Our complete guide to being a landlord

In our society, owning property will always provide you with security! Being a landlord is a popular move these days. In 2021, there were around 2.65 million landlords in the UK. With so many landlords with the same idea, competition can be stiff. But if you do things right and follow the rulebook, it can be an incredibly effective way of generating passive income.

However, being a landlord in the private sector won’t always be plain sailing. There is a lot that goes into being a successful landlord and building up an impressive portfolio over time if that’s your intention. It’s certainly not as simple as finding tenants and collecting rent each month!

Are you a new landlord or thinking about becoming one? Don’t worry! We’re here to offer some guidance on where to start. Check out our complete guide to being a landlord where we explain pretty much everything that goes into providing a first-rate service to tenants.

What are the legal requirements of a landlord?

Being a landlord is a responsible gig, and it comes with important responsibilities, many of which will result in legal issues if not followed. Landlords must provide a safe welcoming home for tenants to live in. So, what safety standards and legal requirements do landlords need to follow today?

Make no bones about it, meeting health and safety standards should be a top priority for UK landlords in 2022. There are approved safety documents and certificates you need to let property to tenants. These rules are there to protect tenants and ensure they are able to live safely and securely in your property.

Fire safety

Failing to stay on top of fire safety as a landlord today, then you’re definitely playing with fire and risking your livelihood. In 2020-2021, there were a total of 27,166 deliberate and accidental dwelling fires in England alone.

The law states that landlords must follow certain fire safety regulation practices to protect both the property and tenants. Fire safety practices that landlords must follow include providing:

• A smoke alarm on each storey
• A carbon monoxide alarm in any room where there are fuel-burning appliances
• Access to unobstructed fire escape routes at all times
• Fire-resistant furniture
• Fire alarms and extinguishers for homes in multiple occupation (HMO).

Electrical safety

New rules on electrical safety standards in the private rented sector were introduced in England at the start of July 2020. This means private landlords must ensure every electrical installation in their residential premises is inspected and tested every 5 years by a qualified electrician.

Landlords need to provide tenants with an electrical safety report, and the local authority if they also request to see one. Landlords can be fined up to £30,000 if found in breach of electrical safety regulations. With fines that high, your tenants won’t be the only ones getting a shock if your electrics aren’t up to scratch!

Gas safety

A landlord is legally responsible for ensuring gas safety for tenants. Landlords must oversee gas checks every 12 months on appliances and flues in the property. An annual gas safety check must be performed by a certified Gas Safe Registered Engineer, as you need someone who really knows what they’re doing. You can use the Gas Safe Register website to find a registered gas safety engineer near you.

The engineer inspects gas appliances like the hob and oven, and systems like the boiler and hot water cylinder, checking that everything is working safely as it should. Landlords must also manage the repair and maintenance of pipework and appliances and record each safety check.

You want to do your all as a landlord to look after tenants’ well-being while they are living in your property. Poor gas safety practices mean there’s a far greater risk of fire, explosions, gas leaks, and carbon monoxide poisoning. All of these can be harmful to the health of your tenants or even fatal.

This is why staying on top of gas safety is so vital for landlords. In addition, there are legal consequences for landlords failing to provide adequate gas safety provisions. Being unable to provide a gas safety record is a criminal offence and landlords can be made to pay unlimited fines and/or six months imprisonment. This isn’t a load of hot air!

Energy performance certificate

Nobody ever likes unexpectedly receiving fat bills through their letter box! Rental tenants have major variations in the bills they have to pay, depending on the energy efficiency of their homes.

Landlords are now required to have a valid in-date Energy Performance Certificate when letting a property to tenants. An EPC rates a building’s energy efficiency on a scale of A (the most energy efficient) to G (the most inefficient). However, there are one or two exceptions; listed buildings and temporary building structures being used for 2 years or less.

This energy performance rating allows people interested in renting a property to work out roughly how much their energy bills will be. This information is especially useful in today’s climate given recent hikes in energy prices that rental tenants are acutely aware of.

Tenancy deposit schemes

Landlords aren’t legally obliged to take a tenancy deposit, but it’s recommended they do. A tenancy deposit provides protection against property damage, unpaid bills, or tenants not sticking to the terms of the tenancy. When a landlord decides to take out a tenancy deposit, it is the law for them to register it with a tenancy deposit protection scheme within 30 days, and let tenants know where the deposit is stored.

