Are you thinking of renting out your home? Here is what you should know…
Renting out your home can be a great source of income, and helps many people to pay a mortgage on another property, or just provides a second income stream.
It is not without it’s risks however. Unlike many rented properties, which have been purchased by an investor with the express purpose of renting it out, or which are owned by accidental landlords, renting out your own home comes with it’s own unique set of challenges to deal with.
Here are a few points to consider.
1: It’s your home. Most of us take pride in our homes, and invest considerably to make them “just so”. Sometimes, the emotional investment is larger than the financial investment. Allowing a stranger (albeit thoroughly vetted and with suitable security) to move into your home is usually very difficult to come to terms with.
2: You won’t expect the costs. Unlike a professional landlord, you will probably not be aware right now of all the costs that you will pick up on the way to finding the perfect tenant.
Costs to consider include gas and electrical certificates, and EPC, all of which must be provided to a tenant before they can move into your property. If you are thinking of providing electrical appliances then these will all need to be PAT tested for safety.
Some of these checks must be carried out regularly, so make sure that you have taken that into consideration. Give us a ring for more information and prices on 0191 303 7778.
3: Wear and tear. Even the best tenants may not care for your home like you do. Be prepared for a higher level of wear and tear than you would expect whilst you are living in the property. Of course this does not excuse actual damage, and an inventory will help ensure that you have a record of what the tenant is liable for should damage be found during an inspection or upon check-out.
Make sure that you use an agent who will carry out regular (6 monthly is standard) inspections, and ask them whether they carry out a full inventory before and after each tenancy. Your agent should also be obtaining suitable deposits and/or guarantors.
Beware: Make sure that your agent is vetting your tenants properly. Whilst you should know that tenant vetting and referencing isn’t 100% foolproof, it goes a very long way towards weeding out unsuitable tenants.(Understandably, some insurance companies won't cover damage caused by your tenant if the tenant was not properly vetted!)
Tenants may want things repaired which you would happily leave without repairing. Your responsibilities are clear and are laid out in the AST agreement (assured shorthold tenancy); ask us for a copy if you would like to read through this.
4: The risk. Sometimes, the dream tenant can turn into the nightmare tenant. Be prepared, and have a plan. If things go badly wrong, you may have to pay out for major repairs to your property. Of course, your landlord/property insurance may cover a lot of this, so make sure that you choose your policy wisely.
If you are still determined to rent out your home then great! You are in good company, amongst many other home-owners using a second property to generate income. Remember that you won’t make a profit without taking risks, so just ensure that the risk is justified, then don’t look back.
Looking for more information or advice about renting out your home? Pop in for a chat, or call us on 0191 303 7778.