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Please note that, unless otherwise stated, the contents of this page apply only to properties covered by the law of England and Wales, and is provided for general guidance only. Whilst every care is taken in compiling the answers Simply Rent cannot assume any legal responsibility for any inaccuracies, or for any loss or damage resulting from such inaccuracies, and readers should seek professional legal advice if necessary.

1. Should I let my property?

There are many reasons why owners consider letting their properties. The most common reasons include:

can't sell: owners often want to buy another house but can't sell their existing house at the right price or quickly enough to stop a chain breaking down, possibly because it's a buyer's market at the time
won't sell: many owners want to move but don't want to sell their house because they (or their family) might want to return or because prices are too low at the time
spare property: a property may become unoccupied, either temporarily or permanently, owing to the illness or death of a member of the family
investment: letting properties can often be a good short or long term investment with gross returns of around 10%

It costs money to keep a property empty in mortgage payments, council tax, fuel bills (or at least standing charges), insurance and dilapidation, and there is a continual risk of vandalism, squatters and complaints from neighbours.

If you let your house the rent should cover your bills and leave you a profit. Let it for long enough and you'll be able to pay off the mortgage and still have the house and an income. You can get your house back whenever you need it. You can charge any rent you agree with the tenant. The house will be kept heated, cleaned and maintained. With proper checks you can make sure that the tenants will pay the rent and look after the property.

2. Do I need to employ a letting agent?

No.

However, a professional Letting Agent can ensure that you avoid the problems that can occur if you do not follow the correct procedures, and can save you the time, trouble and hassle of managing the property yourself. A Letting Agent may also have access to tenants you would otherwise be unaware of.

A Letting Agent should also be able to ensure that you meet the regulations regarding Tenancy Deposits.

Letting Agents usually provide a range of services from a "full management service" to a "let only" or just a "tenant finding" service.

3. What questions should I ask a letting agent?

If you are thinking of employing a Letting Agent some of the questions you should ask are:

what fees will the agent charge?
what services will be provided for these fees?
does the agent earn any other commission or fees (eg commission on insurance or repair work)?
do the fees include the cost of legal work if it is necessary to take action against a tenant?
does the agent belong to any regulatory or professional organisations?
how does the agent protect money held on behalf of landlords and tenants
how much notice would you have to give to terminate your contract with the agent?
how often will the agent visit the property?
how will the rent be paid to you?
how will the agent market the property?
does the agent have a register of tenants looking for properties, and links with local businesses?
will tenants have to pay the agent any charges such as adminstration and reference fees (this may put potential tenants off)?

Our answers to these questions are all detailed in our Services for Landlords page; alternatively we would be happy to explain them to you.

4. What is the law?

Since the introduction of the Housing Acts of 1988 and 1996 letting your property is easier and safer than it has ever been, providing you go about it properly.

The normal tenancy is now an Assured Shorthold Tenancy. These tenancies usually last for an initial fixed term after which they can be allowed to run on as Periodic Tenancies. They can be set up from the outset as Periodic Tenancies.

The tenant has security of tenure for the first 6 months (or longer if it is specified in the Tenancy Agreement), after which the landlord has an absolute right to possession at 2 month's notice. There is only moderate control over the rent that the Landlord can charge.

The benefits to landlords of Assured Shorthold Tenancies include:

landlords can charge any reasonable rent which is agreed with the tenant, and can increase the rent periodically
landlords have a guaranteed right to get their property back after 6 months by giving the tenant 2 month's notice
landlords can get their property back if the tenant owes rent, does not observe the terms of the tenancy agreement, or causes a nuisance to neighbours

In some cases the tenant may be a company (which rents the property for its employees to occupy). These tenancies offer similar rights to the landlord.

In April 2007 new regulations were introduced to protect Tenancy Deposits. No person or organisation can now take and hold a Tenancy Deposit unless they either belong to one of the two authorised insurance backed schemes or they immediately hand the deposit over to the authorised custodial scheme. The penalties for failing to comply with these requirements can be severe.

5. What was the effect of the Housing Act 1996?

The Housing Act 1996 is now fully effective. It modifies some of the effects of the Housing Act 1988, relaxing some of the regulations which previously applied to Assured Shorthold Tenancies. It requires the Landlord of an Assured Shorthold Tenancy to provide certain terms of the tenancy in writing.

