Stalled sale? Relocation? Inheritance? Renting out your home could be the answer

Most people need to sell their home before moving on to another property. But when life plans change, or a hoped-for offer on your home doesn’t materialise, it could make sense to rent instead of sell. 

There are certain circumstances under which a homeowner can become an ‘accidental landlord’. That is, a property owner who turns to letting even though they had not originally planned to do so. 

For example, a stalled sale can leave you in need of a quick solution. If your property has been listed for 12 weeks or more, it becomes harder to regain market momentum. When this happens, you may be forced to drop the price significantly to attract a buyer. 

If you can afford to move on without selling, letting may be the better option. Simply instructing an agent to ‘let my property’ can bring in extra income and help you retain a valuable asset with potential for capital growth. 

You could also consider letting if you are currently living away from home but intending to return, or you find yourself working in a far-off location with little prospect of an immediate home sale. 

Life events, such as moving in with a partner or inheriting a house, can also turn you into an accidental landlord with a vacant property to manage. 

Why letting property in London could be a game changer

Zoopla has recently forecast that UK rents will rise by 4 to 5 per cent by the end of the year. This is because fewer rental properties are coming onto the market. At the same time, higher mortgage rates are forcing first time buyers to remain in rental accommodation for longer. 

Currently, overall average rental prices for properties in Westminster, London Bridge and Kennington are as follows: 

Westminster: the overall average is £3,179 per month, but high end or generously-sized apartments in this area can rent for over £5,700 per month.

 London Bridge (borough of Southwark): £2,431 per month applies to the wider Southwark borough. Properties closer to London Bridge station and the riverfront typically attract higher premiums. 

Kennington: (borough of Lambeth) £2,519 per month again applies to the whole borough. Properties in prime residential pockets command more elevated prices.

Do I need to change my mortgage? 

If your property is subject to a mortgage, you could consider switching to a ‘Consent to Let’ mortgage. This is not to be confused with a ‘Buy to Let’ mortgage, which applies to landlords seeking a long-term rental investment.

 ‘Consent to Let’ is designed for temporary rental periods of between 6-27 months. It can be provided by your current lender and allows you to rent out your home whilst paying your usual mortgage rate. However, the arrangement may be subject to a small surcharge of up to 1 per cent or a low-cost fixed charge. 

What are my legal responsibilities as a landlord? 

Responsibilities include checking the legal status of tenants, providing information to the local authority and ensuring that your property is safe, well-maintained and free from hazards. Here is a checklist of the essential requirements: 

• An Electrical Installation Condition Report (EICR)

• Gas and fire safety certification 

• An Energy Performance Certificate (EPC) 

• Right to Rent checks (for England only)

• A licence to let your property (required for all HMOs and by certain London boroughs)

• Deposit protection (to safeguard your tenant’s deposit) 

The Renters’ Rights Act came into force in May this year, introducing a swathe of new laws. One of the Act’s key changes is the end of Section 21 ‘no fault’ evictions. Landlords serving notice to quit must now use Section 8 and provide a lawful reason for asking tenants to leave. 

Renting out your home in London - Real questions people ask

Do I have to pay tax on rental income? 
Yes. UK landlords pay income tax on rental profit, not the full rent, at 20%, 40% or 45% depending on total income. There's also a £1,000 tax-free property allowance for smaller rental income, alongside deductible expenses like insurance, repairs and letting agent fees.

Do I need landlord insurance? 
It's not a legal requirement, but if there's a mortgage on the property, your lender will typically insist on buy-to-let buildings insurance. Standard home insurance won't cover a tenanted property properly in any case.

How much do letting agents charge in London? 
Full management typically runs 10-15% of rent plus VAT, often at the higher end given local demand. Tenant-find-only and rent-collection-only services cost less if you'd rather stay hands-on.

What happens if I rent out my home without telling my mortgage lender? 
Letting a property without your lender's permission counts as mortgage fraud. Always confirm Consent to Let, or switch to Buy to Let, before handing over the keys.

Will I be able to manage the workload? 

While it’s possible to be a hands-on landlord if you live within reasonable travelling distance of your rental property, the time commitment can be considerable. Our property managers are available around the clock to supervise your property and deal with any issues. On a typical day their work might include collecting rent, carrying out inspections, booking in trades people for maintenance tasks or dealing with emergencies. 

Importantly, our agents also ensure that your property remains fully compliant with UK letting laws, while preparing for any legislative changes that may be in the pipeline. Are there additional costs involved? You will need to pay for the various checks, reports and licences required to ensure that your rental property is safe and legally compliant. You should also be prepared to pay tax on the profit earned from rental income (minus any allowable expenses, including agent and property manager fees). 

If you would like more information on the pros and cons of letting versus selling your London property, we’re here to help. Simply call one of our offices (located in Westminster, London Bridge or Kennington) for a chat.