As a landlord, there are lots of things that you need to know in order to meet the requirements of the industry regulations and ensure that you’re providing a service that benefits both yourself and your tenants in equal measures. It’s not quite as easy as simply owning a house and renting it out; there are codes, rules, and laws that are enforced to create a safer and more transparent environment for renters and landlords, which has improved the relationship between the two dramatically over the past few years, with less divisive issues left in the grey area.
Here at JonSimon Estate Agents, we’re passionate about helping people to find homes, which includes helping landlords to find the ideal tenants for their properties. The most important thing in a renting agreement is to find a landlord and tenant that are willing to look out for each other, as situations such as this tend to always have a happier resolution than those where the two parties are at odds with each other. As a new landlord, it’s important to know how to create these relationships, as well as understanding your responsibilities and how to handle issues that may arise with tenants, the property, and the contracts between everyone involved. To help new landlords begin to get to grips with everything involved, we’ve put together this handy FAQ page to give the answers to all of the most common landlord questions, helping you to get on the way towards being a first-rate landlord in no time.
One of the biggest questions for landlords is exactly this: what is the right amount of rent to charge and how do you calculate a fair price? This is perhaps also one of the most difficult questions to answer, too, as there are many variables involved that can impact the overall value of a property for rent. Unfortunately, there are no set standards when it comes to deciphering the price of rent, so it is mostly up to yourself as a landlord to set a price that you think is right for the standard of the property and the service that you’ll be providing. What you’ll be looking to do is set a monthly rent cost that provides you with the chance to make adequate profits, without the property being overpriced, as this will deter potential tenants and price out much of the market.
When you’re looking to decide on a price, here are a few of the factors that you’ll want to consider:
All in all, deciding how much rent to charge on your property is all about balance, so it’s important that you have the help and support that you need during this process. If you’d like a hand with managing your properties as a landlord, get in touch with our expert team here at JonSimon Estate Agents today.
In 2020, EPC regulations, along with several others in the rental sector, were updated, so if you’re a new landlord, now is a great time to brush up on the latest rules and guidelines to ensure that you’re operating in accordance with the correct regulations. One of the most important regulations in place for rental properties is the EPC, or Energy Performance Certificate, which has been required in all rental properties since October 2008. As of April 2018, a regulation titled Minimum Energy Efficiency Standards (MEES) came into effect, which requires all properties on the market for sale or to let in England and Wales to have a minimum EPC rating of an ‘E’ or above. This applies to all existing tenancies, not just new ones and renewals, so if you are currently renting out a property, it’s good practice to check your EPC rating and ensure that it’s within the guidelines. Legally, a property with an EPC rating below ‘E’ cannot be let out to a tenant.
As a landlord, abiding by these rules is essential; failure to follow these regulations will result in serious action being taken that could have long-lasting implications on your right to let properties in the future. If you’re renting out any property to a tenant, you should always check your EPC rating first, ensuring that the property is safe to rent.
Obtaining an EPC
For properties that do not have an EPC rating, or which need an updated assessment, you’ll need to learn how to obtain a new EPC. Obtaining a new EPC will involve having an Energy Assessment Survey conducted on the property, where a Domestic Energy Assessor will undertake a series of checks and inspections that determine how energy efficient the building is according to the set codes. The report will also identify areas of improvement so that you’re able to improve the energy efficiency of your property to potentially achieve a higher EPC rating in the future.
Some of the things that the assessor will take a look at are:
Once the inspection is complete, your property can then be properly graded with an accurate EPC rating, which you can then place on your listings as proof of EPC. The grade achieved will range from ‘A’ at the highest and ‘G’ at the lowest, with ‘E’ acting as the minimum point for a property that is being rented to a tenant. Once obtained, your EPC will be valid for 10 years, after which you will require a new assessment to determine a more up-to-date score.
As a new landlord, many things can be rather confusing without the help and support, but one of the basic things that you’ll need to come to begin to understand is the process of renting out a property and the steps that you’ll need to take to make this a reality. The obvious first step is to acquire a property that you would like to rent out – this can be done in a variety of different ways, including cash buys or mortgage loans. Once the property is secured, you will be able to rent this out to a paying tenant, however, you must then abide by the rules and regulations set out by the government and housing authority. As a landlord, some of your responsibilities include:
By following the above guidelines, you can ensure that you are protected from any lawsuits and that you’re providing your tenants with a home that’s safe, practical and suitable for their needs.