6. What is a Section 19A Assured Shorthold Tenancy?

Section 19A of the Housing Act was introduced by the Housing Act 1996. New Assured Shorthold Tenancies are no longer regulated by Section 20 (see above) although existing Assured Shorthold Tenancies will continue in operation. Under Section 19A all new Assured Tenancies are assumed to be Assured Shorthold Tenancies unless they fall within one of the listed exceptions (one of which is that both parties agree it should not be an Assured Shorthold). The requirement to serve a Notice of an Assured Shorthold Tenancy (normally called a Section 20 Notice) no longer exists, and there is no minimum 6 month term, although there are restrictions on the landlord's right to possession within the first 6 months.

7. What is a licence?

A licence permits the licensee to occupy the property. If the property is transferred (by sale gift or death) the licence is not binding on the new owner. On the ending of a licence the landlord has an absolute right to possession.

8. What are the disadvantages of a licence?

Courts may declare a licence to be a tenancy, even if the parties have called it a licence. This may occur if, for instance, the licensee has exclusive possession of a part of the property or joint licensees sought accommodation together, particularly if they all signed the same agreement and the property would not accommodate anyone else who the landlord purported to introduce .

9. Are licences safe from a landlord's viewpoint?

Licences are only safe where:

the premises are capable of being shared by a group of people
the license agreement ensures that no person is given exclusive use of any part of the premises
the licensees are not seeking accommodation together and are not previously known to each other

10. Are oral tenancies valid?

Oral tenancies are valid providing that:

they take effect on the day they are granted
they are for a term not exceeding three years
they are granted for the best rent reasonably obtainable without taking a premium.

In all other circumstances they must be created by deed. It is always better to document a tenancy in writing so that there can be no doubt about the terms of the agreement. Note also that under the Housing Act 1996 it is mandatory for the Landlord of a new Assured Shorthold Tenancy to provide certain terms in writing.

11. What is a break clause?

A break clause in a lease or tenancy agreement allows either the landlord or the tenant (or both) to terminate a lease even if it has not run its full length. Under no circumstances should a break clause be exerciseable by a landlord within the first 6 months of an Assured Shorthold Tenancy.

12. Can I get my property back?

If you require possession of the property you would need to give as much notice as possible, but certainly not less than 2 months.

It is not normally possible to regain possession of the property within the first six months of an Assured Shorthold Tenancy. After that you can get your property back by giving 2 months notice, expiring on a monthly anniversary date of the commencement of the Tenancy.

If the tenant agrees to leave (if, for instance, they are offered suitable alternative accommodation) you can get your property back at any time.

13. What are the risks?

The main risks which a landlord faces are:

the tenant may not pay the rent
the tenant may not look after the property

It is usual for landlords to take a returnable deposit (or "bond") from the tenant as security against the tenant damaging the property or not paying the rent. This provides some protection to the landlord. The best protection for the landlord is a good relationship with the tenant, together with regular inspections to ensure that the property is well maintained.

14. What will I be responsible for as the landlord?

Landlords are normally responsible for:

repair and maintenance of the structure and exterior of the property including fixed drainage, plumbing, heating and hot water installations (including baths, sinks, toilets, etc)
the safety of the electrical installation and any electrical appliances provided by the landlord
the safety of the gas installation and gas appliances provided by the landlord, and completion of the statutory annual gas safety check
the safety of any furniture and furnishings provided by the landlord

15. What will I have to pay if I let my property?

Normal expenses incurred by a landlord are:

the mortgage
the buildings insurance (contents insurance is optional)
the annual gas safety check (if there is a gas supply to the property)
the agent's fees (if an agent is employed)
the cost of repairs (if any)

It is worth remembering that all the items listed above will normally be tax deductible (see below)

16. What are the tenant's responsibilities?

Tenants are normally responsible for:

paying the rent
paying the council tax, and the bills for water, electricity and gas (if installed)
looking after the property
repairing any damage which he/she (or a guest) causes

Tenants may be made responsible for:

maintaining the garden
internal redecoration when required

17. Can I place restrictions on the tenant?

Any reasonable restriction which you agree with the tenant and include in the Tenancy Agreement will be binding on the tenant.

