A Landlords Guide To Renting Out A Property

guide to renting landlord

If you’re thinking of becoming a Landlord, there are a few (well, quite a lot) of things you need to be aware of first. As a Landlord, you have many responsibilities to ensure your property is fit for purpose and safe for tenants to live in. There are also legal and financial responsibilities too. This guide aims to help new landlords familiarise themselves with that they need to do before they can rent out their property to tenants as well as their responsibilities as a Landlord when the tenant moves in.

This guide is only valid for Landlords with properties in England and Wales, for other countries, please check the guidelines for your area.

1. Landlord Responsibilities

Here is a quick overview of the primary obligations a Landlord must comply with when renting out a property:

  • must keep the rented property safe and free from health hazards
  • make sure all gas and electrical equipment is safely installed and maintained regularly
  • provide an Energy Performance Certificate for the property that is accessible to the tenants
  • protect the tenant’s deposit in a government-approved scheme
  • check the tenant has the right to rent the property if it’s in England
  • provide the tenant with a tenancy agreement and inventory before they move in.
1.1 Fire safety

Legislation for fire safety varies depending on the type of property. Some laws affect all properties regardless of the layout or how it is occupied, and some only apply to properties that are occupied by tenants who are unrelated or only certain parts of the building.

It is the Landlords responsibility to follow the correct fire safety regulations for their property. Landlords must:

  • Install smoke alarms on each storey
  • Install a carbon monoxide alarm in any room with a solid fuel burning appliance
  • Ensure tenants have access to escape routes at all times
  • Ensure all furniture and furnishings supplied are fire safe
  • Provide fire alarms and extinguishers if the property is a large house in multiple occupation (HMO)
1.2 Gas Safety

If any gas appliances are installed within the property, it is the Landlords responsibility to ensure that annual gas safety checks are carried out by a registered Gas Fitter / Engineer. The examination must be done within 12months of a new tenant moving in, and a copy of the gas safety check must be provided to the tenant before moving in.

1.3 Electrical Safety

Landlords must ensure that all electrical installations and electrical appliances are ‘safe’ with minimal risk of injury or death to humans, and low risk of damage to the property. The Institution of Electrical Engineers recommends a formal periodic inspection and test should be carried out at least once every ten years, and before a new tenant moves in.

All electrical appliances and installations within the property are the Landlords responsibility to ensure they are safe and fit for purpose. Any electrical equipment supplied in the property such as a toaster, kettle, microwave etc., must be marked with the appropriate CE symbol and should either be brand new or checked by a qualified electrician before the property is rented to tenants. All paperwork associated with the checks (i.e. receipts, warranties, certificates of inspection) must be kept for a minimum of six years.

Read: A Guide To Electrical Testing For Landlords

1.4 Legionella Assessment

Landlords must perform a risk assessment for Legionnaire’s Disease. Failing to carry out a risk assessment could result in a fine. The level of risk assessment required depends on the type of property and landlords should check how much is needed before carrying out extensive water sampling tests which may not be necessary.

2. Health and Safety Inspections

As a Landlord, you have a duty of care to protect your tenants by providing them with a safe and secure place to live. The Housing Health and Safety Rating System (HHSRS) is used by councils to make sure that properties are safe for the people who live in them. This involves inspecting the property for possible hazards, such as uneven stairs.

The council may decide to do a HHSRS inspection on your property if:

  • the tenants have specifically asked for an inspection
  • the council has done a survey of local properties and has reason to believe the property might be hazardous
2.1 HHSRS Hazard Ratings

During an inspection, Inspectors look at 29 health and safety areas and score each hazard they find as category 1 or 2, according to its seriousness.

Should the council find any hazards within the property, the Landlord must take action on enforcement notices and also has the right to appeal enforcement notices if they disagree with them.

If the council find a serious hazard, they have the right to:

  • issue an improvement notice whereby the Landlord has to fix the issue
  • fix the hazard themselves and bill the Landlord for the cost
  • stop the Landlord or anyone else from using part or all of the property
2.2 Passing Health and Safety Inspections

To pass Health and Safety inspections, the Landlord must check the property regularly for any potential risks and repair them accordingly. This is known as a risk assessment.

