Renting out your home for the first time

A quick guide to becoming a landlord

Who is a landlord?


Anyone who rents out all or part of their home to a tenant or tenants is legally considered a landlord. A landlord has certain legal responsibilities that come along with renting out a home. There are safety and health guidelines that landlords must adhere to as well as other regulations that must be followed.


Special insurance is also required for landlords to protect both themselves and the tenants. Additionally, if you have a mortgage, your lender must allow your property to be rented out per your mortgage agreement with them. There is much that goes into being a landlord. If you are considering renting of your property, this guide will help you make sense of everything that comes along with being a landlord.


How can I become a landlord?


Before you can rent out your property, you must make sure that your lender allows for your home to be rented out. Most of the time a buy-to-let (BTL) mortgage is required in order to rent out your property to others. If you are moving and want to rent out your old home whilst you are living in a new one, you will need a let-to-buy mortgage on the one you are renting out. Sometimes lenders will allow rentals on a property that is not a buy-to-let or a let-to-buy, however certain conditions must be met and consent to let must be given from your mortgage lender. It is considered mortgage fraud to rent out your home without either the proper mortgage or consent to let.


What if I only want to rent out a room of my property?


If you only wish to rent out a room or rooms in your property you are considered a resident landlord, and certain conditions, such as consent to let must be met. Becoming a resident landlord can have its benefits, such as earning you £7,500 of tax-free rent a year with the rent-a-room scheme. The rent-a-room scheme allows you to rent out part of a furnished home which you also live in, and in return for helping supply housing you can claim the tax benefit on some of the rent you earn.


Remortgaging your home to a buy-to-let property


It is almost always necessary for a homeowner who wants to rent out their property to have a buy-to-let mortgage (BTL). If you are currently on a fixed-variable rate mortgage that is not a BTL, you usually cannot rent out your property under the terms and conditions of your mortgage. However, remortgaging to a BTL mortgage may be an option.


There are different types of buy-to-let mortgages and whilst they tend to be similar to ordinary mortgages, there are some key differences. First of all, interest rates and fees on BTL mortgages tend to be higher than those of traditional ones. Also, most BTL mortgages are interest-only, so the borrower would only pay the interest monthly instead of the capital amount. However, at the end of the mortgage term, the original loan would need to be paid in full. BTL mortgages are also available on a repayment basis. The advising, arranging and lending of BTL is covered under the same laws as traditional and residential mortgages, however mortgage lending is not regulated by the Financial Conduct Authority, or FCA.


What kind of buy-to-let mortgage can I get?

There are multiple BTL mortgage products on the market today. Like traditional residential mortgages, BTL mortgages come with a few options.



•       Fixed-rate mortgages

A fixed-rate mortgage is a mortgage which the borrower repays a fixed amount over the entire term of the mortgage, until it is paid off fully.


•       Variable-rate mortgages

In a variable-rate mortgage, the amount paid monthly follows the standard variable rate, or base rate, set by the Bank of England. Whilst the base rate is at an all time low currently, there is no assurance that it will stay there, meaning that the monthly payment can increase when the base rate does, as lenders have to borrow money at a higher rate. In a variable rate mortgage the lender can essentially change the rate to anything it likes, although they typically avoid inflating it too much.


•       Tracker mortgages

WIth a tracker mortgage you are getting a similar product to the variable-rate mortgage but the rate changes solely based on the Bank of England base rate. Most mortgage lenders charge a percentage point or two higher than the base rate with a tracker mortgage.


•       Interest-only mortgages

WIth an interest only mortgage, rates tend to be lower since you pay only the interest due                      on the mortgage. However, a lump sum payment will be due when the mortgage ends.


The buy-to-let mortgage product right for you will depend on your current financial situation and your plans for renting out your home.


You can use our free buy-to-let mortgage comparison to find deals on a buy-to-let mortgage.



Remortgaging your home to a let-to-buy property


You can also remortgage to a let-to-buy if you plan to move into a new home and want to rent out your previous home. A let-to-buy mortgage basically involves having two mortgages, one on the property you are moving to, and one that is a buy-to-let mortgage on your old home.


You can use our free remortgage comparison tool to help you find remortgage deals if you want to rent out your previous home.


Safety and health guidelines for rental properties


There are certain health and safety guidelines a landlord must follow when renting out their home.


