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How to become a landlord

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There’s no single route to becoming a landlord, or one reason why you might choose to do so. With interest rates very low, some people decide to become a buy-to-let landlord to increase their income or to supplement a pension.

For others, becoming a landlord for the first time is a bit more accidental. This applies to people who’ve acquired property through inheritance or after moving in with a partner or relocating abroad.

Whatever your journey to becoming a landlord, you need to get to grips with all the legal and financial things to know about the role first. Read on for our complete guide to becoming a landlord, UK.


becoming a landlord


Understand what being a property landlord actually entails

If you’re thinking of becoming a UK landlord, it’s important to understand what it will mean – to your lifestyle and finances. You will need to do plenty of research from the outset. You’ll need to get up to speed with everything from conducting right to rent checks to ensuring your property has an annual gas safety inspection, and from protecting security deposits in a government-backed scheme to knowing exactly what to do if a tenant defaults on their rent.

Understand that being a landlord is a business

One of the first things you need to understand about becoming a successful landlord is that renting out property is a business not a hobby and you need to approach it in a serious and meticulous way.

This means being organised with your paperwork and records, learning how to market your property to the right target audience and taking clear decisions, based on the best business case.

You should also take a professional approach to dealing with your tenants, maintaining open communication at all times, while remembering that yours is a business relationship not a friendship.


Check if you’re even allowed to let your property

One of the first things you should do when thinking about becoming a landlord, is to make sure you are able to rent out your property to tenants.

If you already own the property, with a normal residential mortgage, it is likely that you’ll need to move to a buy-to-let product, which could cost you more and involve redemption fees.

Your buildings insurance may be invalid too, and there could be terms in your lease which prohibit you from renting out the property. Make sure you check all of this out.


Questions to ask yourself

As a new landlord, there are a few questions you might want to ask yourself before getting started:


Will I rent out my property furnished or unfurnished?

Furnished properties often attract higher rents, but you may need to spend money up-front to fit them out and you will need to insure and maintain the items you include.

Your decision should be influenced by the type of property you have. Small, city centre flats are more likely to attract young people with fewer possessions who prefer furnished. Larger houses will attract families who may wish to bring their existing furniture with them. There is plenty of advice about this online.


Will I allow pets?

Landlords tend to not like tenants having pets, because of fears about smells, damage and allergies. Yet there’s a growing movement to encourage more pet-friendly rentals. Being open to well-behaved pets may increase your pool of potential tenants and allow you to charge a higher rent.


Will I allow tenants to smoke in the property?

You can include a no-smoking clause in your tenancy agreement and advertise the place as being for non-smokers – although, in reality, it may be difficult to police. But if you definitely don’t want smokers, make sure you say so early on.


How much does it cost to become a landlord?

You will need to factor in all the costs of becoming a landlord, to work out whether this is a worthwhile enterprise for you. This is particularly important if you are looking to buy a property with a mortgage. You need to carefully consider your outgoings and the rent you are likely to achieve, remembering to account for any void periods.

Add up all of the costs you will face – these include your buy-to-let mortgage, which is likely to cost more than a residential mortgage, landlord insurance and letting agent fees, plus the cost of furnishing the home and carrying out maintenance and repairs.


Rights and responsibilities

Your responsibilities as a landlord

  • Landlord must fulfil certain legal and health and safety obligations and comply with a range of regulations.
  • 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 external structure of the building.
  • You must ensure that the property is fit to live in throughout the tenancy. If the tenant believes you haven’t fulfilled your responsibilities, they can take you to court. Issues, which might make the property unfit for habitation, include damp and rodent infestation.
  • You need to make sure that the gas supply and all gas appliances in the property are in a safe condition. They should be fitted, repaired and checked every year by a GasSafe-registered engineer. This applies to gas pipework, cookers, boilers, fires and water heaters.
  • You need to make sure that all electrical wiring and plug sockets are safe. You should organise an inspection by a qualified electrician, followed by regular basic safety checks.
  • There should be working smoke alarms on each floor and carbon monoxide detectors in any room heated by solid fuel.
  • Your tenants must be provided with certain documents including an energy performance certificate (EPC) and a copy of the government’s How to rent checklist.
  • You are required to protect your tenant’s deposit in a government-approved scheme.
  • If renting out property in England, you must check your tenant has the right to rent your property.


Your rights as a landlord

You have a right to expect your tenants to pay rent on time, look after the property and meet the terms in your tenancy agreement. If they don’t, you have the right to take eviction proceedings against them under Section 8 of the Housing Act 1988. You also, currently, have the right to ask your tenants to leave the property without giving a reason once the initial fixed-term period of their tenancy is over, under Section 21 of the act.

You do not have the right to enter the property without giving your tenants 24 hours’ written notice, unless in the case of a genuine emergency.


Getting your paperwork in place

As a professional landlord, you need to be organised from the outset with a good filing system for both online and paper documents.

