First time renting my house - what are the essentials?

tiger71_2

Hello,

I'm a first time poster (well technically I've typed all this before but it hasn't appeared on the forum for some reason - this time I will copy the text before I press submit ;( )

I need to rent my house fairly urgently. I found out I am to be made redundant in 6 weeks, my payout will be minimal as I have only been in my role for 2 years. There is no real work locally so I am moving in with my partner who lives 400 miles away (this was always on the cards, redundancy has excelerated that plan). With no savings this will hopefully ensure i can keep my house as a long-term investment and I have little equity in the house currently. The rental will not be enough to cover my fixed-rate mortgage but I am confident of being able to make up the small shortfall for a good 12 months, when hopefully I will have a greater income.

I'm at a real loss of what I need to do first. Do I need to contact my bank/mortgage company and tell them I need to rent my property? Could they say no? Are there additional forms or insurance that I will need to be able to do this? Will it overly spook/worry the bank/mortgage company that I am not working?

When do I need to let the HMR&C know? Will I have to pay more tax on the rental income (even if it doesn't cover the mortgage)?

I think I've decided to rent via an agent. Is 12% the norm for their cut? Should I be looking at less than this? What are the essentials I should be getting for the 12% cut? Any pitfalls I should look out for?

I feel a bit punch-drunk and at a loss of what I need to tackle first to get all of this sorted in 6 weeks.

All advice really appreciated.
Thanks

Thrugelmir

tiger71 wrote: »

Hello,

I'm a first time poster (well technically I've typed all this before but it hasn't appeared on the forum for some reason - this time I will copy the text before I press submit ;( )

I need to rent my house fairly urgently. I found out I am to be made redundant in 6 weeks, my payout will be minimal as I have only been in my role for 2 years. There is no real work locally so I am moving in with my partner who lives 400 miles away (this was always on the cards, redundancy has excelerated that plan). With no savings this will hopefully ensure i can keep my house as a long-term investment and I have little equity in the house currently. The rental will not be enough to cover my fixed-rate mortgage but I am confident of being able to make up the small shortfall for a good 12 months, when hopefully I will have a greater income.

I'm at a real loss of what I need to do first. Do I need to contact my bank/mortgage company and tell them I need to rent my property? Could they say no? Are there additional forms or insurance that I will need to be able to do this? Will it overly spook/worry the bank/mortgage company that I am not working?

When do I need to let the HMR&C know? Will I have to pay more tax on the rental income (even if it doesn't cover the mortgage)?

I think I've decided to rent via an agent. Is 12% the norm for their cut? Should I be looking at less than this? What are the essentials I should be getting for the 12% cut? Any pitfalls I should look out for?

I feel a bit punch-drunk and at a loss of what I need to tackle first to get all of this sorted in 6 weeks.

All advice really appreciated.
Thanks

Bite the bullet and sell.

Why keep the house as an investment if you have no long term savings?

blunt_crayon

i'm sorry to hear about your situation but i don't really understand why you want to rent instead of sell? i think you would need to get a buy-to-let mortgage, which would probably be at a higher interest rate, and probably beyond your reach as the LTVs are 75-80% max. you also need savings for contingency - for if your house is empty for a couple of months, or the tenants don't pay the rent, or they trash the place, or the boiler blows up? plenty of people on here will testify that these things are commonplace. plus you would be having to deal with all that from 400 miles away.

unfortunately i think there are a lot of people in your situation, or who are renting because they can't sell, which is driving overall rental prices down and a lot of places are standing empty. it all sounds very complicated and there are no guarantees. with the stress of losing your job and moving so far away i think you'd be better off cutting your losses, putting it on the market, taking whatever equity you can get and starting afresh with your new partner.

you should get your house valued so at least you know where you stand, and speak to your mortgage provider and an IFA.

fwiw, in my area (Essex) i believe the agency fees are about 9% but i guess this can vary.

good luck.

Pee

You won't pay tax if it doesn't cover the interest part of the mortgage.

This is a big decision as it can be hard to get a good tenant. Do you feel you would like to rent and then sell when you are sure that things are right with your partner or should selling the house and releasing the equity affect benefits which you are entitled to?

mlz1413

Yes you do need to contact your lender and request permission to let, you may find a paragraph on this in your lenders terms & conditions, but write down all the questions you want to ask before ringing to confirm.

Yes you will need to advise your insurance, discuss contents and buildings, see who covers sinks, glass, carpets in case of damage.

If you do rent ring your local tax office and advise them, they will send you any relevant forms.

Using an agent is wise if you are 400 miles away, they should be a member of ARLA, read throughly the terms and get answers in writing for anything you want clarifying. The % is normally plus vat so ensure you ask them what you will receive as £ value from the rental rather than assuming.

You will only pay tax on any profit, go to direct.gov for a list of claimable expenses for rented properties.

blahbob

I was in a similar position 18 months ago. I have some tenants who stopped paying rent at the end of April. Now I'm going through an (expensive) nightmare to get rid.

If i sell now then I will be selling at the worst possible time, so Im stuck between a rock and a hard place. If you can sell then do, its not worth the haste unless you are serous about becoming a proper investor.

seven-day-weekend

Once you have your consent-to-let from your lender (and I believe that they CAN refuse), then you will need a Gas Safety Certificate (if you have gas) done by CORGI or the new equivalent organistion, and I believe a HIPs report.

You may also find that your domestic insurance will not be suitable and that you will need Landlord's Insurance.

blahbob

INSURE YOUR RENTAL INCOME and ensure you have coverage for problem tenants and court fees.

tiger71_2

Thanks for all the advice guys, really appreciate it. It's not as straight forward as I'd hoped! Have appt with mortgage company to discuss - will make a rent/sell decision from there. cheers.

Nosht

seven-day-weekend wrote: »

Once you have your consent-to-let from your lender (and I believe that they CAN refuse), then you will need a Gas Safety Certificate (if you have gas) done by CORGI or the new equivalent organistion, and I believe a HIPs report.

You may also find that your domestic insurance will not be suitable and that you will need Landlord's Insurance.

You just need the EPC part of the HIP, prices range from £40- £90. This certificate lasts 10 years & is advisory only. It must be displayed on the premises.LL Insurance available from 75p per £1000 & a wide range of Insurance Policies from loss of income to legal expenses.Regards,N.

carolt

You may well be able to get permmission to let at no extra cost - it depends on the lender. Some may require you to change to a BTL mortgage. Ask.

As above, you need gas safety cert, insurance, HIP and any soft-furnishings (beds, sofas etc) need to be fire-resistant. Deposit needs to be protected under a scheme. House needs inventory.

Sure there's more.

Good luck. Or you could sell.