Becoming a UK landlord

At Friends Capital, we help UK landlords with buy-to-let mortgages every day. There are millions of privately rented houses in the UK, and with demand being higher than supply, more and more people are becoming landlords. With reduced savings rates, renting a property is seen by many as an excellent opportunity to create a passive income.

To become a residential landlord, you may be considering renting out your own home or buying a property to let. It is essential to understand the steps to becoming a landlord, and you should recognise that being a landlord is a business.

You will have money coming in and going out, with expenses and profit. Property has almost always been seen as an excellent long-term investment, but there are no guarantees of success. It is a good idea to speak to someone who is a landlord, to get a better idea of if becoming a UK landlord is for you.

Landlord expenses

Renting isn’t just a buy and forget type of investment. It will take your time, and you might need to deal with issues such as maintenance and repairs, rent arrears, and sub-letting.

You can use a high street or online letting agent, and these will take on the responsibility of some of these tasks. It’s a good idea to create an emergency fund to cover unforeseen expenses. This can cover costs such as a boiler breakdown or periods of vacancy where you might have to cover expenses such as council tax.

Further landlord expenses will include:

  • A landlord license
  • Gas safety checks
  • Energy Performance Certificates
  • Mortgage payments (buy-to-let mortgages)
  • Agency fees
  • Advertising and marketing
  • Professional photos (typically covered if you use a high street agent)
  • Solicitor fees for creating a tenancy contract

While most landlords avoid providing furnishings, most tenants expect you to provide white goods such as a cooker, fridge, freezer, and washing machine.

It is worth considering paying for a membership to a landlord association. The largest of these in the UK is the National Landlord Association. The perks are worth the fee and include:

  • Access to training events
  • Lawyer approved tenancy agreements
  • Discounted trade magazines
  • Advice from professionals
  • Access to networking events and online forums
  • Tenant referencing 

Tenant referencing with the National Landlord Association includes express and comprehensive tenant checks including previous evictions, current debts, credit history, criminal record, and a public record showing if tenants are being sued for unpaid rent or child support.

Do you need a buy-to-let mortgage?

If you have a residential mortgage for your property, then you need to check if you are permitted to rent? You will need to send a consent to rent application or change your mortgage to a suitable buy-to-let mortgage. Leasehold properties may not allow sub-letting, and this can be the case for properties purchased through a shared ownership scheme.

UK Landlord legal responsibilities

Your legal responsibilities as a landlord differ for properties in England, Scotland, Wales, and Northern Ireland. This is also the case for single-let properties and houses of multiple occupations.

Firstly, you should set yourself up as a business owner and register for a self-assessment with HMRC. You will need to apply for a landlord license and renew this every three or five years.

Your property needs to be fit for human habitation and might need renovating to lift it up to these standards. There are 29 hazards to consider, and these are laid out in the Housing, Health, and Safety Regulations 2005. Building stability, damp problems, ventilation, the amount of natural light, and electrical safety all fall within this legislation. You should also make sure that you fit a smoke and carbon monoxide alarm on every floor.

If you take a security deposit from your tenants, then these must be placed in a Tenancy Deposit Protection Scheme

As a landlord, it is your responsibility to ensure your tenant has a legal right to live and rent in the UK. EU citizens automatically have this right, although this may change after Brexit.

Landlords must conform to The Equality Act 2010, and this covers unlawful discrimination against race, religion, disability, sex, sexuality, and gender reassignment. You should also give 24 hours notice if you want to visit the property.

In summary

There is a clearly a checklist of tasks you must complete if you intend to become a landlord. However, the opportunity to create an additional income exists, and with a little preparedness, you can begin a successful venture as a UK landlord.