Landlord Legal Requirements for First-Time Investors
While renting out a property can bring financial rewards, failing to carry out the legal requirements can put your tenants’ safety at risk and result in large penalties or even prosecution.
If you’re a first-time landlord or thinking of letting a property in the future, this article will highlight the obligations you need to be aware of.
Make sure the property meets safety standards
Landlords must ensure their tenants are safe when in the property. This means they have to:
- Install a smoke alarm on each floor of the property, even where only one room is located. These must be tested by the landlord or letting agency on the first day of the tenancy.
- Install carbon monoxide detectors in rooms with a coal fire, wood burning stove, or where biomass is used as fuel.
- Ensure that all gas appliances (permanent or portable) and flues used by the property undergo regular gas safety checks. The checks must be carried out by a Gas Safe registered engineer every 12 months and you must keep a record of all gas safety tests. You must also provide your tenants with a gas safety certificate for each gas appliance in the property.
- Ensure all furniture meets safety standards and displays appropriate labels to reduce the risk of fire.
- Test all electric devices with an Installation Survey or Portable Appliance Test (PAT) to ensure they are safe for use.
- Ensure the water supply is working properly to protect tenants from legionella. Most landlords can assess the risk themselves and do not need to be professionally accredited. The HSE and Local Authority do not inspect the water supply, but should a tenant become ill from legionella disease the landlord will be liable.
- Ensuring the property is fire safe and tenants have access to escape routes at all times. If there is only one door to the property, windows must be able to be fully opened as an escape route.
Repair and maintain the property
As well as keeping the gas, water and electrical equipment in safe working order, Landlords are also responsible for most exterior or structural repairs.
This includes any issues with the roof, chimneys, walls, guttering, drains, windows and leaks within the property.
Provide an Energy Performance Certificate
An Energy Performance Certificate (EPC) is a report detailing the properties’ energy efficiency. It provides a rating from A (most efficient) to G (least efficient) and helps tenants understand the energy consumption of the property and determine roughly what their energy bills will be.
The EPC is required for the property before it is let and should also be included in the marketing of the property. You will need a registered domestic assessor to provide the EPC and it is valid for 10 years.
From April 2020, Landlords will have to ensure the property meets the Governments’ new Minimum Energy Efficiency Standards (MEES) by having a rating no less than E.
The MEES mean that landlords can no longer rent out homes with an EPC rating of F or G, and those who continue to do so face fines up to a maximum of £5,000.
Register as a Landlord
Landlord registration is designed to protect tenants from ‘rogue’ landlords and provides tenants with up-to-date information regarding landlords and their properties.
If your rental property is in Scotland, Northern Ireland, Wales, and in some parts of England, you will need to register as a landlord.
There are different schemes in place throughout the UK, so it’s important to check with your local authority and make sure you comply with the local requirements.
Understand your HMO responsibilities
If you let to three or more sharing occupants that are not part of the same family but share a communal facility such as a kitchen or bathroom, this type of property is considered as a HMO (Houses in Multiple Occupation).
As well as the standard landlord responsibilities, you must also comply with HMO regulations. This includes:
- ensuring smoke detectors are installed.
- checking electrics every five years.
- ensuring that the property is not overcrowded and that rooms meet the minimum room size. There should be a separate room for sleeping for each couple, each single person over 21, and for every two young people aged over 10 years.
- providing adequate cooking and washing facilities for all tenants.
- ensuring that communal areas and any shared facilities are clean and in good working order.
- contacting your local council to determine whether a HMO licence is needed. If not, you could risk a fine of up to £20,000.
Clarify the Tenants Right to Rent
Landlords must prevent illegal immigrants from entering the private rented sector. Renting to illegal immigrants can result in an un-capped penalty and up to five years in prison.
Before providing a tenancy agreement, you must check that the tenant is legally allowed to live in the UK, even if you assume they are British citizens.
This can be done by asking the tenant for documents to prove they can live in the UK, such as a passport, or using the Landlords Checking Service.
Renting to illegal immigrants can result in an un-capped penalty and up to five years in prison.
You can find out more about who you can rent to, here.
Protect the tenant’s deposit
As a Landlord you must protect the tenants deposit within a government- approved Tenancy Deposit Scheme (TDS).
This protects the tenant’s money in the event of a dispute at the end of the tenancy, and also provides some protection for you should damage be caused to the property by the tenant or there is unpaid rent. If you are using a letting agent to manage your property, confirm they will use a scheme to protect the tenants deposit.
Provide the tenant with information
Your tenant must be provided with your full name and address, or the letting agents’ details. And if your property is in England, you must also provide your tenant with a copy of the Government’s How to Rent Guide which provides practical advice on living in a rented property.
Provide notice to access the property
Although you own the property and are obliged to make sure it meets safety standards, you cannot simply enter it whenever you want.
Landlords must provide a minimum of 24 hours’ notice in writing before they can enter the property. Any visits must take place at ‘reasonable’ times of day so the tenant can be present or arrange for a third party to be there, if they wish.
Pay the correct tax
As a landlord, you must pay tax on any profit you make from renting out property, regardless of whether you live in the UK or not. The rate of tax you pay depends on your total income for the year including any income from employment, self-employment or pensions.
If your income is £2,500 to £9,999 after allowable expenses or £10,000 or more before allowable expenses, HMRC will ask you to report your profits on a self-assessment tax return.
If HMRC ask you to send in a tax return you must give details of your rental income and expenses for the tax year even if you’ve no tax to pay.
You can work out the rental income and payable tax for your rental property here.
Take out the correct insurance
While it’s not a legal requirement in the UK, you should consider landlord insurance to protect you in the event of a dispute with a tenant. Additionally, some mortgages will require you to take out landlord insurance before approving your application.
Going without a policy means you’ll have to cover damages yourself, which includes fire, flooding, theft, vandalism, and much, much more. And if you fail to provide your duty of care as a landlord, you can be sued for quite a substantial amount.