenses

Before renting out your house, it’s essential to calculate how much rental income you’re likely to receive and the expenses associated with being a landlord. This includes:

  • Mortgage payments
  • Property taxes
  • Insurance premiums
  • Repairs and maintenance costs
  • Utility bills
  • Property management fees (if applicable)

Once you have a clear understanding of your income and expenses, you can determine the financial viability of renting out your house.

Decide How You’ll Manage Your Property

Managing a rental property can be time-consuming and stressful as there’s a lot of legislation to be aware of. Before renting out your house, you’ll need to decide how you’ll manage your property. Will you manage it yourself, or will you engage a letting agent?

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If you decide to manage the property yourself, be prepared to handle things like tenancy deposit schemes, maintenance requests, tenant complaints, and rent collection.

Screen Potential Tenants

When renting out your house, if you don’t use a letting agent, it’s crucial to find reliable tenants who will take care of your property and pay rent on time. To do this, you’ll need to screen potential tenants carefully. This includes checking their credit score, rental history, and employment status.

If you use a letting agent this is all part of the service they provide.

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What might the mortgage provider ask?

Is it temporary?

If you’re looking to rent your home out temporarily (e.g. one to 12 months) your mortgage lender may give you consent to rent. But don’t assume and always ask.

Is it long-term?

If you want to rent your home out for a longer period of time – or permanently – you likely won’t be able to stay on your current mortgage. This will also be the case if your lender doesn’t grant you consent.

You’ll need to switch over to a new mortgage deal, such as a buy-to-let mortgage.

It’s worth speaking to a mortgage adviser to help you find the best deal. We can put you in touch for free.

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Can I buy a house and rent it out straight away?

If you’ve got a residential mortgage, the lender may be less likely to grant you permission to rent your home out straight after you’ve bought it.

Most people who buy a property with a mortgage and intend to let it will need to obtain a buy-to-let mortgage.

If you bought the property mortgage-free, then you would be able to rent it out straight away or live in it. You’re not bound by the mortgage lender’s rules.

Can I rent out a room in my house?

If you’re not looking to rent out your whole property, you could rent out a room in your house and get a lodger instead.

How does renting a room out work?

If you have a mortgage then check with your lender first. Whilst some mortgage providers prohibit lodgers’ others allow it under the stipulation that you must be living in the property at the same time.

You should also declare that you are renting out a room to your local authority as having a tenant may mean you’re no longer entitled to a single person discount on your council tax.

You are a ‘residential landlord’ if you let out part of a property that is your only or main home. You can charge what you want for rent but should agree on the amount with your tenant beforehand – they don’t have the right to challenge it.

Can I rent out a room in my council house?

If you are a council tenant, then it is important to check your tenancy agreement before renting out a room. Your tenancy agreement is a legal document which outlines the rules about living in your property. The rights and responsibilities outlined in a tenancy agreement will be different for each council tenant.

What is the Rent a Room Scheme?

The Rent a Room Scheme lets you earn up to £7,500 per year tax-free for letting out furnished accommodation in your home. (This is halved if you share the income with your partner or someone else.) If your rental income exceeds this threshold then this will need to be declared to HMRC.

What else should I consider before renting out my room?

Other than checking compliance aspects, such as getting approval from your mortgage provider and notifying your council, there are some other factors worth considering before renting out a room in your home.

  • Advertise the room in suitable places and screen potential lodgers to find a good match.
  • Establish clear boundaries and expectations before your lodger moves in.
  • Consider the financial implications, including taxes on the income you receive and any adjustments you may need to make to the home.
  • Check your buildings and contents insurance as there may be implications from taking on a lodger which may affect your premium.
  • If the property is a leasehold, check your lease, you may need permission from the freeholder first.

Can I rent my house as a holiday let?

Letting out your home for holidays can be a lucrative way to make money from property. Like all lettings there are rules and plenty of regulations to adhere to.

If you only occasionally rent out your property or part of your home (for example through short-term rental apps like Airbnb) you may need to declare this income to the HMRC – always check.

Again, you’ll need to check with your mortgage lender if you’re considering going down the holiday lettings route to see if you’re allowed. Always get permission before you list the property.

How much can I rent my house for without paying tax?

You are required to pay tax on any profit you make from renting out property. How much you pay depends on a number of factors.

Before renting out your house or a room in your house it’s worth getting professional advice from a qualified accountant.

Should I rent out my house?

Renting out your house can generate passive income. However, it’s essential to do your due diligence and understand your obligations, the laws and regulations, calculate your income and expenses, decide how you’ll manage your property, and screen potential tenants carefully.

If you need a professional, qualified and regulated letting agent then look for a Propertymark member agent.

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Last Updated: November 29th, 2023

Phil Spencer

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