The best way to find tenants
Landlords need tenants and tenants need housing, so in theory, the two are a match made in heaven. However, this is not always the case – from strict, lazy landlords to tenants who are prone to breaking the rules, there are a lot of potential issues that could arise when renting a property. This is why a proper vetting process for any potential tenant is vitally important. For most landlords, finding potential tenants is not too difficult, but finding the right tenants can be a much tougher task. To find the best possible tenants for your home, we’d recommend that you look to work with a professional estate agency such as ourselves here at JonSimon Estate Agents; we’re a vastly experienced team with a wealth of knowledge in areas such as Radcliffe, Ramsbottom, and Burnley.
By working with a reputable estate agency, you can have confidence in the tenants that are taking residence within your property, as they will have already been subjected to the standard checks and processes that ensure that they are eligible and suitable candidates for the home in question. This will cut out the hassle of dealing with time-wasters and ensures that your property is protected and respected by those who live there. For more information on our landlord services or to learn more about how we can help new landlords to handle their properties and find the best tenants, give us a call or contact our expert team online.
As a landlord, the rules surrounding tax can be a little confusing, meaning it can be hard to predict your potential financial outlay if you’ve never been in this situation before. If you’re planning on becoming a landlord and renting out one or multiple properties at a time, it’s incredibly important to make yourself fully aware of the tax rules that apply to rental income, as this will allow you to forecast your earnings as accurately as possible. The first thing to be aware of is that as a landlord, you will likely have to pay tax on your income. There are very few cases where this would not be applicable, so in most scenarios, you should prepare for the eventuality that you will be looking at paying tax on your income from rental properties. Of course, there are different methods of becoming a landlord and these are:
In each instance, you’ll find that the tax guidelines do vary, so you’ll want to work out which method works best for you given the number of properties that you own, the value of these, the expected income, and the expected tax deductions with each method. For landlords who have multiple properties, it is probable that setting up a property business will be the safest, smarter, and more manageable way to handle your property portfolio.
The tax rules for landlords are broken down into two sections, one for each different type of landlord model that is available. Below, you can find a breakdown of the basic rules that each landlord model will need to adhere to.
Running a property business
If you choose to run a property business to handle your rental income, you will need to pay Class 2 National Insurance if your profits exceed the amount of £6515 per year and if your operations class as “running a business”. To be classed as a business, you will need to meet the following criteria:
One thing that is important to note is that you will not pay National Insurance if you’re not running a business.
Renting out a personally owned property
When renting out a personal property, you will have to abide by a different set of guidelines to that of a business. Firstly, the first £1000 of income that you make from property rental will be tax-free and is known as a ‘property allowance’. Between £1000 and £2500, you will need to contact HMRC to discuss your income, as this amount does not fall within a self-assessment tax return bracket.
The self-assessment tax return brackets for rental income are:
If you need a little more help or guidance with regards to tax return and deductibles, we would urge you to contact a property industry expert, or HMRC directly to ensure that you are paying the correct amount of tax, rather than being stung with a large unpaid tax bill at the end of the fiscal year.
Evicting a tenant is never an easy job and it does come with a lot of issues, but in certain cases, it is, unfortunately, the only way to proceed. To avoid complications and potential lawsuits being filed against a landlord, they must follow the procedures set out by the government to ensure that the eviction is fair, proper, and legal in the eyes of the law. As a landlord in England or Wales, there are two different types of tenancy agreements that your tenant may be using, these are ‘Assured Shorthold Tenancies’ and ‘Assured and Regulated Tenancies’, each of which present a different set of protocols that must be adhered to.
Assured Shorthold Tenancies
With this type of tenancy agreement, there are two different sub-categories that a tenant may fall into – these are:
The process that you must follow when evicting a tenant with either of these agreements is:
Assured and regulated tenancies
Alternatively, your tenants may be under an assured and regulated tenancy agreement, provided that they started their tenancy prior to 27th February 1997. In these cases, a different set of rules will need to be followed, as this type of agreement tends to offer much more tenant protection and can help to shelter the tenant from eviction more rigidly. You can find the most up-to-date information regarding these types of evictions over on the Shelter website, which you can visit by clicking here.