Landlords can choose from 3 government-approved tenancy deposit schemes:

• Deposit Protection Service
• My Deposits
• Tenancy Deposit Scheme

At the end of the tenancy, tenants can get their deposit back – all being well. Landlords are required to return the money to tenants within 10 days after the tenancy ending. But this can take longer if there is a dispute between tenants and a landlord on any outstanding damage or late rent.

Right to rent checks

It gives you peace of mind to know who you’re renting to. Right-to-rent checks are important because you certainly don’t want to be out of pocket from tenants disappearing without paying outstanding rent due to their immigration status in the UK expiring.

Make sure you know that any prospective tenants have the right to stay in the UK until the end of the tenancy date in the agreement. You can do this by checking their documents and right to rent. The documents provided by the tenant must be up to date and recognised and approved by the UK immigration authorities.

How to find the perfect tenants

Before you can truly become a landlord, you need to find the right tenants! Not finding the right tenants could lead to you spending months if not years chasing rent arrears, repairing property damage, and potentially even not being able to rent your property to future tenants due to the place being unliveable.

So, you’ve got to get this one right and find the ideal tenants! Although it may seem like a process that drags a bit, putting in the groundwork to find the perfect tenants is a worthwhile endeavour. Here are some tips to help you find those ideal tenants.

Screening your tenants

Finding ideal tenants is never a walk in the park. A proper screening process is a pivotal starting point to you finding the perfect tenants.

Start by conducting interviews where you meet up with potential tenants and ask them relevant questions relating to their tenancy in your property. This will help you learn more about their character, lifestyle, living habits, occupation, and how they may treat your property.

Think about the sorts of questions you want to ask. Why are they moving? When are they looking to move? How long do they want to rent the property?

You want tenants with glowing references from landlords in the past and not ones who could be featured on shows like ‘tenants from hell’! With this in mind, asking for references from previous landlords could be a crucial piece of the pie when it comes to the screening process. If the tenant has never rented before, try getting references from other sources, such as teachers and employers. This should help in giving you a better idea of their character!

Carrying out credit checks can give you vital insight into a tenant’s financial history. But how do landlords perform a credit check? Landlords can gather data from the credit reference agencies Experian, TransUnion and Equifax, and this will indicate the level of risk in renting to the person in question. Remember, you must get permission before running a credit check on prospective tenants.

Want to gain a better idea of what a tenant is like and how they will treat your home? Looking at their social media profiles is another avenue you could explore to screen tenants. A quick look through their social media may quickly give you an inkling on whether they’re a party animal or not.

That said, you can’t tell everything through a social media profile, and landlords should avoid invading tenants’ privacy. Tenants may not like the thought of their new landlord snooping around their personal social media pages.

Tenant discrimination

In the UK, it is against the law for landlords to discriminate against tenants on the basis of protected characteristics such as age, race, gender, marital status, pregnancy, disability, sexuality or religion. So, landlords can’t make decisions on whether or not to accept rental applications based on these grounds. You don’t want to fall foul of these rules and be in hot water by getting accused of tenant discrimination, as this will damage any reputation you’ve built up as a landlord.

Only reject a tenant if you have a good reason to do so. Valid reasons for not allowing a tenant to rent from you can include:

• They don’t have sufficient income
• You have an uneasy feeling about them
• You truly believe they won’t take adequate care of your property
• They have multiple County Court Judgements (CCJs) against them
• You receive poor references during the tenant referencing process
• They are a smoker and intend to smoke in the property.

Different types of tenants

As a landlord, you need to be open to the idea that you could have a diverse range of people renting your property. Here we discuss more about the different types of tenants you may need to be open to.

Students

Renting homes to students can be a highly profitable investment. As long as you keep on top of things, being a landlord to students isn’t as bad as some of the stereotypes make out. You’ll have no shortage of tenants if you buy somewhere in a location popular with students or near a university.

Student neighbourhoods also tend to be in inner city areas where property is often cheaper to buy. So, becoming a student landlord could be a real worthwhile opportunity! Check out our ultimate guide to renting to students.

Seniors

When renting to seniors, you may have to make special adjustments to the property and consider mobility issues they may have. This could involve adding ramps, handrails, stairlifts, walk-in showers and so on. You’d be surprised, there are more retired renters in the UK these days than you would imagine. The number of 65+ year-olds renting rose 93% in a decade between 2008-2009 and 2018-2019 according to research.