Common restrictions include:

prohibiting pets in the property (eg cats and/or dogs)
prohibiting smoking in the property

Certain activities, such as carrying on a business from the property, should always be prohibited as they may invalidate the Tenancy Agreement if they are not.

18. Should I let my property furnished or unfurnished?

This is entirely a matter of choice, but some factors to take into account are:

whether a property is let furnished or unfurnished does not make much different to the rent which can be obtained, but it may make the property more easy or more difficult to let
many tenants (both professional and on benefit) have their own furniture, but tenants living elsewhere who are renting in order to have a base in the area will often require fully furnished properties
tenants renting unfurnished properties often stay longer that tenants renting furnished properties (unless they are renting while they look around for a property to buy)
furniture will sustain an element of fair wear and tear, however carefully the tenant looks after it
fully furnished property attracts a tax allowance of 10% of the gross rent (see "What about tax?")
furniture must meet the safety regulations, and should be maintained in a good condition

19. Do I have to change my mortgage?

Probably not.

You should check with your mortgage lender whether they will give you permission to let your property on a temporary or permanent basis as soon as you are thinking about letting your property, and you should obtain their permission before you actually let it.

If your mortgage lender will not give you permission there are many lenders who will give you a mortgage, often at normal rates of interest. Most of these will give you a mortgage to buy a property you intend to let as an investment.

20. Do I have to change my insurers?

Probably not.

You must tell the company that insures your property that you are letting it to a tenant. If you don't, and you need to make a claim, the company will be entitled to refuse your claim.

If your insurer does not agree to insure your property if it is let to a tenant there are many insurance companies which will provide insurance at normal rates.

21. Can I visit the property while it is let?

A landlord is entitled to visit and enter his/her property to inspect or maintain it at a reasonable time of the day and after giving reasonable notice to the tenant.

Except in an emergency, you should give at least 24 hours notice to the tenant and agree any reasonable alternative appointment suggested by the tenant. You should not normally enter the interior of the property without the tenant's permission, or visit the property too often, or you may be accused of harassing the tenant.

22. What would be my safety responsibilities?

You would be responsible for ensuring that the property is in a safe condition. You should take all reasonable care to ensure that the property is free of any defect which may present a hazard to any Tenant or visitor. If you have reasonable concern regarding the safety of the property you should obtain a specialist report.

The law does not expect landlords to be experts, but does expect landlords to exercise due diligence in ensuring that any property they let is safe. You would be expected to notice (and correct) such things as unsafe carpet edges (which may cause a tenant to trip and fall), insecure hand-rails, frayed electrical leads or bare wires, and incorrect fuse ratings.

There are specific requirements relating to gas and electricity and upholstered furniture:

Gas Safety
It is a legal requirement that any gas installation and each gas appliance provided by the landlord in rented residential property is checked once each year, and that a copy of the safety certificate is provided to the Tenant.
You can instruct any CORGI registered gas installer to complete the "Landlord's Gas Safety Check" and provide one copy of the certificate to you and one copy to the tenant.
Electrical Safety
Landlords owe a duty of care to tenants, and are responsible for ensuring that the electrical installation in rented properties, and portable electrical appliances provided by them, are safe. There are, however, no detailed mandatory checks specified by law.
The recommended method of ensuring that the electrical installation is safe is to obtain a "Periodic Inspection Report for an Electrical Installation" from a contractor approved by the NICEIC. The inspection should be repeated at the interval recommended in the report (often every 5 years).
The recommended method of ensuring that electrical appliances are safe is to have an electrical contractor complete a "Portable Appliance Test" (PAT) on each appliance. This test will ensure that each appliance and associated electrical lead is safe, and that the electrical plug has screened pins and is fitted with the correctly rated fuse.
Furniture and Furnishings
All upholstered furniture (excluding carpets, curtains, bed-clothes and furniture made before 1950) provided by the Landlord of rented residential property must comply with the Fire and Furnishings (Fire) (Safety) Regulations 1988.
You must ensure that any furniture you provide which is covered by the Regulations meets the requirements.

23. What about tax?

You should notify your local tax office as soon as you have let the property and are receiving rental income. You may wish to ask the tax office to send you a copy of booklet IR150 (Taxation of Rents).

