Points to Consider Before Letting

Before you sign up with an agent, or start looking for a tenant, there are some important factors you will have to bear in mind.

1) Consent of Insurer

Whether you are letting the house furnished or unfurnished, you will need to contact your house insurance (and your contents insurer if letting furnished) to discuss your plans to let with them. It is likely that the insurer would see this as an increased risk and would wish to vary the terms of the policy, often by increasing the amount of the excess and/or charging a higher premium. Failure to get the insurer's consent could result in them refusing to meet any claim you make on the policy.

2) Consent of Mortgage Lender

Consent to let will be required as a term of your mortgage. The lender will be concerned that the existence of a tenant could reduce the value of the house should they need to sell it to recover their loan. It is possible that the lender may charge a higher rate of interest as a condition of giving their consent. In any event, there is likely to be a fee to cover the lender's administration costs in deciding whether or not to give consent.

3) Planning Permission

It is not normally required to let property, but if you are going to let the house to more than one family group, or divide it into flats, then permission may well be required. You should contact the planning department at your district board unitary council to discuss your plans with them.

4) Length of Tenancy

You need to decide for how long you want to let the property. Is the let intended to be a semi-permanent arrangement (a buy to let arrangement probably will be), or is there a change you will want the house back in a few months time, either to live in yourself or to sell with vacant possession? If you let the house on a five-year tenancy, you will not be able to get possession back until the end of that time, unless the tenant agrees, and why should they unless you make it worth their while? Many lets are for six or twelve months, which gives you as the landlord some degree of flexibility should circumstances change. However, it may well be that you will attract a better tenant if you offer a longer let.

5) References

Every landlord wants a tenant who will look after the property well, pay the rent on time every month, and at the end of the letting will voluntarily vacate the premises without the need for a court order. Insist on references being provided - and be sure, if you use an agent, that they obtain references on your behalf. Ideally, you should obtain employers reference, to show that the prospective tenant is in employment and therefore has the means to pay the rent (this will not, of course, guaranteed that they will actually pay it). Many people also recommend getting a reference from a previous landlord to say the your prospective tenant was a good tenant. However, landlords are generally not amenable to giving such references, and insisting on one would rule out someone who has never rent a property before. The personal reference as to the person's character is a good alternative.

Be vigilant, however, with all references - it is not unknown for people to write their own. Check the names and addresses of all those giving the references, whether employers or individuals. You can search the BT web site for phone numbers and addresses (except for individuals who are ex-directory). Bear in mind that even impeccable references are no guarantee the you will have a trouble free time as a landlord - there is always an element of luck involved.

6) Guarantors

If there's a doubt over the prospective tenant's ability to pay the rent regularly, it is not unusual for a landlord to insist on the tenant providing a guarantor. A guarantor signs an agreement to the effect that if the tenant does not honour the terms of the agreement (for example, by not paying the rent regularly), then the guarantor is liable. Such an arrangement is often used in the case of a student renting property - a parent will be required to guarantee the obligations under the lease. Again, such a guarantee is only as good as the financial standing of the person given it, so references should be obtained for the guarantor, too.