In the UK, the Right to Rent is a policy that can be found within the Immigration Act 2016, which states that landlords in England are duty-bound to check the immigration status of all tenants who apply to rent any property that they own and deny lodgings to any applicant who cannot prove that they have the Right to Rent in the UK. The Right to Rent policy applies to all tenants who will be living in a property, regardless of whether their name is on the agreement or not. You must check the Right to Rent credentials of every tenant that will be living in your property. There are two ways that you can check your tenant’s documents: you can choose to check their original documents for validity or alternatively you can view your tenant’s right to rent online if they have access to a share code. We’ve detailed how to check the validity of each tenant’s right to rent below.
The first step when using the original documents is to learn which adults will be using the property as their main home, as these will be the official tenants on the property and the tenancy agreement. Once you have learned who your tenants will be, the next step is to ask for the original documents proving that they can legally live in the UK.
If these documents are presented, you’ll then need to check their documents for the right to rent in the UK. Once you have seen these documents for each tenant, you need to ensure that the documents are valid and that the documents belong to the tenant legally – this must be done with the potential tenant present to avoid any claims of obscurity.
If you can confirm that the documents are legitimate, you can then make a copy of all of the documents and record the date that these checks have been made, for reference at a later date if required.
You must remember that renting a property to someone who does not have the legal right to live in the UK is punishable by law in the form of unlimited fines or even a prison sentence.
While – as a landlord – it is up to you who you ultimately rent your property to, it is important to be aware of recent legal developments with regard to ‘no DSS’ policies. The acronym ‘DSS’ stands for the Department of Social Security, which was a UK governmental agency from 1988 until 2001, when it was replaced by the Department for Work and Pensions. However, the term ‘DSS’ continues to be used informally, much like the term ‘MOT’ for vehicle MOT tests, despite the relevant government department not having been formally called the Ministry of Transport since 1970.
In the private rented property sector, the term is commonly used in reference to tenants who claim any kind of state benefit, such as Universal Credit or housing benefit. It was assumed for some years that it was legal for landlords to have ‘no DSS’ policies when advertising their properties for rent, on the grounds that being a benefit claimant was not a ‘protected characteristic’ under discrimination legislation. Multiple court cases in recent years, however, have effectively found blanket ‘no DSS’ policies to be illegal. When advertising properties for rent, landlords and letting agencies must avoid policies that amount to a universal rejection of all applications from prospective tenants who claim benefits.
In particular, ‘no DSS’ policies have been criticised on the basis that they could be a form of indirect discrimination against groups explicitly protected under equality law – such as women, who are likelier to be recipients of childcare benefits.
Even the outcomes of recent court cases, however, do not mean a given landlord is forced to let to a tenant receiving a particular benefit. It simply means that they must consider the would-be tenant’s application properly, alongside other applicants, instead of rejecting them purely because they receive benefits.
Are you unsure about any aspects of the above issue, or have any further questions? If so, you are welcome to call the JonSimon Estate Agents team in Burnley, Radcliffe and Ramsbottom in Bury for more detailed and tailored advice and guidance.
In January 2021, the UK government announced that it had introduced a new standard tenancy agreement to help “responsible tenants in England with well-behaved pets… to secure leases more easily”.
The Model Tenancy Agreement, as it is known, is the UK government’s recommended contract for landlords. The government said that, under the new Model Tenancy Agreement, landlords would no longer be able to impose blanket bans on pets. Instead, consent for pets would be the default position, with landlords wishing to object to a tenant’s written pet request needing to do so in writing within 28 days, while providing a good reason.
However, it is important to be clear about what this change is, and what it isn’t. The Model Tenancy Agreement is effectively a guideline or template, and is not legally binding. While the Model Tenancy Agreement has been drafted by government lawyers and is the government’s recommended assured shorthold tenancy agreement, landlords have no obligation to use this document. This means the terms of this document will not be legally binding on you if you use alternative tenancy agreements.
