If you are letting your own home, you must make sure that you have permission from your mortgage lender and that you disclose your rental income to the taxman.
It would not surprise anyone to learn that not all landlords who decide to let out their own home inform their mortgage lender about this fact. Buy-to-let mortgages tend to be more expensive so such landlords often face an increase in interest rate on their mortgage. This does vary from bank to bank and some bank will even charge the landlord a fee. Faced with increased costs, some landlords decide not to inform their lenders and so breach the terms of their mortgage. There are serious consequences that such landlords may face and right now the risk seems to be that much higher.
A well known guru of mortgage industry and expert on the housing market, Ray Boulger, has spoken with The Telegraph warning landlords that lenders are increasing the checks they carry out to see who lives at an address. He mentions that places like electoral register and letting websites such as Rightmove are being used.
On similar subject, HMRC has been targeting landlords as well. They have created a special task force that has been particularly focusing on ‘accidental’ landlords as many believe that some landlords are failing to declare their full rental income. They task force is said to be using similar ways to the lenders but obviously are able to access other date like housing benefit records (which could be checked against Land Registry data).
It is worth knowing that you must keep your financial record for 6 years from the end of the given financial year. So for example the financial records of the current tax year (2013-2014) should be kept until the end of 2019-2020 financial year. A government website provides some more details with regards to the rental income and tax. You can find it here.