What is a landlord?

A landlord is someone who lets out a property for tenants to live in and receives rent payments in return.

People who do this in the private rented sector are known as private landlords.

They must stick to rules laid out in the Landlord and Tenant Act 1985 and the Housing Act 1988.

According to the Office for National Statistics (ONS), the number of households living in the private rented sector in the UK went up from 2.8 million in 2007 to 4.5 million in 2017. That’s an increase of 1.7 million (63%).¹

Some landlords let one or more rooms to lodgers in the property they live in. They’re known as live-in landlords.

Most landlords let a whole property to tenants and live somewhere else. They have different rules to live-in landlords.

This guide applies to landlords who let a whole property.

There are several reasons why you might become this type of landlord:

  • you might buy a property with the intention of letting it and making money

  • you might let a property you previously lived in, while you live elsewhere

  • you might inherit a property and let it

Landlords who own multiple rented properties are known as portfolio landlords.

How much does it cost to be a landlord?

Unless you own the property outright, your biggest cost as a landlord will be the mortgage on the property.

You could keep your residential mortgage if you only want to let your home for a few months.

To do this you’d need permission from your lender, which is known as consent to let. Your lender might charge you a fee for this, as well as increase the interest rate for the period.

If your lender will not give you consent to let, you’ll need to switch to a buy to let mortgage

This type of mortgage is designed for landlords.

You tend to need a bigger deposit for a buy to let mortgage. 

Buy to let mortgages usually have  bigger arrangement fees and higher interest rates.

You can read more about buy to let mortgages in our guide.

Other landlord costs include:

  • maintenance

  • repairs

  • insurance

  • tax

  • letting agent’s fees

  • ground rent and service charges (if a leasehold property)

  • licensing

  • annual gas safety checks

  • smoke and carbon monoxide alarms

  • deposit protection fees

  • eviction costs

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A landlord’s responsibilities

Landlords have a number of responsibilities.

As a landlord you need to:

  • keep the property safe and free from health hazards

  • provide an Energy Performance Certificate (EPC) for the property

  • make sure all gas and electrical equipment is safely installed and maintained

  • protect your tenant’s deposit in a government approved scheme

  • check your  tenant’s immigration status under Right to Rent rules

  • give your tenant a copy of the ‘How to rent’ checklist ²

  • give your tenant a copy of the Assured Shorthold Tenancy (AST) agreement

  • make repairs to the property

  • provide smoke alarms and carbon monoxide detectors

  • only end tenancies under the rules set out in the Housing Act 1988

A landlord's rights

As a landlord you have the right to:

  • enter your property to inspect it or carry out repairs, but you must give 24 hours’ notice

  • enter the property in an emergency

  • receive the rent as agreed in the tenancy agreement

  • increase the rent once a year 

  • repossess your property at the end of a fixed term tenancy if the correct notice period has been given

  • bring a tenancy to an end, using conditions laid out in the Housing Act 1988

  • sell the property

Do I need landlord insurance?

There are several types of insurance you might need as a landlord:

The cost of landlord insurance varies depending on the:

  • type of cover you buy 

  • size of the property

  • location of the property

You should always compare landlord insurance before buying a policy.

How much tax do landlords pay?

As a landlord, you pay income tax on the profit you make from your rental property.  

Your profit is how much you have left once you’ve added together your rental income and taken away the cost of expenses and allowances. 

These might include:

  • maintenance and repairs costs

  • letting agent’s fees

  • landlord insurance

You can also take away a part of the interest you pay on your buy to let mortgage, although this relief has been reduced to basic rate tax (20%). 

Your rental profits are taxed at the same rates as income you receive from your job. 

This is 20%, 40% or 45%, depending on which tax band the income falls into.

You’ll usually need to fill in a self assessment tax return if you earn money from letting a property.

In most cases your tenant is responsible for paying council tax.

The main exception to this is if you let a House in Multiple Occupation (HMO) on a per room basis.

In this kind of rented property bills, including council tax, are normally included in the rent.

Before you start

How to register as a landlord in England

Currently, not all landlords in England have to be licensed or registered.

This is because different councils take different approaches to landlord registration.

Some local authorities require all landlords in certain areas to be licensed, so check with your local council.

Wherever you are in England, if you let a HMO you’ll need a licence from your local authority.

Landlord registration is compulsory if you let a property in Scotland or Wales.

Landlord checklist

  • make sure the rental property is safe

  • have the right type of mortgage

  • have an up to date EPC

  • reference and credit check your tenants

  • use an assured shorthold tenancy (AST) contract

  • protect your tenant’s deposit

  • decide if you need landlord insurance

  • pay the right amount of tax

  • understand eviction procedures

  • obey licence rules

  • decide if you need to use a letting agent

  • consider joining the National Residential Landlords Association

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Sources

¹   ONS: Home Economy Inflation and price indices.  UK private rented sector: 2018

²  GOV.UK: Guidance - How to rent