•       Gas and electricity

As a landlord, you will need to make sure that all the gas and electric equipment in your rental property works and is safe for use. You will need to get a gas safety certificate from a registered and qualified gas technician. The engineer will record the details of the check on a Landlord Gas Safety Record form and will supply you with copies for you and your tenants.

Even if your tenants don’t use gas, if there’s a live supply to your property, you will need the certificate.


•       Smoke and carbon monoxide detectors

Smoke and carbon dioxide detectors need to be in place and in working order throughout the property.


•       Council inspections

The council may decide to do a Housing Health and Safety Rating inspection on your rental property. This typically only happens if tenants request an inspection or a survey reveals that your home may be hazardous.


•       COVID-19 measures

Certain conditions will need to met regarding health and safety during COVID-19. You can read the government coronavirus and renting guidance for more information.


Maintenance responsibilities of a landlord


Your property will need to be in good condition and certain things fall under your responsibility as a landlord to have repaired when broken. Some things that might fall under your responsibilities include:

•       structural repairs

•       repairs to sinks, baths and toilets

•       repairs to kitchen appliances such as refrigerators, stove tops and exhaust fans

•       boiler and heating system repairs

•       other serious damage to the property


You'll also need to make sure you get an Energy Performance Certificate if you're renting out your property.

Accessing your property when it is rented out


You may need to access your property for different reasons whilst it is rented out. You will need to obtain permission from your tenants to do so. You will need to give at least 24 hours notice.


Legal and financial responsibilities of a landlord


There are certain legal and financial responsibilities that come along with being a landlord. A few of them are:


•       Right to rent

You will need to make sure your tenants have the right to legally rent in the UK. To do this you will need proof of identification or a visa that shows they are allowed to rent property before renting out. You must do this whether you have a tenancy agreement or not. You can read more  on the government's right to rent policy on the government website.


•       The tenant deposit scheme

You’re required by law to put your tenant’s deposit into a government-approved scheme until the end of the tenancy. You can read more on the tenancy deposit government scheme at the government website.


•       Tax

If you rent out your property, you will need to claim the income on your taxes. You won’t pay tax on the first £1,000 of income you get from letting out your property, but will need to claim the rest. If your annual income from property rental is £2,500 or more, you need to declare it on a Self Assessment tax return.


•       National Insurance

If your profits are over £6,475 a year, being a landlord is your main job or you rent out more than one property, you will need to pay what is called Class 2 National Insurance. Class 2 National Insurance due is based on the number of weeks you are self-employed (as a landlord) during the year. You will need to pay Class 4 National Insurance if your property nets you over £9,501 a year or more. For class 2 insurance, the charge is £3.05 a week and for class 4 you must pay 9% on profits between £9,501 and £50,000 annually.


Should I use an agent to rent out my property?

Using an agent to rent out your property can help take the guesswork out of the rental process and ensure that all checks are in place. A letting agent can also help you assess how much you can charge in rent on your property.


Working with an estate agent can help take the hassle out of following through on the required checks. An agency will run the required identity, income and right to rent checks so that you don’t have to.


There are many options when it comes to choosing an agency to help let out your property. Different agencies charge different charges and fees to use their service. It is best to do your research to see what different agencies in your area have to offer.


How do I know how much to rent my property out for?


You can use our free house price value checker to see what your property is worth and help to assess what you can charge in rent. You can also do a quick search for rental properties similar to your’s in your area to see what the average going rate is for rent. A rental agent will also be able to help you determine what to charge.


What insurance do I need as a landlord?


Unfortunately, home insurance cover does not cover you for issues that can arise from renting out your property. All landlords will need a standard landlord insurance policy that covers them for certain things such as themselves, the tenants and building and contents damage. There is a wide range of cover for landlords to choose from.


What rights do I have as a landlord?


There are some situations in which landlords may be entitled to take back their property from tenants. If you need to take back your property before the end of a tenancy agreement, there are certain protocols you will need to follow. You have the right to take back your property under the following conditions:

•          the property being unfit to live in

•          late or non- payment of rent

•          repossession by the landlord’s mortgage lender

•          breaching the terms of the tenancy agreement

•          If serious damage was caused to your home by tenants

•          anti-social behaviour or drug use

•          fabricating of credit checks or references


The bottom line

Renting out your property can be a sound financial decision. As long as you follow all the health, safety, legal and tax guidelines, you should have no problem making some extra income on your property or home. Taking the time to understand the rental process and the regulations that go along with renting out a property will help prepare you for becoming a landlord.

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