Renting out my house - total novice - advice please

a1a1a1 · 24 January 2010 at 1:08PM

Hi all, (sorry I have had a good search of the forums for answers to these questions but I would really appreciate some further guidance).

My partner and I have separated and we are now looking to rent out our house as it's not possible to sell in the current climate. We are looking to rent privately to someone we know (obviously I know there can be difficulties with this but I think it's the best option).

I know we need a contract, insurance certificates, deposit / inventory forms, gas certificates (am I missing anything?!!) but basically I have a number of questions?

Is there anywhere I can get a template contract from?

Do I need to inform my mortgage lender? (HSBC by the way, does anyone have any experience of this?)

Are there any insurance companies that specialise in this?

Do I have to pay any tax?

I do want to be a good landlord, so want to do things properly, so I would really apprecaite any advice. Thanks in advance.

NEH · 24 January 2010 at 1:17PM

We;ve just looked into this and decided against it...

You have to inform your mortgage provider first and foremost....Ours would do it for an admin of £250 but others don't...

Whereabouts are you renting out? There are different rules depending on whether it's Scotland or England etc...

Jowo_2 · 24 January 2010 at 1:33PM

Join a national landlords association and attend a course. You've not even mentioned tenant screening which is the only way you can reduce the risk of getting a dodgy tenant by 90% (who actively seek out novice/accidental landlords). Even if you know the person, you should do all the proper checks. Consider getting it managed by an agent that belongs to a professional body such as ARLA.

Yes, you do need the lenders permission.

Landlordzone will tell you about screening, legal obligations, templates and how to find a good agent.

missile · 24 January 2010 at 2:19PM

You have separated but want to go into business together ............ not a good idea IMHO.

Any house, anywhere will sell if the price is right. I would suggest, cut your losses, cut your ties with ex partner and move on.

HRV · 24 January 2010 at 2:46PM

I rent my flat out and I was a complete novice (as when i met my partner it was big enough as he has 2 kids from previous marriage). I got permission to let from my lender- as HSBC (no charge). I let through an agent-10% fee. I have to do a self assessment tax return (but be warned I declared a loss last year!!- will prob make a small profit this year if tenants decide to stay but will have to pay tax). Also you need special landlords building insurance- I was with dorect line for my buildings insurance at the time and they transferred me over to their business policy when i started renting it- this avoided the admin fee they would have charged to cancel it. You dont need contents as such but my landlord insurance cover windows and santiary wear etc.
Good luck with it

Fire_Fox · 24 January 2010 at 2:54PM

You don't need to inform your lender you need to ask your lender. Then join a landlord's association, go on a few courses, read the landlordzone site already linked to.

DVardysShadow · 24 January 2010 at 3:29PM

a1a1a1 wrote: »

My partner and I have separated and we are now looking to rent out our house as it's not possible to sell in the current climate. We are looking to rent privately to someone we know (obviously I know there can be difficulties with this but I think it's the best option).

You are starting from a false premise. It IS possible to sell in the current climate. You may have to reduce the price to do it. And would the rent cover all of your costs - not just the mortgage? And if house prices fall again, would the rent make that up as well as the costs?

You may find you are better off just to drop the price for it to sell. Do sit down and do the sums and look at different assumptions about house prices over the period you are looking to rent out for.

a1a1a1 · 24 January 2010 at 3:39PM

Thanks for people's help and advice. I will certainly check out the link to the landlord zone website.

Obviously it is not an ideal situation, we've both just got to try and make the best of it. It isn't possible to sell, which of course would be the best option but it would cost us a lot of money, which we just don't have.

I'll give HSBC a call tomorrow and see what they say.

On the tax side of things, am I right in thinking that it is only the capital element of the rent that will need to be taxed?

Thanks again.

ManicMum · 24 January 2010 at 3:55PM

You could re-mortgage to a BTL but fees are quite high.

We turned a residential into a BTL and stayed with same insuarance provider, Halifax. I told them we were renting it out and have checked with them since that they are still aware of that as insurance premiums quite low. I know some landlord insurances can be quite high.

This will become a millstone around your neck. I think a lot of lenders will only give permission to let for about 3 years. SO if you miss the boat now, (and this could be a good time to sell), you might be waiting a while longer before things pick up again. If I were you, just cut your losses and sell. Your freedom is more important.

If you rent you will also need to do a tax return so you will have to get together with your ex once a year to sort this out and work out receipts etc. Unless one of you does this and informs the other of what to put down. If something needs doing, you will have to make a decision together about who to get in to fix it, what to spend etc. Do you feel you could do this?

Lots of variables. Good luck!

HRV · 24 January 2010 at 3:57PM

The interest element of you mortgage and the costs (eg. management fees, wear and tear, finding fees for tenants, insurance, ground rent, service charges) are all offset for tex purposes but not the repayment element

I can see why people are warning you aginst renting but really for some (like me, and you by the sound of it) there is nt a whole lot of choice. Had we remained in the flat the kids (age 1 and 4 at the time) would not have been able to stay (they stay 3 nights a week) and would have no garden- thus badly effecting their relationship with their dad. For a small loss for me (on covering mortgage) we have a nice house and they have a home and their dads not just somewhere to visit on a saturday afternoon.

We could not sell as the lease was too short ( we have now saved and extended it) and at the time the market had just collapsed- new flats sold for 120k a few months earlier being sold as repo for 72K. No way I could take that hit! there was no choice

rich1967 · 24 January 2010 at 4:10PM

I found Directline by far the most competitive for insurance,as a landlord i only took out buildings but you can have it put into any tenancy agreement that tenants have contents with accidental damage, would you want to approach your friend for £500 for a new carpet as he had by accident damaged it such as paint,cig burn(most contracts ban smoking as the norm) etc. get any contract via a solicitor,before you sign it ask if you can take it away to read,photocopy it, delete all the names and addresses and you have a blank one then for a second or third tenant. even after checks on tenants you are still relying on a gut instinct if they are good or bad,to my cost i found bad, all relveant laws in my opinion treat landlords as millionnaire thugs and tenants as poor innocent victims. you will need a landlords hip, british gas landlord checks,strongly suggest you take out 5star cover for cooker,gas appliances,even plumbing as you are responsible and also the deposit must be placed in a scheme where no party can get it without the others permission such as the government "deposit protection service" search on google. the deposit must be put in their until the end of the tenancy. its a minefield and you do sometimes have tol be very hard but hopefully the end will justfiy the means, one person on here mentioned using an agent as this makes sense if monies allow as its independant because as i said before you may think you know your friend but do you know his habits etc and anything you say he may take personally either deliberately to make you back off or becuase he thinks you are accusing him. hope this helps and any comments i make are my opinion only and said without prejudice

Renting out my house - total novice - advice please

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