It has been suggested that the update to the Model Tenancy Agreement could be a prelude to the government eventually changing the law to allow pets in rented homes. In the meantime, landlords are not legally obliged to allow tenants to keep pets.Some landlords may be especially concerned about their tenants wishing to keep exotic pets, such as snakes, lizards and big cats. In the case of many exotic pets, the tenant who wants to keep them at their rented home will require not only your permission as their landlord, but also a licence from the local council.
If you want the property back from your tenant, the amount of notice that you must give them, and the other rules you are required to follow, will depend on such factors as the type of tenancy agreement and its terms. It has been especially difficult for many landlords to keep up with the latest rules on notice periods during the COVID-19 pandemic, as the requirements have changed several times during the coronavirus crisis. It is therefore not guaranteed that the information you read online from many sources will be up to date. With that in mind, we would urge you to contact our Burnley, Ramsbottom or Radcliffe estate agents for advice if you are in any doubt about the latest situation.
Nonetheless, the latest information at the time of this FAQs page being written was as follows: if you wish to end an assured shorthold tenancy, the most common way to do this is by issuing a Section 21 notice. This type of notice is sometimes referred to as a ‘no fault’ notice, given that the landlord does not have to provide a reason for the notice. In this sense, it differs from a Section 8 notice, which requires the landlord to have a legal reason, or ‘ground’, for the notice that they can prove in court.
Below are the minimum notice periods for Section 21 notices that have applied during the pandemic:
Section 8 notices, meanwhile, are mostly commonly used by private landlords for rent arrears. They can also be given for other reasons, such as antisocial behaviour. Once the notice period ends, you will be entitled to take court action. You will need to begin court action within a year of giving the notice – otherwise, the notice will expire.
Below are the minimum notice periods for Section 8 notices issued in relation to rent arrears, given on or after 1 August 2021.
Some less common types of tenancy or occupancy agreement, meanwhile, can be ended using what is known as a ‘notice to quit’. This procedure can only be used to end a rolling agreement – for instance, a monthly or weekly agreement – and you will still have to apply to court if your tenant doesn’t leave by the time the notice ends.
A ‘notice to quit’ must satisfy the following conditions:
As the term suggests, landlord insurance is a type of insurance designed to give a landlord financial protection against the risks arising from renting out their property to tenants. It is similar to home insurance, but is designed specifically with rental properties in mind.
There are three main types of landlord insurance: buildings, contents and liability insurance. However, there are also various add-ons – such as loss of rent and tenant default insurance – that you may wish to purchase to further protect yourself as a landlord, depending on your situation and circumstances.
The most common types of landlord insurance can be defined as follows:
Buildings insurance, which covers the cost of any damage to your property’s structure. This can also include the cost of rebuilding the home entirely if it has sustained irreparable damage.
Landlord buildings insurance typically covers against such sources of damage as theft, vandalism, malicious damage, lightning, storm, subsidence and burst pipes
Contents insurance, which covers the cost of repairing or replacing fixtures and fittings such as furniture, carpets and electrical items. Landlord contents cover can be taken out as its own policy, or as an add-on to a buildings insurance policy. How much contents cover you will require will likely depend on whether you’re renting out a furnished or unfurnished property
Liability insurance, which covers you in the event of your tenant or a visitor sustaining an injury in your rental property. This type of landlord insurance is also often referred to as public liability cover and helps to protect you legally and financially if unforeseen accidents occur
While landlords in the UK are not legally required to take out landlord insurance, it is important that landlords at least consider the protection the right landlord insurance policy can provide. After all, a rental property is likely to be one of the biggest investments you ever make, and regular home insurance might not provide the protection you require.
Life as a landlord is a highly specialised endeavour, with very particular and often complex needs. It is therefore crucial to consider how dedicated landlord insurance could help give you important financial security and peace of mind.
The amount that you spend on landlord insurance will naturally largely depend on the level of cover you choose. This, in turn, will be largely dictated by such factors as your property and tenants. As is the case with any other type of insurance, the insurer will determine the cost of your insurance – otherwise known as the ‘premiums’ – on the basis of how likely you are to make a claim, as well as the possible cost of any such claim.
As a landlord, provided that the tenancy is an assured shorthold tenancy that began after 6 April 2007, you are required to put your tenant’s security deposit in a government-approved tenancy deposit scheme (TDS).
