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Thinking of Renting Out Your Home? Don’t Scroll Past this Guide! [Updated Mar, 2024]

Home | Guides | Thinking of Renting Out Your Home? Don’t Scroll Past this Guide! [Updated Mar, 2024]

By Lisa Hayes (Quick Sale Industry Expert)
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Property investors far and wide talk about the benefits they have reaped from acquiring tenants in the empty properties they own and becoming landlords. Many would have you believe that it is a leisurely existence with a fruitful income, wherein the landlords themselves become small scale millionaires of some sorts.

Is this the truth? In short, absolutely not.

Now, we would neither recommend nor discourage becoming a landlord, because it’s a different story for every individual who does it. But one thing we would say is this – and that’s that it is hard work and a lot of responsibility.

If you do the maths and renting out property is going to make you a profit, great! If not, then you might want to think again.

There are many do’s and don’ts to renting out a property, and we’re going to be taking a look at them today. So if this sounds like something you’d be interested in, then read on!

The Positives that Can Come from Renting Out Your Home

We’re going to start things off on an up note, and cover what the main positives are you’re likely to come across if you choose to rent out a property.

  • If you are moving away temporarily, or are struggling to sell your property on, for example, renting it out for a six month period can be a good alternative.
  • If you don’t like the sound of the hassle that comes from being a sole landlord, then there are agencies you can contact who will do the letting for you.
  • If you get a good tenant, then great! They will likely look after the property you’ve paid for well, pay their rent on time and all round make your life a lot easier.
  • Property is considered to be a sound investment. After all, people always need a place to live, right? So if you’ve got some money you want to invest, then there’s arguably no better thing to do so on.
  • In becoming a landlord, you can make a second income – and many will make this their only income in time as they build up a portfolio.
  • You can also potentially gain capital growth by owning a property and letting it out to the right tenant.

It’s all sounding pretty good so far, isn’t it?

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The Negatives that Can Come from Renting Out Your Home

For everything that has a positive, there must be a negative too. So, in order ensure we aren’t taking a biased approach to things and are giving you the best possible advice, we’re now going to relay some of the negatives that can come from renting out your home.

  • The property you’re renting out must, by law, adhere to certain health and safety requirements, and if it doesn’t already, you’ll have to spend on these. These can be things such as fitting a new boiler or fuse box.
  • There are tenants out there, who very simply, can’t be trusted. Not everyone is reliable, and some will even go out of their way to actively cause damage to your property, knowing that they don’t technically “own” it, and that you have to pay for their repairs. In some extreme cases, landlords have even found tenants using their properties as drug farms. Some things will be covered by landlord insurance, but not all.
  • If you need to take on any additional debt or credit in order to become a landlord, then in the long term you could end up losing money – or worse yet, all of your properties. This is particularly the case if housing prices plummet, or if you default on your mortgage.
  • This is a big one, and it might surprise you to know that there are over four hundred rules and regulations that all landlords must know, and keep in line with. We know, it’s a lot, and we didn’t say it would be easy! If you do not comply with all of these rules and regulations as a landlord, then you could be fined up to £30,000 – and that’s per problem! – for non – compliance.
  • Again, when it comes to tenants, you may not always get those who are easiest to deal with. In some cases, they may even stop paying their rent – simply because they can’t afford to. If this is the case, it’s likely you’ll end up having to evict them, and therefore in the period in which your property is empty, you’ll be responsible for all of the bills and so on.
  • The same stands for periods in time when you’re looking for tenants and the property is therefore empty. You’d be surprised at how much money landlords can lose from this alone.
  • Very simply, renting out a property can be incredibly expensive in terms of maintenance. In some cases, this could even cost more than the sum of the rent that you receive.
  • If you have a “second home”, as most landlords do because they live in one and rent out the other, then you may have to pay expensive tax on it, even if it’s on a buy to let basis. This can work out a pricy investment if this is the case.
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Does it Make Sense for Me to Rent my Property Out?

As we stated earlier on in the post, every individual situation is different, meaning for some people it might make absolute sense to rent property out, whereas for others it wouldn’t be financially viable.

So does it make sense for you to personally rent your property out?

Below, we are going to list some things we would advise you consider before making the choice to rent out a property, when you could simply just sell it on.

  1. Look at what the market is looking like for renting out your property at current. Is it hot or cold? How much interest is it likely to attract from tenants?
  2. Consider whether or not your property has already benefitted from capital growth over the years. Has this increased over the last few years, and are they set to continue to do so in the future?
  3. Know all of the true costs of renting out a property and becoming a landlord. This will include things such as upgrades – which are legal requirements – and so on. It could cost thousands in total.
  4. Chances are, if you’re considering renting out your own property, you’re looking to move elsewhere. Will the cost of renting out your current property be adequate to fund your new home?
  5. Look over all of the tax implications that come alongside earning an income from rent, and securing capital growth on a property. For example, are you currently receiving benefits, such as child tax credit? If this is the case, you could lose out on these should your rental income take your overall income over the threshold.
  6. Sit down, and compare the returns – or the NET of tax – that you’re likely to receive when investing your money on property VS making other sorts of investment, for example stocks and shares. Are you really investing your money in the right places?
  7. Ask your existing lender whether or not you’d be able to keep your current mortgage terms with them, and at what rate. You’ll also want to ask how long this will before, and how much it’s likely to cost.
  8. Try and understand all of the implications of your actions as a landlord, so that you can insure against any risks. Some of these include damage created by tenants, the cost of eviction, losing jobs, and even long term sickness. Pretty much anything that will prevent your tenant from paying their rent, as these things will make it incredibly difficult for you to own and run one household, and let out another.
  9. Find out whether or not you need to be registered or licensed as a landlord, so for example in Scotland and Northern Ireland, you absolutely do. The rules differ from place to place. In some cases a property may even require a license to be granted from the local authority in order to be let out. The most important thing is to be up to date with what all of the costs are, and have a plan in action that will enable you to abide by the rules.
  10. Finally, figure out how long you intend on keeping the property on and letting it out for. Furthermore, is it in your long or short term plan to invest in more properties and build your portfolio? If this is the case, then you’ll not only have to contact your lender to see if they are on board and will allow this, but you’ll also have to sit down and create a fully comprehensive, formal, business plan. Being a landlord is effectively running a business, after all.
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Above all else, we advise doing your research, and truly knowing the ins and outs of letting out property before you commit to becoming a landlord.

It’s a big step, so don’t take it lightly!

Lisa Hayes

Lisa Hayes

I am the co-owner of Ready Steady Sell. We built this website to arm homeowners with the knowledge and understanding they need to navigate the quick sale industry.

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