Families

Renting to families on a long-term basis is an ideal setup for landlords and often proves a great source of dependable income. This is because settled families tend to stay where they are for longer, and don’t chop and change houses like students do every year. In addition, renting to financially secure families should mean there’s no hassle with you receiving the rent in full and on time.

Families looking to rent, particularly large ones with multiple children, may go for bigger size houses with more bedrooms. If you’re renting to a family of active kids who love running around, a sizeable outdoor space may be what they’re looking for. But not all houses are large and come with lovely spacious gardens. So, having a rental property located near a park or other natural open spaces such as beaches or nature reserves could be a real pull attracting families with energetic kids.

However, like with any other tenant, landlords must ensure that families do a good job of maintaining the property. We all know just how messy and clumsy kids can be!

Tenants with pets

Many people are animal lovers and love nothing more than living together with their furry friends. Therefore, landlords will often come across tenants asking if they’re allowed to live with their pets.

The fairer private rented society bill published in June 2022 means landlords cannot unreasonably withhold consent when a tenant requests to have a pet in their home. Landlords are still able to refuse a tenant’s request for a pet, but this bill essentially allows tenants to challenge a refusal, and landlords will have to provide proof of a good reason for refusing permission.

Tenancy disputes

Sometimes, things don’t go entirely smoothly in life. Tenancy disputes are one of the challenges landlords face, and they can arise from a range of different situations, including excessive noise, complaints from neighbours, tidiness, maintenance issues, rent payments not arriving on time, and more.

Landlords should have the foresight to put any potential areas of dispute into the terms of tenancy agreements. But not every type of dispute with tenants can be factored in and foreseen by landlords. At times, landlords may even find themselves having to mediate between tenants in conflict with one another.

How tenancy disputes are dealt with will of course depend on whether you use a letting agent as an intermediary or have a private arrangement where you deal with tenants yourself face to face.

Let’s talk about the different types of common disputes that can arise between landlords and rental tenants.

Rent Arrears

One of the trickiest tenancy disputes to have to deal with are rent arrears. The procedure for rent arrears should be laid out in the tenancy agreement your tenants signed. Normally, underpayment or failing to pay the rent breaks the tenancy agreement.

Try the reasonable approach of contacting your tenant to find out why they have been unable to pay their rent. There may be a good reason and perhaps you’ll be able to work with them to resolve it.

If they haven’t paid within 14 days, contact the guarantor. If after 21 days the rent has still not been paid, write to the tenant and guarantor explaining you intend to take legal action. When your tenant is 8 weeks behind on rent, you have the right to reclaim possession of your property under the Housing Act 1988. You then must serve a section 8 to let your tenant know you will take them to court if they don’t pay within 14 days.

Unfortunately, rent arrears piling up can eventually lead to landlords being made to evict tenants, and it’s always a tough decision to make. The amount of notice landlords have to give to evict tenants through the courts also depends on the amount of rent that is owed.

Complaints from neighbours

A common bugbear landlords have to contend with is disputes between tenants and neighbours. Dealing with such issues is all part and parcel of being a landlord.

Noise complaints can sometimes be a bone of contention. There is no legal level above which noise becomes a nuisance. However, noise from your tenants mustn’t be ‘unreasonable’, whether it comes from music, animals, singing, shouting, or whatever it may be.

Tenants should try approaching the neighbour first in a civilised way. If noise complaints go to the council or police, it could be harder for you to sell the property in the future and put buyers off. If the council judges that someone is causing a noise nuisance, they can issue a ‘noise abatement’ order to let the person know legal action will be taken if noise levels persist. In the event of someone breaking this abatement order, they can be fined up to £5,000.

Your tenants also need to stay within the boundaries of your property and not trespass on neighbours’ land . You can prevent boundary disputes by making it clear at the start of the tenancy about where the property starts and ends, including outdoor spaces.

Managing waste and bins can sometimes cause conflict. Make sure your tenants know where they are allowed to put their bins without disturbing the neighbours or putting rubbish on their property. Understandably, nobody likes to have somebody else’s rubbish dumped onto their drive or doorstep.

There are an infinite number of neighbourly disputes landlords may be confronted by alongside the ones we’ve mentioned. Try and be fair and mediate neighbourly disputes with a calm and steady head as much as possible.

