You’re likely reading this article today because you own a second property. You may have bought it either as an investment or perhaps as a holiday home. In any case, renting out your second home is an excellent way to create a secondary revenue stream.
The thing is, if you’ve never rented out a property before, there are some things you must bear in mind before you begin. Here’s a brief guide to how you can successfully (and legally) rent out your second home:
The first thing you must do is make sure you’ve got the right buildings insurance for your second home. If you’ve got a mortgage on the property, you’ll likely already have such a policy in place. Otherwise, make sure you get buildings insurance organised.
You can also take out an insurance policy that pays out money if your tenants don’t pay their rent. It’s a good policy to have so you never have to worry about rent shortfalls.
The law says that your property must have an EPC or Energy Performance Certificate if you plan to rent it out. The good news is property certificates are easy to organise and relatively quick to get, depending on the provider you use.
Inform Your Mortgage Company
If you’ve got a mortgage on your second home, you’ll need to contact your lender and tell them of your intention to rent out the property. That’s because they need to know someone other than yourself is going to live at the address.
In some cases, you may need to switch to a different mortgage product, such as a ‘buy to let’ mortgage.
When you start renting out your second home, you must tell HMRC what you are doing. That’s because you may need to pay tax on all of your rental income. Each year, you must complete a self-assessment tax return and include your rental income on it.
You can lessen your tax liability by offsetting your mortgage interest payments, letting agent fees, and even some property repair costs.
Advertising Your Property
If you want a hands-off approach to renting out your second home, it makes sense to enlist the services of a letting agent. They can take care of marketing your property, vetting prospective tenants, and handling the deposit and rent payments.
Otherwise, you will need to advertise your second home and scrutinise all prospective tenants yourself. On the plus side, you’ll save a lot of money doing the work yourself.
Tenancy Deposit Scheme
When you take a deposit from a new tenant for your property, the law in England and Wales says you must place it in a Tenancy Deposit Scheme. What’s more, you must do that within 30 days of receiving the deposit.
Renting out your second home is brilliant as it means you won’t have a property sitting empty and potentially being a target for thieves and vandals. Of course, it also means you’ll have a regular income stream from it.
Renting out your property isn’t challenging, as long as you do everything right and comply with all applicable income and tenancy laws.