True Cost of Renting?

philng

My son is pondering renting his house out circa £1000pm and renting something in a different area for around £500pm.
I am aware he will need Mortgage Lender approval to rent (Current mortgage £390pm) (although I know it does allow temporary rent for up to 2 years after which Mortgage has to change to a Buy to Let at a higher rate).
I am aware he will have to pay tax on his rental income plus management fee say total £275pm making his net receipt around £725pm.
His normal bills will still be payable like Council Tax Gas Elec on the property to be rented.
I think he is silly to consider it but what are the other considerations financially to be aware of?

Slithery

The biggest risk is having tenants that refuse to leave and don't pay their rent. Can he afford to cover the costs of both properties for the couple of years it will take to evict?

MaryNB

Does the house meet current standards? He'll have to get an EICR and GSC (if there is gas) and get any necessary repairs done.

Will he be renting to a family or individuals? If the latter and there are 3 or more people across more than one household he needs to be familiar with HMO requirements and may need to get a HMO licence. 

His tenants will be liable for council tax (unless his tenants are all on separate contracts). He should leave the responsibility of the utilities with the tenants. They set up their own accounts, choose their own supplier and pay the bills directly. If he includes it in the rent he'll have to pick up the cost if the usage goes up and there's no incentive for the tenants to cut down on their usage. If he pays it directly but it is not included in the rent he'll have to get the tenants to pay him back. 

Will his current fixed term end after two years? If not he may have to pay an ERC to end his fixed term and apply for a BTL. He'll only get a max 75% LTV mortgage for a BLT mortgage so he'll need 25% equity in the property (or use savings to increase the deposit)