Damage to the property

Another source of tenancy disputes can be damage to property. To bill tenants for damage, landlords must be able to prove tenants caused the damage to occur, and that it hasn’t come from neglect on their part as an owner or failure to deal with longstanding maintenance issues that were there previously, such as damp or mould.

Tenancy agreement

Getting things down on paper is always paramount for landlords. A tenancy agreement is a legal document put together by the landlord before the tenancy begins. This agreement provides the tenant with the right to live in a rental property, and the landlord the right to receive rent for it.

The tenancy agreements landlords issue should be up to date and compliant. Want to lay down the ground rules so your tenants know what they’re getting themselves in for before committing to renting one of your properties? This is what a tenancy agreement is there for.

Both you and your tenant must sign on the dotted line. Landlords should produce two copies of the agreement; one original copy with the tenant’s signature, and a photocopy/scan with your original signature for your tenant to keep.

The tenancy agreement also helps keep track of whether tenants are looking after your property. So, it may be a wise idea to keep an inventory of items such as household furniture and appliances present at the start of the tenancy. These tenancy agreements can help protect landlords in the event of damage, fire, theft, or loss of rent.

How to stay on top of property maintenance

One of the hallmarks of a good landlord is keeping on top of property maintenance. You can do this by using the services of a letting agent, employing a family member or friend, or simply taking care of property maintenance yourself. If a landlord doesn’t make an effort to maintain a property and see to repairs, why should renters choose to live there?

Repairs

Landlords are responsible for any repairs they commit to in a tenancy agreement. There are also things landlords are legally responsible for keeping in repair and which they can’t pass on the cost to tenants including:

• The structure and exterior of the home e.g. walls, roof, external drains and guttering etc
• Toilets, sinks, baths and pipework that goes with them
• Water and gas pipes
• Boilers
• Electrical wiring
• Heaters

Property inspections

After giving over the keys, it’s now the tenants’ home to live in for the duration of the tenancy. Landlords can’t get into a habit of turning up unannounced whenever they like.

Under the Landlord and Tenant Act 1985, landlords have the right to enter a property to view its condition and state of repair, however, they must first ask for tenants’ permission, unless it’s an emergency. A landlord inspection must give current tenants’ at least 24 hours’ warning and be carried out at a reasonable time of the day!

Outdoor spaces

According to section 11 of the Landlord and Tenant Act 1985, landlords are responsible for maintaining the garden and outdoor spaces that a tenant couldn’t reasonably be expected to do, such as removing weeds or pruning trees. Essentially, landlords must take care of aspects of outdoor space maintenance that if left unattended could pose health and safety risks to tenants.

Landlords cannot expect tenants to upgrade or make major improvements to the garden. The landlord is responsible for carrying out such improvements and repairs. In addition, landlords are also required to tend to smaller tasks, such as trimming and maintaining hedges and shrubs.

Fair wear and tear

Tenants are not responsible for maintenance and repairs relating to the ‘fair wear and tear’ of a property. But hang on a sec, what exactly is wear and tear?

Well, fair wear and tear is any sort of damage that could be reasonably expected during a tenancy. Fair wear and tear may include faded curtains and carpets, scuffs on the walls, peeling wallpaper, and plenty more. These things fall within your responsibility to maintain the property as a landlord, and shouldn’t be passed onto the tenants.

Finance

Understandably, all landlords want to be able to make a profit from letting out their property. Nobody wants to be a landlord only to haemorrhage money non-stop. There is a multitude of different factors that go into the cost of being a landlord that affects how much you decide to charge rental tenants.

Ultimately, you need to calculate how you will make a rental return on investment. The ‘rental yield’ can be affected by the state of the housing market, property prices, interest rate fluctuations, and much more. Here we go into some other factors that can contribute to how much rent landlords ask tenants to cough up.

How much should a landlord charge for rent?

Housing tends to be the most costly outlay in peoples’ lives. The average rent in the UK was £1,159 per month as of September 2022, and how much a landlord ought to charge tenants for rent is a subjective topic. In the UK, we currently do not have any ‘rent caps’ in place limiting how much landlords can charge tenants. There are a large number of factors which can influence how much a landlord charges for rent.

Location

Whether purchasing or renting a home, location, location, location will always have a big impact on the price of property. You will tend to pay more to live in a more desirable location, with some parts of the UK being considerably more expensive than others.

