Fancy being a landlord? You just buy a property, find a tenant and then sit back and watch the cash roll in, right?
The truth is, being a landlord can be a lot of hard work and can be tough at times. That’s not to say that it’s a bad decision to make. It’s not consistently hard, but you need to be prepared to take the rough with the smooth.
So, if you’re interested in finding out more about being a landlord, this guide will be a good start.
Paperwork can be tedious - fact. You may choose to hire a letting agent to help with the administration side of being a landlord but remember that if even the smallest thing goes wrong, the responsibility lies with you.
You’re accountable for getting the right paperwork sorted. After all, your letting agent is unlikely to have sleepless nights if the correct paperwork isn't in place, but you can bet your bottom dollar that you will.
So, as part of your landlord responsibilities, here are the top 10 documents you need before you take on your first tenant.
Of course, the most important document of all is the contract between you and your tenant. This lays down the legal terms and conditions including when your tenant is expected to pay the rent and when the tenancy is due to end.
Even if your tenant is a friend or family member, you should still have a tenancy agreement in place. It takes away any uncertainty or arguments if the relationship breaks down for any reason. You should either consult a solicitor for advice or download one of the many tenancy agreement templates that are available online.
Before you sign the tenancy agreement though, you must make sure that your tenant has the right to rent property in the UK. Under the Immigration Act, 2014 you have a responsibility to request copies of your tenant’s original ID (and a visa if they require one) so you can check their status. If they don't have the right to rent, then you must take the necessary steps to evict them.
If your mortgage has been granted on the basis that you'll be living in the property, it's essential that you inform your mortgage lender if you decide to rent it out. It’s simply a case of sending a 'consent to rent' application to your lender.
You may need to pay income tax on the profit you make from letting out your property. Your profit is what you have left from your rental income minus any allowable expenses such as letting agent fees and landlord insurance. If being a landlord is classed as your business, you’ll also need to pay Class 2 National Insurance.
Energy Performance Certificates (EPC) contain information about how much energy a property uses and how much this typically costs. It also offers advice on how to reduce energy consumption to save money. The EPC will rate your property’s energy efficiency from the most efficient (A) to the least efficient (G).
If you don't give your tenant an EPC, you may be fined up to £200. From April 2018, it’s illegal to rent out a property with a rating lower than E. If you do then you could be fined up to £4,000. As part of your landlord responsibilities, you’ll be expected to provide your tenant with a copy of the EPC so that they have an awareness of how much the property will be to maintain.
You can find details of accredited Domestic Energy Assessors (DEA) in your area here:
The EPC will also be valid for ten years so once you've got your certificate you’re sorted for a while.
In Scotland you’ll need to display the EPC in a place which can be easily seen by your tenant.
As a landlord, it's up to you to make sure that all gas and electrical equipment and appliances pass an annual safety check. These checks need to be carried out by a Gas Safe registered engineer and a qualified electrician. You must give your tenant a copy of the gas safety check record as soon as they move in or within 28 days of the check being completed.
Note: At present, there isn’t a requirement for electrical checks to be carried out regularly unless your property is a House in Multiple Occupation (HMO), in which case it will need to be inspected every five years. But for your peace of mind and the safety of your tenant, it’s worth getting an electrician to check your property every couple of years.
And don’t forget about fire safety. You won’t get a certificate for this one, but by law, you’ll need to install smoke detectors and carbon monoxide alarms on every floor in your property. You’ll also be responsible for checking that they work. Failure to do so could result in a £5,000 civil penalty.
Whether your property is fully furnished or not, you’ll need to make an inventory. Not only should you document the condition of your property before your tenant moves in but you should also list all of the fixtures and fittings. This is a tedious task but necessary so that you can work out if anything has been damaged or stolen at the end of the tenancy.
Any soft furnishings in the property must meet the relevant safety regulations.
You can either give your tenant a physical copy of the How to rent checklist (PDF), or you could email it to them. At each renewal of the tenancy agreement make sure that you provide the most recent version of the checklist.
Note: You only have to provide a copy of this checklist in England.
Joining the National Landlords Association can help to increase your credibility. It will also help you to keep up to date with your landlord responsibilities and any legislation that may affect you.
If your property is rented out by at least three people who are not from one ‘household’ (for example a family) but share facilities like the bathroom and kitchen, then you'll need to apply for a House in Multiple Occupation (HMO) licence. In England, Scotland and Wales, you apply to your local council. In Northern Ireland, you can apply online through the Northern Ireland Housing Executive (NIHE). Your licence will last for five years in England, Wales and Northern Ireland and three years in Scotland. Don’t forget to renew your licence before it runs out.
Deposit protection schemes are designed to ensure that your tenant receives their deposit back when the tenancy ends, providing several criteria are met.
Tenancy Deposit Protection (TDP) schemes are companies authorised by the government. There are three deposit schemes that you can choose to use in England and Wales. These are:
You don’t have to take a deposit from your tenant, but it is recommended to give you financial security. Fortunately, there are more good tenants out there than bad, but in the case of your property being damaged then at least you’ll have the deposit to help put things right again.
The sense of security that comes from buckling up and getting landlord insurance sorted is priceless. With a landlord insurance policy, you’re not only protecting your investment but demonstrating to your tenant that you take your landlord responsibilities seriously.
Some people assume that their standard home insurance will provide them with all the cover they need, but this isn't usually the case. This is because home insurance policies aren’t designed to cover the risks that come with renting a property.
A landlord insurance policy can provide the following cover:
You’ll also be given the option to add extra covers on to your policy including accidental damage insurance or legal expenses.
You may hear people say that being a landlord is like making money while you sleep, but despite popular belief, this isn’t the case.
Landlord responsibilities include fixing a broken shower late at night or replacing a damaged window on the weekend. Basically, as a landlord, you sign up to dealing with a continuous stream of maintenance issues to ensure that the property is safe and secure for your tenant.
The Landlord and Tenant Act 1985 spells out your landlord responsibilities with respect to making the property fit for purpose. These include:
If for any reason you don’t carry out any necessary repairs or do a shoddy job, your tenant has the right to take you to the small claims court or deduct the cost of repairs from their rent payments. In extreme circumstances, your tenant can request an inspection from the council if they feel that their safety is in jeopardy.
By understanding your landlord responsibilities, you're able to put the necessary measures in place to protect you, your tenant and your investment.
Start by getting your landlord insurance in place. You can get a quick and easy quote online for up to five properties within minutes. Our online policy is underwritten by RSA Insurance Group PLC.
If your landlord insurance needs are more complex, or you need help choosing the cover you need, call 0345 241 3410.
A team of experienced advisers are available from Monday to Friday, 9am to 5pm to search the market for you. You’ll be presented with a range of quotes from a panel of carefully selected insurers so that you can choose the policy that’s right for you.
To provide this service we work with Arthur J. Gallagher Insurance Brokers Limited, one of the UK’s largest insurance brokers.
Whatever the size of your portfolio, we can help you protect your property and your rental income.
What are the issues facing landlords?
Being a landlord is a big deal, with lots of things to consider. So where do you start?
Get a competitive priced quote from one of the UK’s leading insurers. If you rent between 1 and 5 residential properties.
*Online policy is underwritten by RSA Insurance Online.
Please check you have all the cover you need by reading the policy documentation carefully (this will be provided during the quote process).
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