Landlords can identify potential hazards and risks by understanding:

  • The basic physical and mental needs for human life and comfort
  • How the property has an effect on the overall safety of the occupant.

The property must not contain any hazard that could lead to an increased risk to the tenant’s health, safety, and wellbeing. Therefore, Landlords must have a good understanding of the general functions of each element of the property (installations, fixtures etc.) as well as the ability to identify and illuminate any hazards.

Read: A Guide To Health and Safety Inspections For Landlords

2.3 Licensable HMOs

If the Landlord is renting a property that is a house in multiple occupation (e.g. bedsits, shared house or a shared flat), then an HMO licence is needed. This can be obtained from the local authority.

3. Insurance

While every Landlord aims to find tenants that will look after their property, unfortunately, this is not always possible, and even tenants that appear perfect on paper can damage the property. Because of this, Landlord insurance should be a consideration for anyone renting out a property.

The correct cover can protect Landlords from costs of eventualities that could result in a loss of rent, damaged property, or injury to the tenants. The correct policy can give Landlords peace of mind as well as peace of mind for the tenant. It can also help to attract tenants to a property that appreciate a responsible Landlord.

Although Landlord insurance is not a legal obligation in the U.K, a good comprehensive policy can help to safeguard the Landlords financial future. It is also a desirable policy to have in place to attract professional tenants that really care about where they live.

Read: A Simple Guide To Landlord Insurance

4. Financial Responsibilities

As a Landlord, there a few financial obligations that must be carried out and understood before renting out a property to tenants. Landlords must:

4.1 Inform the Mortgage Lender

Landlords must let their lending provider know that someone other than himself or herself will be living at the property – before the tenant moves in.

4.2 Pay tax

As a landlord, you need to know your Income Tax and Capital Gains Tax liabilities.

Income Tax – Rental income is added to any other income you earn during the year. Landlords must contact HMRC if their income from property rental is less than £2,500 a year. Landlords must declare this income on a Self Assessment tax return each year.

Capital Gains – If you sell your rental property, you will have to pay Capital Gains Tax on any gain (profit).

For up to date guidelines on income tax and capital gains, Landlords should seek advice from their accountant or financial advisor.

4.3 National Insurance

Landlords running a property business must pay Class 2 National Insurance if their profits are over £5,965 a year and if all of the following apply:

  • being a Landlord is their main job
  • the Landlords rent out more than one property
  • the Landlord buys new properties to rent out

If the Landlords profits are under £5,965, they can make voluntary Class 2 National Insurance payments to ensure they receive the full State Pension.

Landlords do not pay National Insurance if they are not running a business.

4.4 Deposits

It is common practice for Landlords to request a deposit from the tenant before they move into the property to protect them from damage caused by the tenant or in case the tenant leaves without paying the rent. A deposit is usually the equivalent of one month’s rent and is taken along with the first month’s rent in advance.

The tenant should be provided with a receipt and a clear understanding of what the deposit is for and the conditions for its full return. Landlords must return the deposit to the tenant within a reasonable period of time after the last day of the tenancy agreement providing there is no damage to the property, and the rent payments are up to date.

Should the Landlord need to keep the deposit, they must notify the tenant in writing, stating how much money is being retained and the reasons why. If possible, Landlords should also provide receipts for estimates or costs incurred to repair damage to the property.

4.5 The Tenancy Deposit Scheme

From 6 April 2007, new legislation was introduced to help tenants and landlords avoid and resolve disputes relating to the return and use of a tenant’s deposit. Under the legislation, if landlords fail to protect the tenant’s deposit, they may have to pay the tenant three times the value of the deposit.

5. Responsibilities to Tenants

Landlords must carry out basic tenant responsibilities that are a legal requirement in the U.K. There are some crucial documents that must be completed before a tenant moves into the property, such as:

5.1 Tenancy Agreement

A tenancy agreement is a legally binding contract between the Landlord and tenants that specifies the conditions of the let, as well as certain rights to the tenant. The tenancy agreement must clearly state the rent of which the tenant must pay to live on the property and when it should be paid. The agreement should also state the tenancy deposit scheme details.