So, average monthly rental costs in the surrounding local area will influence how much landlords decide to charge tenants per month. The proximity of amenities nearby such as local schools, supermarkets, leisure centres, shops, and parks, will also affect the rental price.

It will come as no surprise that London is greatly more expensive to live in than the rest of the UK. As a result, rental costs there are higher. The average cost of renting in North East England in 2022 is £588, this pales in comparison to the current average cost of rent in London, which is now £1,846.

Utilities

It’s up to the landlord whether or not to include utility bills like electricity, gas, and water in the overall rent price. Including utilities in the overall price of rent can help to make life easier and more straightforward for tenants since it takes a load off their backs by giving them one thing less to worry about. Whether or not you decide to include utilities, the price of the rent you charge should be detailed in the tenancy agreement and made clear to tenants from day one.

Cleaning services for tenants

A common aspect for landlords to worry about is how clean and tidy tenants will keep the property. A home left in unsanitary conditions by tenants can devalue a property and cause long-term maintenance issues. It’s the landlord’s responsibility to provide a clean, safe and healthy property, and by the beginning of a new tenancy, any issues caused by previous tenants must be eradicated.

Landlords can include cleaning services as part of the deposit fee they ask tenants to pay at the beginning of the tenancy. However, landlords cannot charge tenants for end-of-tenancy cleaning services. Landlords often won’t provide a cleaner with the rent.

Types of property

The type of property you own will impact how much rent you can charge. Rental costs can vary depending on the number of bedrooms, the overall square footage, detached or semi-detached, terraced housing, and whether you have a new build or a period property such as a listed building. Houses in multiple occupation and multi-units (flats) bring landlords higher rental yields in the UK compared to houses.

Council Tax

The tenants are responsible for paying council tax when a property is rented by one person, a family, or joint tenants. But in periods between tenants, you will responsible for paying the council tax as a landlord.

In houses in multiple occupation, such as student houses or flats with shared facilities, it’s the landlord who is responsible for covering the council tax bill, regardless of whether there are tenants in situ or it’s unoccupied.

Landlord insurance

Landlord insurance isn’t something that’s mandatory, and there’s no legal requirement for you to have it. Nevertheless, most buy-to-let mortgages come with an obligation for you to have landlord insurance.

Taking out landlord insurance is incredibly worthwhile. It covers landlords against unpredictable events, such as vandalism, fire, or flood. Failing to get landlord insurance before renting your place out to tenants can prove financially costly in the future. And of course, you also want to protect your tenants and avoid putting them at any risk. The two main types of landlord insurance are buildings and contents insurance.

Buildings Insurance

Older properties and listed buildings may be more vulnerable to experiencing major structural damage over time. The purpose of buildings insurance is to provide extensive cover for the physical structure of the property. Looking after the general wear and tear of the building is one of your responsibilities as a landlord. Building insurance covers:

• Roof damage
• Wall damage
• Floors
• Permanent fixtures (including kitchen cabinets)
• Loss of rent

Here at CIA, we also offer buildings coverage for unoccupied properties. Want to cover your back against a wide range of eventualities as a landlord? CIA offers extensive buildings & contents insurance coverage.

Contents Insurance

Do you provide tenants with a ready-furnished property? Some landlords like to kit out their properties with furniture and appliances for tenants, such as dishwashers, washing machines and so on. Contents insurance is there to cover any damage that may occur to furniture and furnishings that you have put inside the property, and these items certainly don’t always come cheap! Contents insurance can help cover your household items from things like theft, floods, storm damage, fire, and more.

It’s important to note that contents insurance won’t cover your tenant’s belongings. Make sure that you advise and make it clear that they should take out their own personal contents insurance to protect their belongings from any unforeseen accidents!

At CIA Landlord Insurance, we pride ourselves as a company providing landlords with top-quality robust insurance policies. We have 20+ years of expertise specialising in niche areas of the landlord insurance market. As one of the leading landlord insurance brokers in the UK, we offer affordable deals and won’t be beaten on price!

After reading this guide, we hope you now understand more about being a landlord and what it takes. To get in touch with us at CIA to find out more about taking out landlord insurance, get in touch with us by requesting a callback, dropping us an email on info@cia-insurance.co.uk or picking up the phone and dialling 01788 818 670.