All You Need to Know About Becoming a Landlord

As we experience challenging market conditions, one sector is indeed growing: home rentals1. With Generation Rent on the increase, and low interest rates, it’s little surprise that an increasing number of people are looking to invest money in property.

But there’s more to being a landlord than simply handing over keys and collecting rent.

Here’s an overview of all you need to know about becoming a landlord.

Ensure the Safety of Your Property

It’s your responsibility to ensure your property is safe for your tenants, which means ensuring that any gas2 and electrical equipment3 is safely installed and regularly maintained and checked.

You need smoke alarms and carbon monoxide detectors4 and any furniture you provide should be fire safe. Note that purpose-built5 and converted flats6 have different regulations.

Provide an Energy Performance Certificate

All landlords are now required by law to have an Energy Performance Certificate (EPC)7. This states how energy-efficient the property is, and gives your tenants advice on how to save energy.

Protect Your Tenants’ Deposits

If you ask your tenants for a deposit before moving in, you’re required to protect it in one of three government-approved schemes8. All schemes also provide a deposit resolution service in case you and your tenant have a disagreement. You must tell your tenant which scheme you’ve used within 14 days of their tenancy beginning.

Check Your Potential Tenant’s Right to Rent

If the property you’re renting is in England, you have a legal responsibility to check the tenant can legally rent it. You must check all persons, even those not named on the tenancy agreement, and not just those whom you suspect not to be British9.

Ensure You Have Adequate Insurance

While there’s no legal requirement to have a landlord insurance policy, your buy-to-let provider may insist on it before giving you finance. Regardless, having specialised landlord insurance helps protect your business and your investment.

Landlord insurance covers a number of different elements, including building and contents insurance, landlord liability, employers liability, loss of rent, accidental damage, and legal expenses.

Account for Your Expenses

When factoring in your costs, bear in mind that you won’t be able to “bank” 100% of your rental income. In addition to insurance costs, you need to account for your buy-to-let mortgage, and bear in mind you’re also responsible for the maintenance of the building. In addition, you’ll probably want to refurbish every few years to keep the property in good condition, and there are likely to be periods when the property is empty, such as when it’s undergoing refurbishment.

In addition, if you hire a letting agent, you need to account for their fees too.

Understand Your Tax Obligations

Finally, renting a property is a business so you must advise HMRC and, depending on your income, you may have to pay income tax and National Insurance10.

Property tax can be a complicated business, so it’s a good idea to seek advice from a specialist before you get started.

1. https://www.theguardian.com/money/2016/may/30/number-of-uk-landlords-rises-to-175-million
2. https://www.gassaferegister.co.uk/help-and-advice/renting-a-property/information-for-landlords/
3. http://www.hse.gov.uk/electricity/maintenance/safety.htm
4. https://www.gov.uk/government/publications/smoke-and-carbon-monoxide-alarms-explanatory-booklet-for-landlords
5. http://www.local.gov.uk/publications/-/journal_content/56/10180/3369777/PUBLICATION
6. http://www.cieh.org/policy/fire_safety_existing_housing.html
7. https://www.gov.uk/buy-sell-your-home/energy-performance-certificates
8. https://www.gov.uk/deposit-protection-schemes-and-landlords
9. https://www.gov.uk/check-tenant-right-to-rent-documents
10. https://www.gov.uk/renting-out-a-property/paying-tax

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