Let-to-let explained (what it is and why it’s beneficial)
Wed 15 Mar 2023
With the current property and mortgage market a little uncertain just now, if you do need to move, it might be worth doing so a bit at a time.
What is let-to-let?
Instead of selling your current home and buying a new one, you could look at letting out your own home and renting one that’s more suitable (let-to-let) so you’re in the location you need to be when looking at houses for sale, or until things have settled down with mortgages and you’re more confident in buying again.
How do I let-to-let?
- If you have a mortgage, you will first need to get the permission of your lender. This may cost you a small fee, or they may raise the rate while you are letting the home.
- You will need to prepare your dwelling for rent. Although we often hear about rental dwellings being ‘substandard’ in quality to owned homes, those that are rented properly are actually much more safe. You will need to have things like gas and electrical safety certificates and smoke and carbon monoxide alarms.
A qualified agent that is a member of ARLA or RICS will be able to check if your dwelling will need any adaptions so it can be let safely and legally.
- Check what your dwelling will rent for and then take tax advice to understand how much you will net from it - it maybe more or less than you think, especially if the additional income takes you into a higher tax bracket and that might impact on your decision to let and rent somewhere else.
- Find out from the agent if the dwelling will let quickly or if you may have to wait a few months to move.
- To advertise your home to let you will need an Energy Performance Certificate and this will typically need to be a minimum rating of ‘E’. If it isn’t you won’t be able to rent it unless you can secure an exemption. EPCs last for 10 years and your agent can check if it’s still valid.
- Work out whether you want to let the dwelling with some furniture in or none at all and what appliances you will be leaving. These will all need to meet the Furniture and Furnishings (Fire Safety) Regulations 1988/1989, 1993 and 2010, as well as electrical safety rules, even if they are second hand.
- As there are over 150 laws that govern letting a property, it is advisable to work with a lettings specialist, such as Moginie James. For example, when you let the dwelling to a contract-holder, you will have to provide them with prescribed information such as safety certificates and The Rent Smart Wales Tenant Guide, how to protect their deposit and more. If you don’t prescribe the right information, you may not be able to evict future contract-holders.
- All dwellings that are let have a minimum tenancy agreement, so you will have to commit to not moving back in your home for that length of time.
- Secure specialist landlord insurance which will cover your dwelling should anything unexpected happen.
- Remember if something goes wrong with your dwelling, you will have to pay to fix it and do so within a reasonable timeframe. The work carried out will need to be in line with the legal and safety rules of letting a home. It’s very different to being a homeowner and doing things when you want to a standard you are happy with.
When you are letting your own home out and renting from someone else, it’s worth trying to match the contract-holder agreements so they come to an end at a similar time. Alternatively, if you can, organise to have longer in the home you are renting to give you a choice on when you want to move next. Find out when you view a dwelling what flexibility the landlord has on letting the home to you. Are they in similar circumstances to you and may need to move back in or sell their dwelling in 6-12 months or is it an investment they are keen to let to someone for as long as possible?
Think too about the budget you have. Most rents are locked in for the length of the contract or up to 12 months - so you can budget quite well, but you need to be clear on how much will be left from letting your own home after all the costs and renting a new one – will you need extra cash each month or have some spare? It is also worth considering taking out Rent Guarantee, so if your tenants are unable to pay, we will cover the costs so you’re not out of pocket.
Next, make sure the dwelling you rent is being let legally and safely, ideally by renting through an agent that is qualified and a member of either ARLA or RICS, so you will be looked after properly. If they are an individual landlord, ask them if they belong to a landlord association such as the NRLA or a local authority one if they operate one.
If you have pets it might be difficult to secure a let, so it’s worth speaking to your vet in advance to see if they will give you and your pet a ‘reference’ to show you are responsible owners and you are likely to look after the pets and the home well.
Renting your own home and letting someone else’s to help achieve your moving needs just now could be a great way to get through the current uncertainty. Hopefully within the next 6-12 months things will have calmed down for both the mortgage and property market.
If this is something you are keen to do, it is worth seeking professional advice on how to rent out your home, get in touch with your local branch in Cyncoed, Pontcanna, or Roath and we’ll be very happy to help you to know if it’s worth pursuing.