From my experience:

Do not rent it privately. Use a full service agency. You are in a business relationship with the tenant; you’re not their friend. That line can get blurred very easily if you’re dealing with them yourself and it will become difficult to deal with any issues related to their behaviour like non-payment of rent. A full service agency will deal with all of this for you, as well as any maintenance etc. Will it cost more? Yes, but IME 100% worth it.

Do not go anywhere near guaranteed rent. These are always advertised with lovely soft focus photos of everyone living happily ever after. In reality these are people the council want to get off their waiting lists and the chances that they are problem tenants is high. The council will be impossible to deal with, won’t take any action on ASB from the tenants and will take years to pay you for any damage. Stay well clear.

Don’t rent to students or set up an HMO. The tenants will fall out with each other and expect you to adjudicate their rows, and one will always want to move out early. It’s a huge hassle.

This has all been super-negative, sorry! I’m very burnt from an earlier experience, but my current experience is going well and I attribute that to a full-service agency and a different type of tenant (no HMO, which my last one was).

Unless you have time and are experienced (no offence but you definitely aren’t) go for fully managed with a reputable agency. The regulations are complex and you will fall on your face trying to do it on your own

As you get a bit of a handle of things over the years you may decide to do everything yourself or just use an agent for certain aspects such as tenant finding

Be careful about repairs & maintenance through an agent as they will just ask if you want to use their contractors and mostly they take a cut which will load the cost of the job that you will have the to pay for. Often best to use your own contractors, try to find trades who aren’t VAT registered to save yourself 20%

HMOs and student lets are a minefield but more profitable, but huge stress and increased refurb costs

Take out insurance for malicious damage, rental guarantees and legal costs. Learnt this from experience. Nothing like having a couple of £12k bills for damages, lost rent, legal fees and bailiffs while it takes 9 months to evict

Down South you should get capital growth, but as a higher rate tax payer you pay on the rent received minus deductible expenses. Your mortgage only counts for 20% relief

If you have a residential remortgage you need to get consent to lease from your lender, or you switch to a BTL mortgage. If you are on a fixed rate the latter will incur redemption penalties, so apply for consent to lease until your deal ends and then remortgage onto a BTL. Depending on the lender consent to lease might just be £200 admin charge or a 1% loading on your interest rate. Generally you would need 25% equity in the property to switch to BTL and it needs to meet lenders rental stress tests

The majority of landlords would have their mortgage on interest only so the investment washes its own face or provides a profit. All depends on the size the mortgage (if you have one). You may decide that you would rather not make a profit or make a few hundred pounds loss a month so that the house is paid off entirely in the future

When you dispose of the asset you will be liable in Capital Gains Tax on the increase in value from the time it is let out until the time it is sold

Firstly decide what you want out of this as that really drives the rest. It’s really hard to give advice without that.

Some questions you need to consider:

• what is my long term goal? Keep the property as a store of wealth and income? Then probably rent it.
• what time am I willing to commit? If full time worker then I would say work with a property manager - make sure they are registered with ARLA and PRS.
• for tax planning chat to a Chartered Accountant. High level you are taxed at 40%. You didn’t mention if you had a mortgage

So a few things to think about!

Biggest thing new landlords can’t get their head around is that you are taxed on your full rental income minus some expenses not just ‘profit’. So you could be loss making and still owe the tax man. Remember that.

Expenses are 20% mortgage interest credit. Any redecoration works. Cleaning. Agency fees. Gas safety work and few more. Those are the biggies. Any capital gains expenditure is not tax deductible for rental income. You claim that when you sell.

Similar situation to you a year or so ago except I'm only a 20% tax payer. I decided to mortgage it to the hilt, take as much as I could out of it for my new place which was a doer upper, I used an agent to rent it out, had 5 very strong applications after one day so I took one and I manage it myself. I couldn't justify the management fee and another thing to possibly look at is rent guarantee insurance. It costs about £14 a month but covers you for about 50k in costs. I've had a couple of things I've had to pay out for maintenance wise but nothing much and so it's looking around an 11% return first year. In your position with the 40% tax I'd possibly consider selling up and seeing if you could do more with the money elsewhere. If you've already decided against that then good luck! Just in case you weren't aware you need to make sure your EPC is in date, you need a yearly gas certificate and an in date electrical inspection. Oh, and landlords insurance. You can hire an accountant to do your taxes but tbh, I'm doing mine myself, seems pretty straightforward. You need to do a bit of research on the ins and outs though if you go down that road.

Paid ChatGPT is great at doing some scenario planning.

NRLA has good information.. it is worth joining and doing the short online training course which will teach you what you need to know.

BTL is not very profitable for a higher rate tax payer with a mortgage. There are high costs. There is risk .. what happens if the tenant stops paying the rent?

You may consider selling and putting the money imto something else.

Of course If you are not married and not 100% sure about the relationship you may want to keep the place as a backup up for a while

From experience in a similar situation.

• Check out your mortgage, ask for "consent to let" if it isn't already a BTL. This will normally give you 1 year to rent out your property, which they may or may not extend. If you are going to do this long term, its worth swapping onto a btl product.
• Don't do everything privately. Advise a "full management" letting agent so you have virtually no contact with the tenant - at least at first while you figure out if they are mental or not. Once you get used to the situation, you could look at DIYing some of it. If you are handy, you can save a packet on handyman type repairs.
• Keep records and receipts for everything you spend on the rental as you can deduct a whole load against tax
• You pay tax on the "profit" from the rental at your 40% rate. This is why its important to deduct any and all expenses so you can reduce the profit as much as possible.

In terms of type of tenant, Go for a couple / family, as they are likely to stay for a long time. In my experience, I'd take a stable reliable tenant paying a slightly lower rent than students and the like with high turnover.

For the tax situation you pay at 40% on the rent received and you declare it on self assessment but you can deduct Fees from the agency eg fee for finding tenant

Any service fees you pay for the place

Gas and electric safety check

Any costs of redecoration between tenants

Insurance (make sure you take it out in case you have to go to court to get a tenant out)

Mortgage relief (covered by others here)

Basically anything you are paying out to keep the place running and safe for the tenant

Major works like a new bathroom cannot be claimed but can be offset against capital gains which you would pay when you sell

Do us a full service agency unless you are close enough to run round for a boiler fix/lost key/ window broken etc

Do use an agency to find a tenant

Having said that open rent are very good Also the .gov.uk site is very good has lots of instructions on what to deduct

The tax man takes a huge cut, and then there's CGT waiting for you when you sell. If you can afford the 10% commission per month, go with a fully managed let. We rented out our place for a year and a half ending next month, and I can't wait to be rid of the tenant. We made no money and had nothing but stress with it. I think what I take away from the experience is: if you have any emotional connection to the property (as in "we are renting out our house"), don't rent out. If it's purely an investment...play the (very) long game with it.