Renting out your home: getting it right for legal, financial and personal peace of mind

Whether by plan or by accident, renting out your own home could be better for you than selling.

Perhaps you're relocating for work, heading off on an exciting adventure, or looking to create an extra income stream while moving on somewhere else.

Regardless of why, there’s plenty to navigate in legal, financial, and personal terms, so here in our guide to renting out your home, we're covering important areas like:

• Should you leave your furniture?

• Ensuring your finances add up.

• Creating trouble-free tenancies.

• Self-managing vs using an agent.

• Preparing your home for rental.

In short, all you need to avoid common pitfalls and make the smooth transition that turns your happy home into a successful investment.

SHOULD YOU LEAVE YOUR FURNITURE?

Depending on where you’re moving to, you could be wondering whether it’s best to rent out your home empty or with the furniture included, so here are some things to consider:

• Long-term tenants usually prefer to surround themselves with their own furnishings to make a proper home for themselves that reflects their personal taste.

• Fully furnished homes usually attract tenants looking for a temporary home, which may suit you if you intend to move back in within a year or so.

• Any upholstered furnishings manufactured after 1950, including mattresses, curtains, sofas and dining chairs, must have fire safety labels attached that show they meet British Standard BS7177.

The vast majority of lettings are unfurnished because it reduces the potential for damages and disputes, but call us on 0118 304 5877 to talk about the best option for your home.

ENSURING YOUR FINANCES ADD UP

Money worries or budget-blowing surprises don't have to be part of renting out your home, and you can set yourself up to take everything in your stride with some preemptive financial planning.

• If you have a mortgage, check if you'll trigger an early repayment penalty if you need to switch to a buy-to-let product, which may also have an arrangement fee and higher interest rate.

• In addition to the costs for management, maintenance, and repairs, you can claim back a flat-rate tax credit of 20% of your mortgage interest payments on a rental property.

• If you’re buying another property to live in, you’ll pay the second home stamp duty / LBTT surcharge (but you can reclaim it if you sell your previous home within three years).

• Protect yourself and your home with landlord contents insurance, public liability and rent protection policies in case of accidents, injury claims, or your tenant not paying their rent.

• Allow for one vacant month a year, set aside 10% of the rent to cover maintenance and repairs, and put away the money for your tax bill every month in an account where you won’t spend it.

To find out more about allowable expenses and keep as much of your income as possible, take a look at our previous Landlord Tax Tips blog https://www.pauk.property/blog/123-buy-to-let-tax-update-your-no-nonsense-guide-to-the-current-rates-and-allowances for a deeper dive.

CREATING TROUBLE-FREE TENANCIES

When private landlords come to us with a problem, it usually stems from how they initially set up their tenancies, which isn’t surprising given the amount of legislation to contend with.

Unfortunately, the law leaves little room for error, so if you want to avoid fines, claim for any damages, and get your property back when you want to, make sure you at least get these five things right:

• You need a valid Energy Performance Certificate to market your property, and you must provide gas and electric safety certificates before your tenant moves in, and then keep them up to date.

• All rental properties require smoke alarms and CO2 detectors, and they must be tested on the day a tenancy starts (even if they were tested the day before).

• The tenant’s deposit must be protected in a government-approved scheme within 30 days of the tenancy starting, with proof supplied to your tenant within that timeframe.

• Off-the-shelf tenancy agreements can fall short of protecting your interests as a landlord. Agents tend to use far more comprehensive and watertight contracts, so beware of cheap templates.

• Unless your tenant signs a detailed inventory at the outset and you make regular mid-tenancy inspections, you’re unlikely to win any claim you try to make from the security deposit.

Taking the time to get these foundational elements right will start your tenancy on the right footing and minimise the potential for issues down the line. It's all about prevention, not cure!

SELF-MANAGE OR USE AN AGENT?

Choosing whether to manage your rental property yourself or hire an agent is a decision that every landlord needs to make, and here are some factors that might help you decide.

• The property portals don't accept ads from private landlords, so you'll need to rely on sites like Gumtree and Facebook, field the calls, weed out the best candidates and do all the viewings.

• You need a team of reliable experts, including an electrician, gas engineer, plumber, odd-jobber, referencing agency, inspection agent for mid-tenancy visits, and an emergency contact service.

• Handling problems and disputes is part of being a landlord, and they can be doubly distracting when they involve your previous home because of your emotional connection to it.

• Unless you’re managing multiple local properties, it’s quite a challenge to keep up with current market conditions, the most recent rent reviews, and what tenants will pay more for.

It’s not a choice you’ll make lightly, so if you're unsure whether to self-manage or use an agent, why not call us on 0118 304 5877 or message us at office@pauk.property to see if working together feels like a good move?

PREPARING YOUR HOME FOR RENTAL

When you live in your home for years, it’s easy to gradually get used to things beginning to wear out from daily use. You might develop a knack to avoid repairs, or perhaps you no longer notice.

But when it comes to renting out your home, a new tenant will be faced with them all at once, which can be annoying and disappointing. So be sure to:

• Fix any wobbly handles, difficult locks, leaking taps, dangling cupboard doors, and loose window catches, as they’ll only get worse and possibly lead to higher costs.

• Look around to see if you need to decorate, from historic stains, to scuffed or dented walls, to any wild colour schemes. Warm and neutral tones are your friend for any freshening up.

• Arrange a professional, pre-tenancy deep clean, including windows, carpets, cupboards, and inside appliances: a sparkling home attracts the best tenants and encourages responsible living.

As a final point, remember that wear and tear are different to damage, and even the most fastidious tenant can’t stop the process of time from ageing your property while it’s lived in and used.

Are you thinking of renting out your home?

The right first step is to learn about current prices, the demand for homes in Wokingham like yours, and whether there’s any potential to boost your rental income and attract the highest calibre tenant.

Call us on 0118 304 5877 or message us at office@pauk.property and let’s have a chat about your home and your plans - we’re here to make renting out your home as easy, enjoyable, and profitable as possible.