In England and Wales, your tenant’s deposit can be registered with one of the following schemes:
You must put the deposit in one of these schemes within 30 days of getting it.
When the tenancy comes to an end, you are required to return the deposit to the tenant within 10 days of the two of you reaching an agreement on how much you’ll give back.
If you and the tenant end up in a dispute over this, the deposit will continue to be protected in the tenant deposit scheme until the issue is resolved.
This question is not always as straightforward as many people assume. Council tax is payable on all domestic properties across England and Wales, and, as a broad principle, it is the occupant who is responsible for paying it; however, this isn’t always the case.
In the general ‘hierarchy of liability’ on who pays council tax on a rented property, a resident tenant on an assured tenancy agreement ranks higher than the owner of the property who doesn’t live there. In the majority of cases, then, it is the tenant who is expected to pay the council tax bill. There are also, however, some instances in which it may be the landlord’s responsibility to pay council tax on a given rented property. These include if any of the below conditions apply:
Another example of the aforementioned hierarchy not applying is when the rented property is a house in multiple occupation, or HMO, with the tenants all paying rent in accordance with their own separate tenancy agreements. In this case, it is technically the property owner – the landlord – who is responsible for paying the council tax. In practice, however, it is common for the landlord to simply adjust the rent they charge to their tenants to cover this cost. Alternatively, the property in question may have multiple tenants, but they may be renting the entire property on a single, joint tenancy agreement. In this instance, these tenants are regarded as jointly liable for the council tax bill. During times when a rental property is unoccupied with no tenants in residence, it is the landlord who becomes responsible for paying council tax on the property. Local authorities are entitled to decide how much of the council tax bill to charge.
It wasn’t unheard-of not so long ago for councils to offer landlords a 50% discount on their council tax bill when their property was empty. However, this has become less likely amid concerns about ever-increasing numbers of empty properties in recent years.
Overall, as a landlord, you are advised to make clear in the tenancy agreement who will be responsible for paying council tax during the tenancy. You will also need to budget for paying this tax during the times the property is unoccupied.
For further advice in relation to council tax and the related aspects of owning and managing a rental property, please don’t hesitate to contact our experts in Burnley, Ramsbottom or Radcliffe.
This is one of the most common questions asked by both landlords and tenants, and the short answer is: no, subject to certain exceptions. Of course, there are various reasons why you may need to gain access to the rental property you own from time to time during the tenancy. UK law allows you, for instance, to conduct regular inspections of your property to check that the tenant is maintaining it well. You are also legally compelled to undertake yearly inspections of your property’s gas installations, so that you can determine their safety.
However, it is also important to appreciate that in making the decision to rent out your property to someone else, you are consciously granting this person the right to make a home in that space. Renting your property from you gives the tenant exclusive rights to make it their own, and this includes setting the rules by which all others must abide – including entry. This means that, in principle, the tenant has the right to control who enters the house during their period of occupancy – and the actual landlord of the property is also subject to this condition.
In summary, the law states that the landlord is not permitted to enter the property without permission in the UK. Even if the tenancy agreement sets out that the landlord may be allowed to enter the property without permission in special circumstances, this is irrelevant in the eyes of the law, as the tenant has the statutory right to decide who enters their rented premises. Specifically, the tenant holds a statutory right to live in quiet enjoyment, which means they are entitled to live peacefully in the property they are renting, without disturbance.
The above doesn’t, of course, prevent a landlord from ever entering their rental property during the duration of the tenancy agreement. They are legally able to do so if they serve the tenant a written notice, at least 24 hours before the landlord wishes to enter the given property.
If the tenant is comfortable with this request, they may simply allow the landlord to enter. However, they do also have the right to deny the request, especially if the landlord wishes to enter the property at a time that would be inconvenient for the tenant.
If the tenant does deny entry to the landlord, the landlord may decide to negotiate with the tenant on the terms of entry. If you end up in this situation with a tenant, you may provide them with a compelling reason as to why you need to access the house, and make clear the downsides of the tenant refusing entry to you. You may alert the tenant to the risks of a fault in the property not being fixed in time, or you may hold the tenant responsible for costs arising due to the tenant refusing to allow you into the property to carry out repair work.
