1 ATTITUDE A good attitude is essential if the rental arrangement is to work. By letting out a property that has been your main or only home you are effectively allowing strangers to occupy your personal space. If you cannot accept this, then renting out is unlikely to be in your own – or your tenant's – interests.
2 CONSIDER AN AGENT There is nothing to prevent an individual letting out their own property under their own steam. However, given that this decision has been made as a last resort, appointing a managing agent does seem sensible. The agent will protect the landlord from much of the hassle – and, in some cases, regret – that this decision involves. Be aware, however, that not every professional agent may be prepared to take on every request from someone seeking to let out their property in these circumstances – precisely for the reasons above.
3 THE RENTAL The rent should be set at a level that reflects the market and not how much the owner requires to cover his or her costs. For example, it is no good trying to obtain a rent of £1,000 a month because your mortgage is that amount, when the "market" rate for the type of property on offer is £850 a month. Many owners who rent out must be prepared to accept that their rental income (less associated costs) will not cover all of the monthly mortgage payment on the property. The good news is that rental rates have risen significantly in the past year, so the loss for many owners may be minimal, while some may even record a surplus.
4 TENANT COVENANT Letting out to the person waving the biggest cheque is not always the best course of action. A tenant who is employed by a blue-chip company or government department, and has the rent paid for by his or her employer usually makes an ideal tenant. But the decision at the end of the day rests with the owner.
5 MULTI-LETTING A house or larger flat that is let out to three or more people who are unrelated must have a HMO (houses in multiple occupation) certificate. For the temporary landlord, applying for one is unlikely to be worthwhile, given the expense and hassle involved, so renting out to fewer than three people is sensible.
6 KEEP YOUR DISTANCE Do not expect to be able to access your property whenever you like during the course of the rental. You have entered into a legal agreement to give up your property for six months and as long as the rent is paid promptly, you don't have a right to enter the house unannounced, except in exceptional circumstances. Most tenants, being reasonable people, will allow the landlord access in an emergency, but this should not be taken advantage of. If an unofficial arrangement cannot be agreed then, by the terms of the lease, the landlord must give at least 24 hours' notice of his intention to enter/inspect the property.
7 SUPPLEMENTARY COSTS These include an agent fee, which in most cases will be between 10 and 15 per cent of monthly rental, although bear in mind that cheapest is not always the most cost-effective. The longer the property is tenanted, the more likely the owner will have to fork out for general upkeep and improvements. Tenants are responsible only for damage caused through negligence or wilful actions. The effects of wear and tear (such as worn carpets) must be paid for by the owner. Indeed HM Revenue & Customs gives a 10 per cent allowance on rental income to cover this situation. Be aware too that buildings insurance on properties that are let out is generally more expensive than for owner-occupied houses and flats.
8 ACCOUNTS Even amateur landlords are required by law to keep a record of all rental income, and this includes situations where overall outgoings are in excess of this. The figures must be declared to HMRC at the end of each tax year.
9 ALTERNATIVE OPTION Some people whose house move involves a change of location choose to remain in their existing house or flat and rent out the new one instead. One advantage is that, because there is now very little difference in rental income between furnished and unfurnished properties, letting out the new property makes it unnecessary to buy a whole new set of furniture. Also, letting out the new property may be a better option psychologically because, unlike the old one, it is not yet considered "home".
10 HOW LONG FOR? Obviously, the length of time for which the property is rented out will depend on how quickly the market recovers, enabling the owner to find a buyer for the unsold property at an acceptable price. Initially, the lease will be on a short assured tenancy for six months. At the end of that period – if the arrangement is working well for both parties – the landlord can then offer the occupier further tenancy agreements in six-month tranches, which is now common because people are seeking to rent for longer periods than previously.
THE SCOTSMAN, 4 October 2008