I want to rent out my house

[Alf]

I want to rent out my house but do not know how that affects my mortgage or where I stand with insurance etc.  Do I have to let any authorities know?  Any advice welcome.

[kags]

I am assuming you are in the UK. Mortgages for the house you actually live in are offered at a preferential rate - you may find your mortage lender will increase the interest rate if you are renting it out. You must also tell your insurer immediately or you may find you are not insured!

You need to notify your local council that you no longer live there, and arrange for the Council Tax to be transfered to the tenant's name. Same with Water Rates and Utilities, otherwise you will be personally liable for unpaid bills.

You will be liable to Income Tax on any profit you make from the rent. You can deduct mortgage interest and any other expenses you incur from the rent received, or claim a flat rate deduction if the property is furnished. This leaflet is helpful.

http://www.hmrc.gov.uk/pdfs/ir87.pdf

The Capital Gains tax rules are complicted for the sale of houses that you have once lived in, (assuming you HAVE lived there yourself whilst not owning another property) but essentially any gain relating to the period of letting will be chargeable to tax. This will not apply if you sell the house within 3 years of starting to let it out, and there are annual exemptions.

Hope this helps.

[sandras]

You should let your lender know of your intention - they may increase your interest rate as you are creating a 'commercial' situation. Some lenders will charge a admin fee of about �100 to transfer the loan to this basis.

Once the house is let, it is good practise to take out insurance based on the use of the property - so normal household insurance is not good enough.

If you are in doubt you should get expert advice.

Best of luck