It is also worth noting that there are some situations when the landlord is able to demand entry to the tenant’s home, even without prior notice. This includes emergency situations that would not give the landlord the luxury of allowing the 24 hours’ notice period after issuing a written notice. Examples of such circumstances, in which the landlord entering the property without permission would not be considered punishable by law, include:
If you have any questions about your rights as a landlord in the above situations or others, please don’t hesitate to contact one of the leading letting agents here at JonSimon Estate Agents. We have branches in Burnley, Radcliffe and Ramsbottom in Bury, so if you are a landlord or would-be property investor in the North Manchester area, there is sure to be an office near you.
It’s easy to be confused about what exactly the technical definition of a landlord is – and therefore the circumstances in which you would need to adhere to legislation targeting landlords. However, the Health and Safety Executive (HSE) succinctly defines a landlord as “anyone who rents out a property they own under a lease or licence that is shorter than seven years.”
The UK government agency also lists various types of accommodation where landlords’ duties would apply. The listed examples include residential premises rented out by:
You would also count as a landlord if you let out individual rooms – such as in bedsit accommodation, private homes, hotels and bed-and-breakfast (B&B) accommodation.
As a landlord, you would also have the option of making holiday accommodation available for rent. Examples of this type of accommodation include:
If you are considering renting out a property, you should remember the HSE’s broad definition of the word ‘landlord’ as you discern whether UK law pertaining to landlords would apply to you.
If you are considering renting out a property, this could be for several reasons. Perhaps you are struggling to sell that property but reckon many people would be interested in renting rather than buying it, meaning you could at least get some rental payments trickling in.
Alternatively, maybe you were thinking of selling that property to help fund your purchase of a new one, but you remain unsure whether you should make that leap permanent. Renting out your old property could financially enable you to ‘test the waters’ of a new one before committing to it.
Whatever your reasons for wanting to rent out your existing property, the process of doing so would generally entail you following these steps:
If you are considering renting out housing, you could be pleasantly surprised by how much demand exists for it. There are various types of housing you could make available as rental accommodation – and which of those types you should choose will depend largely on the local market.
For example, if a university is based nearby, you could rent housing out to students. Many students opt to move into a university-owned residence or private rented accommodation – particularly houses in multiple occupation (HMO). A HMO is a home rented out to three or more tenants who aren’t all from the same family.
Other forms of housing you could seriously consider offering in the rental market include sheltered housing. This is often reserved for older people or people with disabilities, and it tends to comprise self-contained flats or bungalows.
Therefore, how exactly you should rent out a house could largely depend on what type of house it is. If you wanted it to serve as sheltered housing, for example, you might need to carefully adapt it beforehand – such as by having an alarm call system fitted.
If the house you are considering renting out is one you own and live in as an individual, rather than a house you have added to a portfolio of properties owned by a business you run, this can have implications for how you should go about renting out the property.
For example, if you want to let out your existing residence because you are about to move into your partner’s home but you can’t be certain that you will stay there for a particularly long time, you could continue to own your old house but temporarily rent it out while you live in the other home.
It would be vital for you to determine whether HM Revenue & Customs (HMRC) would class you as running a business if you were renting out your house. HMRC would take into account such factors as how much revenue you make from being a landlord and whether this is your main job.
If HMRC reaches the conclusion that your activities as a landlord indeed constitute a business, you could have to pay Class 2 National Insurance contributions.
Yes, as you could become a ‘resident landlord’ – the term used for a landlord who lets out part of a property they use as their only or main home.
If you only occasionally let out part of your home, such as through short-term rental apps, you should investigate whether you need to inform HMRC about this additional income.
In any case, as a resident landlord, you would be required to keep the property safe and in a good state of repair. You would also have a number of additional rights not usually available to landlords.
For example, you would be able to set the agreed rent without a tenant or lodger having the option of challenging it. Furthermore, when you want to end a letting, you can give less notice than would be the case if you were renting out the property as a whole.
You may also be able to yearly earn £7,500 in tax-free rent through the Rent a Room Scheme. People running B&Bs and guest houses are also eligible to join the scheme.
