How to Become a Landlord in the UK

by Rizwan Osman on 1st February 2021

Demand for good-quality rental property in London remains strong, with 30% of Londoners living in the private rental sector. As London’s growth in property prices continues to outstrip wage growth, the number of renters is expected to increase significantly.

how to become a landlord

Whether you’re looking for a buy-to-let property to boost your income, increase your pension pot or give you a good, long-term investment, it is essential to understand what the role involves.

In this article, we outline the key considerations for anyone thinking of becoming a landlord in the UK.

Rental property health and safety requirements

Your rental home must be safe, fit and legal for your tenants.

Gas safety

You need to make sure that the gas supply and all gas appliances in the property are safe. They should be checked every year by a GasSafe-registered engineer. This applies to gas pipework, cookers, boilers, fires and water heaters.

Read our blog on landlords gas safety regulations.

Electrical safety

You need to make sure that all electrical wiring and plug sockets are safe. You must have the electrical installations in your property inspected and tested by a qualified and competent person at least every five years.

Any appliances you provide, should be checked and have a portable appliance test (PAT) sticker on the plug, showing the date tested and when the next test is due.

Fire safety

There should be working smoke alarms on each floor and carbon monoxide detectors in any room heated by solid fuel. Landlords can be fined and sent to prison if they don’t follow fire safety regulations.

Maintenance responsibilities

Landlords are responsible for most repairs and maintenance in a rental home. This includes the electrical wiring, plumbing and sanitation, heating and hot water, and the building’s external structure.

Before you embark on becoming a landlord, it is worth researching how much maintaining your rental property could cost you.

Read our blog on landlords’ responsibilities for repairs and maintenance.

Landlord licences

All landlords who rent property to five or more people from more than one household require an HMO (House in Multiple Occupation) licence. Some councils in England also operate ‘additional’ or ‘selective’ landlord licensing schemes. You should check with your local council before letting your property.

Your rights as a landlord

You only have a right to enter the property if you have given the tenants at least 24 hours’ notice.

Landlords have the right to receive rent when it is due, expect their tenants to look after the property and meet the tenancy agreement’s terms. If they don’t landlords have a right to take legal action to evict their tenants. You also have the right to ask your tenants to leave the property without giving a reason once their tenancy’s initial fixed-term period is over. However, the government have announced an intention to scrap no-fault evictions.

your rights as a landlord

Legal and financial responsibilities

Energy Performance Certificate

You must get an Energy Performance Certificate (EPC) before you market your property to rent.

Your EPC rating must be E or above; if the rating is F or G you must take action to improve the property’s rating to E before you market the property.

Right to rent

If you are renting out your property you must check that everyone living in it (aged over 18) have the right to rent in the UK.

You must ask your tenants for the original documents that prove they can live in the UK, read more here about the right to rent documents you can accept.

Protecting your tenant’s deposit

You are required to protect your tenant’s deposit in one of the following government-approved schemes.

Tax

The rent landlords receive must be declared on an end-of-year tax return. If you do not usually complete a tax return, you need to register by 5th October following the tax year you had rental income.

The first £1,000 of your income from property rental is tax-free. If your rental income is between £2,500 and £9,999, after allowable expenses, or £10,000 or more before allowable expenses, you must declare it on a self-assessment tax return. You should also contact HMRC for advice if your income from property rental is between £1,000 and £2,500 a year.

As a landlord, you will pay tax on the profit you make after allowable expenses have been deducted. Click here for a list of allowable expenses, from 2020 none of the interest on your mortgage payments can be considered an allowable expense.

If you are unsure about tax and self-assessment, get advice from an accountant with property and tax experience. This could save you from making expensive mistakes later on.

How hands-on will you be?

You will need to decide how you are going to advertise, find good tenants and manage the property throughout the tenancy. You have three main options:

  1. You could appoint a letting agent to look after everything for you, including repairs and maintenance.
  2. You could appoint a letting agent to advertise and source tenants. They will screen your potential tenants and conduct reference and credit checks, arrange the viewings and negotiate the rent. They may also collect the security deposit and first month’s rent, before stepping away to let you manage the ongoing relationship.
  3. Alternatively, you can undertake the whole process yourself.

The option you choose depends on how much of your life you want to devote to your new role. The third option will mean savings on fees but will be time-consuming; leaving you with the sole responsibility to find the right tenants and fill an empty property quickly enough to avoid losing money.

How to choose a letting agent

If you decide to use an agent, choose wisely – you shouldn’t necessarily go with the cheapest. Look for a member of the Association of Letting Agents ARLA Propertymark, the National Association of Estate Agents (NAEA) or the Royal Institution of Chartered Surveyors RICS.

They should also be signed up to the Property Ombudsman Scheme – an independent service, which resolves disputes between tenants and agents or the National Approved Letting Scheme NALS. Membership of these schemes gives reassurance that the agent is regulated by leading industry bodies.

Decide how to much rent to charge

The simplest way to decide how much rent to charge is to look at similar properties in the same area. Talk to a local letting agent; they will tell you how much rent your property can achieve. A knowledgeable letting agent will also be able to give you an idea of the demand for your property type in the area.

It is vital to price your property carefully. Too high and you risk not finding tenants and facing a dreaded void period. Too low and you won’t be maximising your full earnings potential.

decide how much rent to charge

Prepare your property

Find a great tenant in record time by sprucing up your property to make it as appealing as possible. Deal with any outstanding DIY jobs and make sure that the property is decorated to a good standard in neutral shades. White and other pale colours reflecting light to make your rooms appear, not just bright and airy but bigger. Replace patterned or dingy carpets with light floor coverings too.

The most common type of dispute between landlord and tenant involves claims for damage. Drawing up a full inventory can help you avoid this issue – make sure you take photos or videos of your property itself and any items included. Your tenants should sign the inventory to confirm that everything it lists is both present and in the stated condition.

Make sure you are insured

Whilst insurances isn’t a legal requirement, as a minimum you should make sure you have buildings insurance. Generally, you won’t be able to get a buy-to-let mortgage without this.

You tenants are responsible for insuring their belongings but you might to want to consider contents insurance for the things you own.

You may also want to consider landlord liability insurance which covers you if your tenant or a visitor is injured in the property.

Finally, rent guarantee insurance will cover you if your tenant falls behind with their rent payments.

 

If you are considering dipping your toes into the buy-to-let market, in south west London, we’d be happy to help. Contact us to find out more today.