Renting out home as a whole versus renting out individual rooms?

Dear Ged,
If you are thinking of creating an HMO yes you need to tell your lender as not all allow HMOs.
Yes you need to understand the tax implications. Please see our Tax Tab above >> https://www.property118.com/tax/
You need to understand HMO regulations and more than likely apply to the Council for a Licence. This is not an undertaking to be taken lightly and you will certainly need a letting agent for your fist.
Please also do an Article search and type in "HMO" there are hundreds of articles.

Letting a HMO is naturally much more complex than letting a whole property (which is complex enough). In addition to the useful advice that Neal has given you above, I would suggest reading "HMO Landlady". Even lodger landlords (just renting out their spare room) have plenty of legislation to comply with.

Hi Ged

While I don't want to put you off becoming a landlord, you perhaps do need to be aware of the huge risk that you may be entering into, and you need to be aware of the legislative burden.

I would suggest that you read and learn everything you can about the legal implications of letting a property, all the legal requirements, e.g. gas certs, CO detectors, EPCs, information booklet, deposit protection, landlord insurances, mortgage requirements/restrictions, freeholder restrictions (if your home is leasehold), etc, etc. Also make sure you fully understand the legal paperwork, e.g. the tenancy agreements, and the notice requirements (s8 & s21, in particular). You also need to understand the legal processes for eviction (e.g. how it could take you over 6 months to evict a tenant (much longer if you get the paperwork wrong) and how much it may cost you to do this.

You need to be aware of the damage that tenants could do to your property (see some of Mick Robert's Tenant from Hell videos! https://www.youtube.com/watch?v=3noflpj8YaE ), and that in most cases you have little or no chance of recovering any rent arrears or compensation (damage and legal costs).

Although the idea of letting out rooms seems good as there is potentially a higher income, you need to be aware that the legal requirements are even more stringent, e.g. HMO licencing, fire alarm requirements, fire doors, fire safety signage (emergency lighting), thumb-turn locks, etc, and of course the wear and tear on the property will increase. Even after taking these matters into account, you then have to realise that tenants of shared houses often do not get on with each other, and you will have to manage that volatile situation. Compared to managing a standard family let, the effort of managing a HMO is multiplied by the number of residents (then x 2 again), so if you have no experience of managing tenants and properties, then I would suggest that it may be best to start with a whole house let to a family.

If letting to a family, I would suggest that you ensure that they are well referenced, that you get a deposit and rent in advance (ensure the deposit is protected properly), and also get a suitable rent guarantor. This will help to avoid the "tenants from hell" type situations.

Where is the property located? There may be specific issues in relation to your location, e.g. selective licensing.

Ged , as you'll see from the comments above, letting your property isn't as simple as putting an ad on a website and watching the money roll in. Get yourself a reputable agent - the cost will be a fraction of the potential costs if you try to do it yourself and it goes horribly wrong.

You need a tax adviser too because you'll need to prepare a tax return every year. The £7500 allowance you refer to only applies it you're renting out a spare room in your own home.