In the UK, private renting is becoming the norm. The rental sector has more than doubled since 2001, rising from 2.3 million to a massive 5.4 million privately rented households in the UK – and this trend is predicted to continue! With an additional 1.8 million households becoming private renters by 2025 and more than half of 20-39 year olds expected to be renting privately by 2025!
So with ‘Generation Rent’ on the rise, is it time you gave serious thought to becoming a landlord?
This guide is designed for anyone who’s taking their first steps on the path towards becoming a landlord. Whether you’re an accidental landlord, or someone who’s always dreamed about a career in property, you’ll find all the information you need to get started right here.
We’ll take you through the process from start to finish, from sorting out the legal side of things to getting tenants settled in your property. Navigate to your interested section using the tabs below:
If you’re trying to decide whether to sell or rent out your property, there are a few things to consider.
Private rental prices have been growing steadily in Britain over the past few years – the Office of National Statistics (ONS) notes that rents have risen by 14.5% since 2011. Not only does this provide a nice passive income, it’s also a clever way to protect your assets. Savings rates have dropped to their lowest rate in history, but in 2017, house prices across the UK rose by 5.8% on average.
Another reason is that it can be a great revenue stream. Last year there was an estimated 1.75 million private sector landlords in Britain, but demand continues to outstrip supply, and the rise of short-term renting options like Airbnb has reduced the amount of housing stock available to long-term tenants.
Being a landlord is a commitment, but it’s one that you can easily manage in your spare time. Our guide will help you decide how to make the most of this opportunity.
The first thing to think about is whether or not your property would work as a rental.
Consider your home’s state of repair. If you’ve just inherited an old property, it might need some renovation work and a bit of TLC to bring it up to code before you can put it on the rental market. If you’ve left a property that you loved to move in with a partner, the property might be almost ready to rent out straightaway, providing it’s up to code.You should also try to work out if there’s any rental demand in your area. It may surprise you, but it’s estimated that one in five British families now rent rather than own and they’re likely to be keener on big houses in the suburbs than studios in lively areas of the city. You can check rental listings on websites like Rightmove and Zoopla to see how fast they’re shifting for a good idea of local demand.The next thing to do is set yourself up as a business owner. You’ll need to register for self-assessment with HMRC so that you don’t get in trouble with the taxman. At this point in your journey, you might also want to chat to some experienced landlords for advice. They can help you with the next few decisions, such as whether you’re going to be hands-on or hire a letting agency, or whether you’re going to rent out your property with furniture or without it.
A few questions you might want to ask yourself before getting started:
A furnished property may attract a higher rental value per month, but bear in mind that whatever furniture or appliances you leave in the property could be your responsibility to fix or replace when broken.
Allowing pets could be a selling point for prospective tenants, but they could cause damage to the property or furniture too.
Smoking is not only bad for your health, it’s also a fire hazard and could leave a lasting impact on your property and furniture.
A letting agency may be an extra expense, but they could manage a lot of the other considerations explained in this Guide on your behalf, which may be beneficial in the long run. Consider what’s best for you before making any decisions.
Although rent will be coming in, you’ll have a few outgoings as a landlord too. Some are monthly, while others are one-off costs.
There are some legal safeguards in place to protect both you and your tenants. Understanding what they are is important.
Your responsibilities are the things that you need to do to protect your property and to keep your tenants happy and secure.
As the landlord, you’ll be responsible for sorting out insurance to protect your property against accidental damage, such as fire and flooding. Your tenant will need to arrange their own contents insurance if they want to protect their possessions.
If you choose to supply furniture and appliances, you’ll need to keep them in good condition. This might mean replacing them or sending out a handyman to fix them. You’ll also need to carry out the majority of repairs. This is probably a good thing – you don’t want DIY-mad tenants potentially damaging your property. If you’re using a letting agent, they’ll handle this, but if you’re going to be a hands-on landlord you’ll need to make sure you’re easily and reliably accessible to your tenants.
Another big responsibility is making sure the property is up to code, which you should do before the tenancy starts. This means things like fitting smoke alarms on every floor, as well as making sure there’s a carbon monoxide alarm in any room that uses solid fuel (such as wood and coal). From 2018 this will also mean making sure your property meets minimum energy performance standards. There’s a lot to consider here, so visit the Getting your paperwork in place section for more details.
If you rent your property to a disabled person, you may be required to adapt it to your tenant’s special needs under the ‘duty to make reasonable adjustments’ section of the 2010 Equality Act. See our ‘Protecting yourself (and them)’ section to find out more about this.
Another responsibility is to look after the deposit your tenant paid by keeping it in a Tenancy Deposit Protection Scheme. If you choose to use a letting agent they’ll likely deal with this on your behalf, but if you’re going it alone, these different agencies handle this in different countries of the UK:
You’ll also be in charge of ensuring that all of your paperwork (such as the EPC, Gas Safety Certificate, and tenancy agreement) is in order.
Landlords must inform their tenant when and how they need to pay their rent and how much it is. If the rent is paid weekly, landlord will need to give tenants a rent book or a similar document.
Before a landlord can increase their rent, the tenant must agree to it. Equally, the landlord can increase rent if:
As a landlord, it’s your responsibility to make sure the houses or flats you rent out are comfortable and safe for your tenants to live in. It’s not just a mark of a good landlord, it’s a legal requirement too. The Homes (Fitness for Human Habitation) Act gives tenants in England the power to take legal action against landlords who don’t take their responsibilities seriously. The courts decide whether a property is fit for human habitation and can seek exert advice if they think something’s not up to scratch.
To find out more about the Act and what you should be doing to make sure your rental property complies, read our article on the The Homes (Fitness for Human Habitation) act.
Although you own the property, whether outright or as the mortgage holder, you no longer have the right to simply walk in and out of it at your leisure. You need to give the tenants 24 hours’ notice before popping in, even if it’s to carry out essential repairs.
You have the right to have your rent paid. And in some circumstances and conditions, you have the right to request that the tenant leave the property. This all has to be done through the proper channels – see the ‘Ending a tenancy’ section to find how it works in your part of the UK.
If they break the contract before the term’s up, you have the right to collect the rent for the term. You’re also allowed to bring legal action if they don’t pay.
If you’re worried about handing your property over, including a ‘break clause’ in your tenancy agreement gives you and your tenant the right to end the contract at any time during the first six months.