Have copies of all the gas, electrical and other important certificates in a safe place, ready for when you’ll need them along with your property’s EPC, insurance policies and guarantees for any work you’ve had done.

You’ll also need to keep copies of all the paperwork related to the tenancy, including the tenancy agreement, details of the deposit protection scheme which you are using, your inventory and evidence that you’ve conducted a right to rent check. It’s a good idea to draw up a checklist of all your important documents, and where to find them.

Once your tenant has moved in you will need to keep detailed records of all the rent paid and money you spend on the property, to help you complete your annual tax return.


Setting fees and rent

However, much you plan to charge in rent, you need to have a clear picture of the going rate for a property in your area. Start by using a rent calculator tool to get an instant guide valuation – plenty of property websites have them, including this one from the HomeOwners Alliance.

Then set about researching what’s available with local letting agents – property portals like Zoopla and Rightmove are an easy way of doing this quickly. Speak to some local estate agents too – they’ll be happy to give you a valuation, even if you don’t end up letting with them.


Preparing the property

To help you make your property as appealing as possible to potential tenants, invest some time in sprucing it up. Deal with any outstanding DIY jobs and make sure that the property is decorated to a good standard in neutral shades.


Finding & referencing tenants

You may decide to use a letting agent to find tenants for you, or go it alone, advertising on local forums and sites such as Gumtree.

However you go about finding tenants, always obtain references, including from previous landlords. If your applicant hasn’t rented a home before, seek references from their employer or a college lecturer. Contact all referees to ensure that they are genuine.

Ask for copies of bank statements and proof of income. It is also worth investing in credit checks to be doubly sure of their past payment history. Credit referencing agencies such as Experian can do this for a fee.

Carrying out background checks isn’t just for your peace of mind. Some insurance policies won’t be valid if you haven’t been thorough in this area.


Things to do before your tenant moves in

Make sure your tenant has read and understood everything in the tenancy agreement and that the home is clean, tidy and ready for them. You should also make sure you have left instructions for all appliances, plus any useful information they need to know – how to reach you if they need to, when the bins are collected etc. Make a checklist if you think this will help.

Many landlord and tenant disputes centre around damage to the property and its fixtures and fittings. 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.


Legal cover and insurance

As with any property you must take out buildings insurance. You will need contents insurance too to cover any items you have supplied. It is important to look for policies designed for landlords, and you must make sure that your insurer knows you are renting the property to tenants.

You may also consider other forms of landlord insurance, such as rent guarantee insurance to cover you for void periods or if your tenant fails to pay their rent.

As well as covering you for loss of rental income, policies will usually reimburse you for deliberate damage, a tenant refusing to leave the property and disputes over repairs and renovations.

Breakdown insurance for your heating system, plumbing and electrics may also be useful if you don’t live close to the property or a have a list of reliable tradespeople to call upon.


Becoming a landlord and tax

The rent landlords receive must be declared on an end-of-year tax return. If you are currently in employment, and are taxed by PAYE, you will need to register for self-assessment by 5 October following the tax year in which you received rental income.

As a landlord you will pay tax on the profit you make after allowable expenses have been deducted. Allowable expenses include buildings and contents insurance, repairs and maintenance (not improvements), interest on property loans and utility bills.

You may also be able to claim tax relief on the replacement of domestic items such as beds, sofas and white goods. Read more about tax, self-assessment and allowances for landlords on the gov.uk website. If you are unsure about tax and self-assessment, get advice from an accountant with experience in property and tax or contact HMRC.


Ending a tenancy

If you want a tenant to leave your property for whatever reason, there are steps you need to take to stay on the right side of the law.

Currently, you have two means of legally evicting a tenant at your disposal – serving a Section 8 notice or a Section 21 notice under the Housing Act 1988.

A Section 21 notice isn’t technically an eviction. Serving a Section 21 notice means you are giving notice to your tenant that you intend to regain possession of the property. You can use Section 21 to give notice of possession without providing a reason as long as you are at the end of a fixed term tenancy or during a periodic tenancy with no fixed end date.

If your tenant has done something to break the terms of their tenancy agreement, such as failing to pay their rent, damaging your property or causing a nuisance, you can serve them a Section 8 notice.

Serving a Section 8 notice will involve court proceedings, so even if you have grounds for eviction, you may choose to use a Section 21 notice instead, as long as the tenancy’s fixed term is coming to an end.

If you aren’t sure which notice to serve, you should get proper legal advice.

If you are a new landlord, Assetgrove’s guaranteed rent scheme provides you with a fixed income for up to five years, plus we take care of the stresses and strains of renting out property, including evictions. Find out more or contact us today.

Neil Jennings

Neil is the Operations Director at Assetgrove Lettings, London's Leading Rent Guarantee Company, providing Landlords with no voids, property maintenance, fee-free property management and stress-free service.

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