If you are a landlord looking to put your property on the rental market, you may find this step-by-step list helpful.
Too many times landlords enter the market without doing any research, and often find themselves falling foul of unexpected pitfalls. These are a few pointers to put you in the right direction when thinking of renting out your property.
1) Inform Your Mortgage Lender
It’s very important to inform your mortgage lender that you wish to rent out your property, as borrowers have a contractual obligation to do so. The best way to do this is to speak with them direct and gain their permission. If you fail to do this you are leaving yourself open to some very harsh penalties. It has been well reported that lenders have become suspicious that vast numbers of landlords are not declaring their arrangements to avoid being forced on to higher interest rates or to switch to a more costly buy-to-let loan, and as a result some lenders are trawling the electoral register, social media websites and online letting agencies for signs that a property has been put up for rent.
2) Check Your Insurance
To ensure you are fully protected as a Landlord, it is recommended that you purchase Landlord Insurance, as normal home insurance isn’t designed for rental properties. This is more expensive than traditional home insurance but it is essential to at least have your building covered and usually a mortgage requirement also. Another good insurance policy is one that covers the rent if tenants default although most reputable Letting Agents will offer a Guaranteed Rent Scheme they are familiar with.
3) Obtain Tax Advice
When you become a landlord, one of the first things that you need to sort out is paying tax on your rental income. It’s important to make sure that you’re set up for self-assessment, and that you know which expenses are deductible. If left too late, the tax bill for your rental property could be a nasty surprise in the cash flow. It is best to tell HMRC as soon as possible after you start, as this will give you more time to consider record keeping, saving up for any tax bill, and how you are going to submit your tax return. Our recent blog '4 Important Tax Issues For Overseas Landlords' is a wealth of information for non-UK landlords.