5.2 The Inventory

The inventory details the contents of the property and the condition they are in on the day the Tenant moves in. It should include any existing cosmetic damage, irrespective of how bad it may or may not be. For example, if a small corner of the wallpaper is peeling off or a skirting board is chipped – this should be detailed in the inventory.

On the day the tenant moves in, the agent or Landlord must go through the inventory with the tenant to agree on the exact condition of the property. Both parties must sign each page of the inventory to confirm they agree on the quality of the property.

An inventory is a crucial document to refer to should a dispute arise regarding damage caused by the tenant during the tenancy.

5.3 Property Checks

Landlords or letting agents should aim to check the property regularly, usually every 6 months or half-way through the agreed tenancy, to assess any damage that may have occurred. The tenant must be provided with sufficient notice of the property visit, 24 hours usually. A final inventory check must be scheduled on the day the tenant moves out – note that this is not always the same day as the end of the tenancy as some tenants leave early.

6. Property Maintenance

Landlords must keep the property in good condition, and any gas or electrical systems must meet specified safety standards.

Although Landlords must give tenants sufficient notice of a visit, immediate access is possible in emergency cases, and the tenants have a right to stay in the property during the repairs taking place.

Landlords are responsible for maintaining and repairing:

  • the structure of the property
  • basins, sinks, baths and other sanitary fittings
  • heating and hot water systems
  • any damage that occurs as a result of attempting repairs

If the property is seriously damaged by a fire, flood or other similar incident, Landlords do not have to rebuild or renovate it. If repairs of this kind take place, Landlords cannot charge tenants for any repairs made.

If the repairs are very disruptive, the tenants may be able to claim a reduction in their rent known as a ‘rent abatement’. This will depend on how much of the property is unusable.

Landlords that own a block of flats are usually responsible for repairing common areas, such as staircases. Councils can ask Landlords to fix problems in common areas or to repair a tenant’s flat that’s been damaged by another tenant.

If Landlords refuse to carry out repairs, tenants can:

  • start a claim in the small claims court for repairs under £5,000
  • in some circumstances, carry out the repairs themselves and deduct the cost from their rent

If Landlords fail to make repairs to remove hazards, tenants can ask the council to inspect the property under the Housing Health and Safety Rating System (HHSRS) and to take any action that is necessary.

If the council finds serious hazards, it must take enforcement action to make sure the hazard is removed.

If the property is temporarily unfit to live in, Landlords can ask tenants to move out during major repairs. However, they must state in writing:

  • how long the works will last
  • the tenants’ right to return
  • details of any alternative accommodation

Landlords cannot repossess a property to do repairs, however, if plans are in place for substantial work, or the Landlord wants to redevelop the property, they can apply to the court for an order to remove the tenants. The courts are more likely to grant this if the Landlord provides alternative accommodation.

7. Dealing with Disputes

Unfortunately, disputes can arise between Landlords and tenants over damage, unpaid rent or other issues. However, these can often be resolved without going to court and avoiding expensive legal fees.

Landlords should follow these steps when dealing with disputes:

  1. Speak to the tenants politely regarding the concerns or issues
  2. If this doesn’t work, write a formal letter setting out the problem
  3. Use a mediation service, which is usually cheaper and quicker than going to court
  4. As a very last resort, Landlords can take the tenants to court.
7.1 Taking tenants to court

If a Landlord decides to take legal action, the case may go to a small claims court if the case is worth less than £5,000, or £1,000 if the case is regarding repairs to a property.

The courts provide a free mediation service for small claims cases, which can take place over the phone.

For Landlords wanting to get your property back because your tenants owe you rent money, you can make a possession claim online

There is plenty of free advice available for Landlords at Citizens Advice or Shelter or Shelter Cymru for Landlords in Wales.

Have you got the right Landlord insurance for your property? Find out more and get a quote here.