Expenditure incurred "wholly and exclusively" in connection with the letting of your property is normally allowable against your rental income in working out your tax liability.

In simplified terms each item of expenditure generally falls into one of three categories:

Purchase and improvements: this includes the cost of purchasing, extending and improving the property. These expenses cannot be claimed as allowable expenses, but interest on loans taken out to fund the costs (for example mortgages) is allowable. This means, for instance, that all your mortgage interest is allowable.
Repairs and running costs: this includes allowable expenses (excluding the costs of purchase or improvement of the property and the provision of furniture furnishings and fixtures). It normally includes the cost of routine repairs and maintenance, annual gas safety checks, agency fees, insurance premiums and similar expenses. All these expenses are normally allowable.
Furniture: This includes the cost of providing or replacing furniture, furnishings, fittings and appliances in fully furnished residential accommodation. A "renewals allowance" may be claimed or, which is usually advantageous, an allowance of 10% of the gross annual rent may be claimed whether or not any expenditure has been incurred.

Any applicable allowances are deducted from the gross rent in order to arrive at a net taxable rental income which is then taxed as income. The rules are slightly different for landlords who live in the UK and those who don't:

UK Resident Landlords
You will be required to account for your income and expenditure as a landlord on your Self Assessment tax return each year. You should ensure that you have received the appropriate sheet when you receive your Self Assessment return, and request an additional sheet if you have not been sent one.

Non Resident Landlords
If you live, or intend to live, overseas your agent (or your tenant if you do not employ an agent) is obliged to deduct income tax at the basic rate from the rent and pay only the balance to you, unless you have obtained an exemption certificate from the Inland Revenue in the UK.

24. What do I do when things go wrong?

Even the most careful landlord and letting agent cannot avoid the occasional problem. This section contains advice on some of the more usual problems.

My property is let on an Assured Shorthold Tenancy and I need it back
A landlord of an Assured Shorthold Tenancy can only regain possession of the property within the first 6 months if the tenant has not paid the rent or is in serious breach of a term of the tenancy.
A landlord of an Assured Shorthold Tenancy can only regain possession of the property during the initial fixed term (if any) specified in the Tenancy Agreement if there is a "break clause" in the Agreement allowing the landlord to terminate the tenancy.
If neither of these restrictions apply (ie if the initial fixed term or the first 6 months - whichever is the longer - will have expired by the time you require possession) you must give 2 months notice in writing to the tenant. The following conditions must be observed:

the notice must be served on or before the start of a tenancy period; a tenancy period for a tenancy where the rent is paid monthly runs from the commencement date of the tenancy to the same date of the following month, and so on
the notice must expire on the end date of a tenancy period two months later
the notice must be served on each tenant individually (if there are more than one) except that a married couple need only receive one copy between them
the notice must contain certain facts and it is advisable to use a standard form
a method of proving that the notice has been served (recorded delivery, independent witness) is recommended in case there is a dispute
If the tenants do not vacate the property by the end of the notice period it will be necessary to apply to the County Court for a possession order.
My tenants are in arrears with their rent
You should immediately serve a "Section 8" notice on them. This notifies them that the landlord intends to apply to the court for an order requiring the tenant to give up possession of the property. At best the tenant will immediately pay the rent owing. At worst the notice starts the clock, and enables you to commence proceedings in the court after the appropriate period (normally 14 days).
The following conditions must be observed:

the notice must state the grounds for possession (as specified in the Housing Act) upon which you will rely in any proceedings. In cases of arrears these will normally be Ground 8 (if the arrears total more than 2 month's rent), Ground 10 (in all cases) and Ground 11 (if the tenant is persistently late paying the rent); the exact text of the ground(s) as written in the Housing Act must be used. Even if you can cite ground 8 (2 month's arrears) you should also cite ground 10 in case the tenant pays some of the arrears between receiving the notice and any court hearing
the notice must be served on each tenant individually (if there are more than one) except that a married couple need only receive one copy between them
the notice must be served in the correct format and it is necessary to use a standard form; this can be obtained from legal stationers
a method of proving that the notice has been served (recorded delivery, independent witness) is recommended in case there is a dispute

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