The short answer is: possibly. You might only be interested in renting out your house temporarily – for example, if you are about to embark on a lengthy trip or relocate for work. Through renting out your house in this situation, you could more easily pay your mortgage while you are away.
If you tell your current mortgage lender – i.e. the person who originally gave you your average, residential mortgage – that the house will only be rented out on a short-term basis, the lender might be willing to give you something called ‘consent to let’.
This would basically grant you permission to rent out the residence for a specific period of time without having to sacrifice your current mortgage. However, there is no guarantee that the lender would give you this consent – and there wouldn’t be any chance of you receiving it if you sought to rent out the home permanently.
So, if you do find yourself denied ‘consent to let’, you would only be able to change that if you switched to a buy-to-let mortgage – whether from your current lender or a different one.
Let’s assume you currently live in the Lancashire town of Burnley, where one of the JonSimon Estate Agents offices is based. However, you might have received an exciting job offer from a Manchester-based company, potentially leading you to consider relocating to the Greater Manchester area to help prevent yourself from struggling with the commute for your new job.
You could soon start eyeing houses for sale in Radcliffe, Ramsbottom and Bury – three Greater Manchester areas where we also have offices. Fortunately, it would indeed be possible for you to turn your existing home into a rental property and buy another property to live in.
This process is called ‘let to buy’ and would see your original residential mortgage on the first property turned into a buy-to-let mortgage, with the cost of this being met by the rental income. Meanwhile, for your second home, you could take out a residential mortgage and fund this through the combined salaries of members of your household.
The term ‘shared ownership’ refers to a system where you buy a share of your home – up to 75% of its value – and pay rent on the leftover share. Unlike what the term might suggest, you don’t have to share the property with someone else.
Shared ownership is therefore an attractive prospect for people unable to purchase a property outright. Shared ownership is typically arranged through non-profit organisations (NPOs) known as registered providers (RPs), but it also comes with a range of terms and conditions.
These include that, usually, shared ownership does not entitle you to rent out the property – a practice known in this context as subletting. This is because it wouldn’t be in the spirit of the shared ownership scheme, which is government-funded and meant to help people get onto the property ladder.
However, you could find that the RP from which you have sourced your shared ownership property is, in very exceptional circumstances, able to grant you permission to sublet – albeit with many conditions attached.
Most RPs offering shared ownership properties will only allow them to be rented out in exceptional circumstances. If you think you have circumstances that would warrant you subletting your home, you should communicate those circumstances to the RP.
Even then, however, you must not rent out the property until you have the RP’s permission in writing. Don’t be surprised if the RP insists on you subletting only for a limited period, like six months, and not subletting on a commercial basis – for example, as a holiday let or Airbnb.
You should also expect a requirement for the tenancy agreement to mirror your shared ownership lease in terms of how the tenant is allowed to use the property. For example, if you are not permitted to have pets in the property, the same restriction would apply to this new tenant.
It is often easier to rent out one room of a shared ownership home to a lodger – though you should first check if you need the RP’s permission to do so. You would also be required to undertake a right to rent immigration check on anyone you would like to welcome into the property as a lodger.
The Help to Buy government scheme is specifically intended to help first-time buyers afford a property. The scheme works by offering an aspiring house buyer an equity loan for funding the purchase of a newly built home, which must consequently serve as the buyer’s main residence.
This means that the loan can’t be used to acquire a property for buy-to-let purposes. You could initially purchase a Buy to Let property as your main home but, later down the line, decide that you would like to start renting out the property – perhaps because you are interested in relocating.
However, you might not actually be able to rent out that property, as the above-mentioned situation would typically require you to fully repay the equity loan first. Otherwise, your Help to Buy agent would need to provide you with written permission for you to rent out the property.
In practice, this permission is only likely to be granted in exceptional circumstances, such as if you are away on duty as a member of the armed forces. You should also heed that your Help to Buy agent could classify even having a lodger in the home as renting it out.
As an estate agency covering Greater Manchester, we can help you to buy a flat in the local area – for example, in Ramsbottom or Radcliffe, both market towns where we have offices in the Metropolitan Borough of Bury.
However, if you do obtain or have obtained a local flat with or without our help, that flat is likely to be a leasehold – rather than freehold – property. In other words, while you would own the property, the land on which it is built would likely be owned by the freeholder.
