"Tenant demand is currently rising rapidly as potential first time buyers struggle to get loans for house purchase. This, coupled with an increasingly difficult market environment, is causing a growing number of people to rent their homes privately instead of selling.
"But casual landlords need to ensure that they do their sums properly, account for all costs and know the laws and legislation around renting property. A number of new reforms have been introduced in recent years, such as tenancy deposit protection and licensing for homes in multiple occupation, and not complying with these could leave landlords seriously out of pocket.
"This is actually a case of history repeating itself. The greatest driver of the private rented sector in recent times was homeowners deciding to let their properties during the downturn in the early nineties. However, homeowners going down this route have to ensure they have the correct knowledge."
Some tips for your clients if they are thinking of renting out their home are:
- Make sure you inform and get the approval of your lender for the change of tenure
- Set rents to account for void periods and minor repairs. Most lenders would require a rental level of at least 125% of your monthly mortgage payments
- Ensure that you have a tax plan and know the tax rules surrounding letting a property.
- Make sure that you have a household insurance policy that covers you and your property in your new role as landlord. You may need to obtain a specialist let policy
- Ensure that if you take a deposit it is insured and protected by one of the tenancy deposit schemes
- Familiarise yourself with the rules surrounding the classification and licensing of houses of multiple occupation
- Understand the requirement for an Energy Performance Certificate to marketing your property to let after 1 October 2008
