What is a landlord?

A landlord is someone who lets out a property for tenants to live in. They pay rent in return.

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

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

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 This data is from the Office for National Statistics (ONS).

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.

You might become this type of landlord to:

  • make money by buying a property and letting it

  • let a property you used to live in, while you live elsewhere

  • let a property you've inherited

Landlords who own more than 4 rented properties are portfolio landlords.

How much does it cost to be a landlord?

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

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. This is known as consent to let.

Your lender might charge you a fee for this. They may also put up 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 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.

More about buy to let mortgages.

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

A landlord’s responsibilities

Landlords have many responsibilities.

As a landlord you need to:

  • keep the property safe and free from health hazards

  • get 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. You must give 24 hours’ notice

  • enter the property in an emergency

  • get 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 you've given the correct notice period

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

  • sell the property

Do I need landlord insurance?

There is insurance you might need as a landlord including:

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.  

To work out your profit, add your rental income up and take 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. This relief has been reduced to basic rate tax (20%). 

Your rental profits are taxed at the same rates as income you get 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.

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

To work out your profit, add your rental income up and take 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. This relief has been reduced to basic rate tax (20%). 

Your rental profits are taxed at the same rates as income you get 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.

Before you start

How to register as a landlord in England

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

Different councils take different approaches to landlord registration.

In some areas, all landlords must be licensed. Check your local council to see if you do.

If you let a HMO you’ll need a licence from your local authority wherever you are in England.

You must have landlord registration if you let a property in Scotland or Wales.

Landlord checklist

  • Make sure the rental property is safe

  • Get the right type of mortgage

  • Get 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