Transgressing the law or local regulations as a landlord could result in you ending up in serious trouble.
Don’t assume that this is just bureaucracy. The authorities will come down very hard on landlords who transgress the rules.
This brief article will highlight some of the main issues you need to be aware of but keep in mind that this is not qualified nor comprehensive advice. You should follow it up with some in-depth research of your own.
What is a landlord?
The first point to be aware of is that it might be easier than you think to become a landlord.
All you need to do is to start earning income through letting out all or part of your property and you’ve automatically joined the fraternity of landlords. That means you need to quickly learn about your responsibilities and comply with various rules.
Note that this applies even if you’re letting out a single room in your own home or only letting a property for a short period each year.
Your taxation obligations
Any income you obtain must be declared as part of your overall income and associated taxation calculations.
What that means in terms of your tax liabilities will depend upon the nature of your overall financial position.
This is a very important area and not one to overlook.
A critical first concept to grasp is that any owner-occupier insurance you might have on your property typically will become invalid the moment you start obtaining rental income from your property. To ensure continuity of protection, you will need to purchase specific landlord’s insurance.
If you have used any form of loan to help you purchase the property, such as a buy-to-let mortgage, you’ll typically find that a condition of the loan agreement is that you maintain full buildings cover at all times. If you fail to do so, including by trying to use invalid owner-occupier policies, you may find yourself in breach of contract.
Local authority regulations
This is one of the areas where it is difficult to be precise as where you live will have a big effect on what, if any, local authority regulations apply to you.
The regulations may be different between England, Scotland, Wales and Northern Ireland. There may also be variations between the rules in different local authority areas within the countries themselves.
Perhaps the best advice is to contact your local council or equivalent before starting your business and check what their requirements are for landlord businesses including whether or not mandatory registration is required.
Although not limited to landlord properties, remember that if you’re planning to make significant changes to a property to support your business plans then you may need one of the many different forms of planning permission now required before changes are made.
That might particularly apply in situations where the property is listed or is located in a conservation area etc.
The law of the land also makes certain demands of landlords.
Whilst it’s important to remember that there may be legal differences between Scotland, Northern Ireland and England & Wales, some of the following points may be broadly common:
- you must provide a safe environment for your tenants. This isn’t just a question of what you think is safe – some elements are laid down by law. That includes regular gas safety inspections, electrical safety compliance and so on;
- your property must be fit for human habitation. That includes achieving certain minimum levels of occupancy space per person, sanitation standards and similar;
- the tenant’s deposit must be placed into the custodianship of an approved scheme. You cannot any longer just put it into your own bank account;
- the way you conduct your business relationship with your tenants is also governed, in part, by the law. For example, you can’t simply evict them based upon a whim – there is an established procedure laid down that must be complied with. Essentially the rights of your tenants are protected.
Cover4LetProperty have an excellent and more detailed summary of some of the above points. It might be well worth consulting.
It’s also worth noting that different types of landlord’s business and property might be governed by different regulations.
For example, if you have a property with multiple tenancies within it, you may find that you’re typically regarded as what’s called House in Multiple Occupancy (HMO).
You can find out more about HMOs from the government’s website.
Your mortgage lender
Your obligations to the lender in terms of insurance have been touched on above but you should also keep in mind one or two other potential complexities:
- if the property you’re purchasing is leasehold, in some situations you may need the freeholder’s permission to use the property to generate rental income;
- if you have an owner-occupier mortgage and start using the property for letting purposes, you will typically need to obtain the lender’s permission first.
The position here is slightly complicated by the multiplicity of potential combinations of different providers, contracts and who-pays-for-what arrangements.
However, broadly speaking it might be sensible to make sure that the providers of any utility services to your property are aware that it is tenanted.
The conduct of your business
This is an odd category as it technically covers many of the above domains but it also crosses them so it’s worth stating separately.
Ultimately, as a landlord you will be held accountable for conducting your business in a professional and reasonable fashion.
That might include things such as responding to tenant concerns in a timely and effective way – for example dealing with faults and repairs etc. Although the specifics of this might not be laid down in the minutiae of the law, that doesn’t mean that a court or tribunal wouldn’t find against you in a dispute with your tenants.
So, make sure you manage and run your landlord business in an exemplary fashion at all times – providing a service to your tenants that you would expect to receive if you were one yourself.Read More →