Becoming a landlord, renting out your property and moving somewhere else may help you manage debts.
Here are some tips on becoming a landlord and renting out your property.
1. Speak to your mortgage lender
You may need your mortgage lender's permission to rent out your home. If you don't ask your lender, they could start repossession proceedings against you once they find out.
2. Check your tenant has the right to rent
A landlord or letting agent must carry out a right to rent check for private tenancies in England. The checks apply to verbal or written agreements that start on or after 1st February 2016.
Find out more about right to rent immigration checks.
3. Draw up a proper tenancy agreement
You can buy a tenancy agreement online or from a stationers' or ask a solicitor to draw one up for you. If you are using a letting agent they may take care of the agreement on your behalf. However as a landlord it is your responsibility to comply with the terms of the agreement yourself.
Read the agreement carefully. It is essential that you understand the legal responsibilities you have as a landlord and how the law protects both you and your tenants.
Even if you don't give your tenants a written agreement at all, they still have rights under the law.
Find out more about tenancy agreements.
If you grant an assured shorthold tenancy on or after 1st October 2015, you must give your tenants a copy of the government's guide 'How to Rent'.
4. Get references from your tenants
Ask for references from your tenants' employers and/or previous landlords. This could help you find responsible and trustworthy tenants. It should also help reduce the possibility of the rent not being paid or damage being caused to your property.
5. Make sure deposits are properly protected
It is important to get a deposit from any potential tenant to cover against any property damage or unpaid rent. You are legally required to place this deposit in a government-approved tenancy deposit scheme.
If you don't, you could be fined an amount up to three times the original deposit, plus the deposit itself. This will be paid to the tenant as compensation. Not protecting the deposit also makes it much harder for you to evict the tenants if there are any problems later on.
There are three different government-approved schemes available:
Find out about tenancy deposit protection scheme rules.
6. Get an energy performance certificate (EPC)
You must provide your tenants with an energy performance certificate if you're the landlord of self-contained accommodation such as a flat or house. This usually costs you around £100. It allows anyone who is interested in renting your property to see how energy efficient it is.
You don't need an EPC if you're letting out accommodation that is not self-contained, for example a room in a shared house, where the bathroom and kitchen are shared.
The trading standards department of your local council can fine you if you rent out a self-contained property without providing an EPC.
7. Check your building and contents insurance policy
Some insurers increase the cost of your premiums if you rent out your property. However, you are still strongly advised to inform them. If you don't, your insurance could be invalid.
8. Protect the health and safety of your tenants
Landlords are responsible for the gas safety and electrical safety of their properties. Your gas appliances must be checked every year and you must give tenants a copy of the gas safety certificate. All gas engineers must be registered with the Gas Safe Register.
It is also good practice to have an electrical inspection carried out and to test any electrical appliances you supply.
Find a registered contractor through:
9. Find out if you need a licence for a shared property
If the property is to be rented to more than one household who will share facilities (for example a number of bedsits sharing bathroom or kitchen facilities) it may be classed as a house in multiple occupation (HMO). If this is the case, you may be required to register with the council and get a licence. This is mandatory if the property is at least three storeys high and contains five or more tenants living in two or more households.
The council can prosecute you if your property needs a licence and you don't get one. You may be fined up to £20,000 and it is much harder for you to evict your tenants if there are problems later on.
10. Protect the property from fire
Landlords must make sure their rented properties are free of fire hazards.
For tenancies starting on or after 1st October 2015, you must provide a smoke alarm on each storey of a property which contains a room being used as living accommodation and a carbon monoxide alarm in any room being used as living accommodation in which solid fuel is used.
11. Declare any income for tax and benefit purposes
You may need to pay tax on the income you receive from renting out your home, so it is important that you declare this. If you claim any benefits, the extra income could affect the amount you receive.
If don't report your rental income, you are likely to have to repay any benefits that you should not have been paid, and you could even be prosecuted.
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