A buy-to-let property is an excellent opportunity for landlords to earn a regular income. It also acts as a valuable investment that often sees capital appreciation in the long term. However, while having an investment property provides long and short-term benefits, it’s not all plain sailing.
Landlords have a specific set of obligations towards their tenants and need to make sure everything runs smoothly during the tenancy. Many of these responsibilities relate to the property before the tenant moves in. There are also ongoing responsibilities once the tenancy commences.
If you’re a first-time landlord or want to brush up on your obligations, this article will provide you with an overview of landlord responsibilities here in the UK. As a result, you will be able to let your property with complete confidence.
When letting an investment property, the level of a landlord’s responsibilities varies depending on which direction they choose. Some hire a letting agent or use other options such as Blueground to take care of the tenant-finding aspects and contracts. If, however, you decide to do it yourself, there are a few things you should take into account.
According to UK law, it’s mandatory to check a prospective tenant’s right to rent. This forms part of the Immigration Act, which checks if people can legally live and rent in the UK. Tenants will need to provide copies of their original ID and visa (if they require one) in-person to the landlord. Landlords who rent to someone without a legal right to rent are wholly liable and can face a civil penalty.
An AST is the most common form of a lease between landlords and tenants. It stipulates the details of the contract, such as rental amount, duration of stay and responsibilities of both parties. A typical AST is 12 months long with a six-month break clause, though there are no specific requirements for length.
The safety of your tenant is paramount, for both legal and moral reasons. That’s why landlords will need to undertake several tasks to confirm whether the property is habitable and there are no dangers to the tenant.
A gas safety engineer will need to come to the property and check that gas-related appliances are in working order and don’t pose any risk. You also need to make sure that electricity is working. If the let is a HMO (house of multiple occupation), you are legally required to get an Electrical Installation Condition Report. Keep in mind that some insurance companies ask for one even if it’s not a HMO.
All rented properties need an EPC (Electrical Performance Certificate) with at least an E rating. This is to measure the quality of your property and how efficiently it handles energy. The certificate, which is carried out by an electrical engineer, lasts for 10 years and all UK homes are required by law to have one.
Under smoke and carbon monoxide regulations, landlords must install a minimum of one smoke alarm on every floor of the property. Carbon monoxide alarms are also needed for any room with appliances that burn solid fuel, such as coal and wood. Each alarm must be tested and should be in working order before the tenant moves in.
Landlords need to make sure furnished properties meet the Furniture and Furnishing (Fire Safety) Regulations for fire resistance. Items, such as sofas, chairs, and beds, should have a label attached stating they are fire-resistant. Landlords should call the manufacturer directly to confirm the items’ safety status if they can’t find the label.
One of the less obvious aspects of checking your rental property includes preventing Legionnaires’ Disease. UK law states that water safety checks should be performed to determine whether or not Legionnaires’ Disease bacteria can develop in the water, though there is no mandate for how to carry out the checks. This means it’s possible to do the assessment yourself. However, hiring a professional is recommended, especially if you aren’t sure which signs to look out for.
After going through the necessary safety checks, landlords are free to let their property. However, they will still be expected to carry out specific responsibilities during the tenancy – including maintenance-related issues.
If appliances, such as boilers, washing machines, and dishwashers stop working and it’s not the tenant’s fault, landlords will be responsible for fixing them. The same goes for plumbing issues. As a landlord, you can either fix the problems yourself or hire a property management company to arrange repairs on your behalf.
Essentially, you are responsible for making sure the property is kept in good repair. That includes making sure it meets the following requirements:
If the tenant believes a landlord is neglecting their responsibilities (and doing so might put them in danger), they can inform the local council, who will carry out an inspection of the property. The council will likely fix any issues it finds and charge the landlord directly for the work. In a worst-case scenario, the council could decide the property is not fit for purpose and stop it from being rented out.
Landlords also have the right to gain entry to a property if the tenant doesn’t respond to their request. However, they must provide 24 hours’ notice before entering (unless it’s an emergency).
Aside from safety and maintenance responsibilities, landlords have financial requirements they need to adhere to as well. From paying tax to looking after security deposits, several financial elements come into play when you’re a landlord.
Under the provisions of the United Kingdom Housing Act 2004, landlords (or letting agent if the property is managed) who takes a deposit (capped at five weeks) for an AST are required to protect it under an authorised tenancy deposit scheme (TDS). Deposits are protected throughout the duration of the AST, and landlords must make tenants aware of the scheme where the deposit is held.
Some landlord insurance is optional. However, building insurance is often a requirement of any mortgage company who may be lending funds for your investment. It’s also a critical form of safety that can protect you from having to pay out large sums if the building is damaged.
It’s not possible to increase the rent during an AST but you can do so once it goes onto a rolling contract, or when a new one is being negotiated. However, you can only increase rent in line with current market conditions once every 12 months.
Landlords are eligible to pay income tax on their rental property income, with the amount depending on their UK tax band. Other tax-related payments might include paying national insurance contributions if overall earning surpass £5,965 per year (and being a landlord is your primary occupation). It’s possible to offset earnings against aspects like agent fees, council tax during void periods, legal fees, service charges and ground rent.
With our tips, landlords are in a better position to understand which actions need taking to let a property legally. There is a lot to unpack, however, and the majority of landlords want to remove stress – not create it.
At Blueground, we rent the property from you directly and source high-quality, professional tenants. It means we take care of many of the responsibilities involved, including security deposit management and post-tenancy inspections, which make your life easier so you can sit back and enjoy passive income.
Discover how Blueground can be your ideal tenant and provide more value than your average London property management company.