Rent out your house

Renting out your house is the most popular option for career breaker homeowners.

You get some income while you're away
Your home is occupied
You have somewhere to live when you come back

Possible downsides:

It's a fair bit of hassle sorting everything out
You may have trouble finding good tenants (or any tenants at all)

Planning to rent out your house
Finding a letting agent
Finding tenants
The law on renting out your house
Your mortgage if you're renting out your house
Tax on income from renting out your house
Insurance if you're renting out your house
More information on renting out your house

Planning to rent out your house

Start 6 months in advance
Decide what stuff you're going to leave in the house and arrange for items of value (sentimental or otherwise) to be moved (see the storage page for self-storage information)
When budgeting, ensure you account for things like redecoration, safety requirements etc (your agent can advise)
Ask fellow home-owners who have rented out their house for advice and tips

Finding a letting agent

Unless you've got very reliable friends or family who are willing to manage your house, it's best to use an agent.

They will charge a fee when they find you a tenant
They will also take a percentage of your monthly rent (usually 5% - 15%)
They will sort out things that go wrong (but need to stay in contact with you to authorise anything that requires payment, eg if the fridge needs replacing)
They will chase unpaid rent for you

When looking for a letting agent:

Ask friends and family for recommendations, especially if you know people who rent
Make sure you know what they will and won't take care of while you're away
Also make sure you know exactly what they will charge you for and how much each charge is
Invite your prospective agent to your house and see what they say - not just about the rent, but about any safety issues, suggestions for increasing the rental value, etc

One final tip - ensure your tenants have your contact details too. If your agent is being rubbish, you will need to know about it.

Finding tenants

Whether you use an agent or not, you will need to leave plenty of time to find tenants. If you don't use a managing agent, you can still use a letting agent to find you a tenant and sort out the paperwork (this is a good option if you're a first-time landlord).

Some career breakers choose to rent their house to friends. If you're thinking of doing this, bear in mind that this can sometimes cause friction (eg if something breaks and there's an argument over who should pay to have it fixed). If you do rent to friends, treat them like any other tenant, with a proper lease etc.

If you're having trouble finding a tenant, try the following:

Use a different agent if not many people are viewing
Ask agents and other landlords for suggestions on improving your house, eg installing a decent shower, repainting a room in a more neutral shade etc
Lower the rent

The law on renting out your house

The legal aspects of renting out your home are thankfully not complex. Bear in mind that your tenant has rights, and that you can't just boot them out if you come back early. There are a few health and safety issues you need to be aware of, such as:

Having smoke alarms and extractor fans fitted
Having gas appliances inspected by a CORGI-registered engineer (you get a landlord's gas certificate when this is done, which the tenant keeps)
Ensuring upholstered furniture is fireproof

Be aware that the Disability Discrimination Act, Sex Discrimination Act and Race Relations Act also apply to you.

If it all goes wrong and your tenant doesn't pay their rent, breaks stuff or is anti-social, you can get a court order to evict them (you cannot go round with a big stick and evict them yourself).

More in-depth information can be found on this government guide for landlords.

Your mortgage if you're renting out your house

You must tell your mortgage lender if you're renting out your house. You may also want to switch to a buy-to-let mortgage. Let your mortgage lender know exactly how long you plan to rent out your house, and find out what happens if your plans change (eg if you return earlier or later than you anticipated).

Tax on income from renting out your house

Your rental income is taxed and you need to declare it on a self-assessment tax return. Here's how you do it:

Calculate your annual rent (after the agent has taken their share)
Subtract your allowable expenses (a 'wear and tear' allowance, which is a percentage of your rent, plus the cost of buying anything new for your house)
Fill in your self-assessment tax return by 31 January (or 30 September if you want the Rev to work out your tax bill for you)

Your rental income is added to your normal income, and you pay ordinary income tax on it. It may be deducted at source by your agent.

For more on tax, plus contact details if you need help, visit www.hmrc.gov.uk.

Insurance if you're renting out your house

You must notify your buildings insurance provider if you're letting your house. With your contents insurance, you may choose to keep yours, or you can insist the tenant has a policy which covers damage to landlord's fixtures and fittings (plus your furniture if relevant).

Some people also recommend getting legal insurance, to protect yourself if your tenant sues you, or clears off with your stuff.

More information on renting out your house

Tax information: www.hmrc.gov.uk

Legal information: www.communities.gov.uk (this is the government department responsible for housing)

Notes on renting out your house (printer friendly, opens in a new window). These are from a talk given by Colette Browne from propertygarden.com.

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