That person would be either the builder or a company to which they have sold the freehold. Furthermore, there would be a set limit to the length of time for which you own the property. If your lease expires, ownership of this property will be handed to the freeholder.
Hence, renting out a leasehold property would technically be subletting, which many leases don’t allow. Reassuringly, though, the freeholder might be willing to let you sublet if you first request permission from them to do so. You might also need permission from your mortgage lender.
Most retirement properties are sold on a leasehold basis. To buy a retirement property, you would need to satisfy particular criteria – which, for any given retirement property, could depend on your age, if you would like to keep a pet at the home and how often you want family to stay with you.
Befitting the term ‘retirement property’, these properties are intended largely for people who are retired and, though still capable of living independently, need a little extra care from time to time. However, people who are simply of retirement age can also buy a retirement property.
Whether you are able to rent out a retirement property after buying one will depend on the lease. Many leases on these properties will allow them to be rented out as long as the freeholder has been notified, though you might also need to pay a consent fee.
You could find that the lease only permits you to rent out the property to people over a specific age. If you are looking for a buy-to-let retirement property, an estate agent from our team could help you to find the right retirement property for sale in Burnley or the Metropolitan Borough of Bury.
The government’s Right to Buy scheme can provide council tenants in England with financial support enabling them to buy their council house. However, you would likely still need to take out a mortgage to fund the purchase – potentially leading you to consider a buy-to-let mortgage.
The terms of Right to Buy dictate that, if you buy a council house through the scheme, you must use this home as your main residence for at least five years before you can rent out the property.
Therefore, you could opt to use a residential mortgage to fund the property purchase and then, once the five-year period has elapsed, remortgage on a buy-to-let basis – enabling you to finally start renting out the property.
However, as remortgaging an ex-council house in this way can be a complex endeavour, we urge you to consult a property agent from our team so that you can learn about potential pitfalls.
So, you have gone through various steps of becoming a landlord – like researching the local property market and letting agencies, calculating renting costs and getting in touch with a mortgage lender. However, you would face various responsibilities as a landlord – including:
These are all rules that apply in England – including the North Manchester area and surrounding areas, like Burnley, where we can help landlords to find new buy-to-let houses, flats and apartments for sale. You should be careful to look up the specific rules for Scotland or Northern Ireland if you are researching estate agencies in either of these territories.
It would be illegal for a landlord to do this on a property without the tenant’s permission, as the law states that the tenant has a right to quiet enjoyment of their home – no matter how difficult your relationship with the tenant might be.
Even if a tenant – after you have served them with an eviction notice – refuses to leave the property or pay you rent you are owed, you must adhere to the correct legal procedure for evicting them. If you change the property’s locks to keep the tenant out, you will be guilty of an illegal eviction.
To legally evict a tenant who has stopped paying rent, you should:
The circumstances are slightly different if you live at the property, you share a kitchen and bathroom with the tenant or the tenant does not need to pay rent for the accommodation.
In any of these three situations, you should give the tenant reasonable notice to vacate the property. If they do not leave after this time, you will legally be able to change the locks, as the tenant would now technically be a trespasser.
Exactly what types of problem you, as the landlord, would have to fix will depend on what is specified in the rental contract. However, when a tenant rents a home privately, the landlord would be responsible for most major repairs to that property – including to:
There is no specific law indicating how quickly a landlord should complete minor repairs for which they are responsible. However, the Retaliatory Evictions and the Deregulation Act 2015 requires landlords to repair major problems within two weeks of the tenant notifying the landlord about these problems if they threaten the tenant’s health and security.
If the landlord does not rectify the problem in that 14-day period, the tenant should report the situation to the local authority to bring about enforcement action.
In your day-to-day work as a landlord, you are bound to incur various expenses – like those of finding new tenants right through to property maintenance costs. The good news, however, is that you can claim tax relief on many of these expenses.
Tax-deductible expenses for landlords include but are not limited to:
You would only be able to claim tax relief on expenses incurred entirely due to renting out the property. For example, if you rent out just one room of it, you wouldn’t be entitled to tax relief on the cost of cleaning services only provided elsewhere in the property.
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