Rent residential property

When you rent out property make sure you comply with any laws and regulations. It's important to give tenants (also known as ‘contract holders’ in Wales) a Tenancy agreement that will set out any terms such as rent payments, duration and obligations. For the avoidance of doubt, references to ‘tenants’ also apply to ‘contract holders’ unless otherwise specified.

Buying a property combined with becoming a landlord requires a significant commitment, so make sure you've considered whether it's suitable for you. Research the buy-to-let market and make sure you're buying at the right time and in the right place. Do your sums to work out if you can afford the deposit and if the expected rental yield is worth it. If you're renting an existing property with a mortgage, you should obtain the lender's consent to the letting and you may need to change your mortgage product to a 'buy-to-let' mortgage. You should also contact your building insurers to tell them that you are letting out the property.

Once you've decided to go down the buy-to-let route, think about the best type of property and location having thought about the sort of tenant you will be targeting (eg student, young professional or family). Spend some time selecting the most appropriate mortgage and make sure you carry out a survey on the property. If you're buying a property that is already rented out to a tenant, check that all the relevant documents are in place and that the deposit will be transferred to you. Also, remember that there will be more restrictions when it comes to leasehold as opposed to freehold property.

For more information on buy-to-let, read What to consider when buying a property to rent out, Points to consider before you buy-to-let, Buy-to-let as an investment and Buy-to-let as an investment in Scotland.

Whether you try and find a tenant yourself or decide to use a letting agent, it's important to have some form of vetting procedure in place, even if this is simply a case of obtaining a reference from their previous landlord and current employer. You can additionally get a credit report which may give you an indication as to whether the prospective tenant will be able to pay rent on time. You'll also want to know if they're good at paying bills on time or if they've ever been evicted. However, bear in mind that even 'good' tenants can become problematic as a result of changing circumstances. Also, remember that it's illegal for landlords to discriminate against tenants on the basis of gender, sexuality, race, disability, age or religion or belief. For more information, read Picking a tenant and Picking a tenant in Scotland.

If you're considering renting a property to multiple tenants, there are legal requirements relating to the registration of houses in multiple occupation (also known as HMOs). A property that is let as a main or only home to at least three tenants who form more than one household and who share a kitchen, bathroom or toilet will count as an HMO.

If your HMO is occupied by five or more persons who form more than one household it must have a licence. There are fines for non-compliance so make sure you check with your local authority for their policies on HMOs. For more information, read HMOs and Fire safety in HMOs.

An Inventory can be used to record and agree on the condition of items in a rented property. If there are any disputes at the end of a tenancy, the inventory can provide useful evidence. However, it's important to also include any particular obligations of both tenant and landlord in the tenancy agreement. Tenants should keep the property clean and in a good state of repair inside, whilst landlords are normally responsible for exterior maintenance and general safety.

Note that in Wales, an inventory must be provided within 14 days of the contract holder moving in. For more information, read Occupation contracts in Wales.

Landlords owe a duty of care to any tenants and must comply with a range of safety obligations. Gas safety checks must be undertaken every twelve months by a Gas Safe registered engineer; safety certificates should be kept and copies provided to tenants. Electrical equipment must be safe, undamaged and carry the British Safety Standard sign. There should be at least one smoke alarm on each floor of the property and any furnishings provided (including sofas, beds and futons) must meet fire resistance standards.

Specific safety standards have also been placed on landlords in Wales, under the Renting Homes (Wales) Act 2016.

For more information, read Legal obligations of a landlord and Legal obligations of a landlord in Scotland.

Energy Performance Certificates (EPCs) contain information about the energy efficiency of a property, using ratings of A-G. They are valid for ten years. All prospective tenants must be provided with a valid EPC free of charge before they sign the tenancy agreement. Fines can be levied upon landlords who fail to provide EPCs.

Gas safety certificates must be given to the tenants as well. Not providing an EPC or a gas safety certificate can cause complications if you try to evict your tenants or want to reclaim possession of the property. For more information, read Energy performance certificates.

It's a good idea to take a deposit at the beginning of the tenancy to cover the costs of repairing any damage to the property. If you rent out your property you must comply with the tenancy deposit protection scheme. For more information, read Deposit protection schemes. The scheme aims to protect the deposit and makes use of an Alternative Dispute Resolution (ADR) service in case the deposit is disputed at the end of the tenancy.

In England and Wales, you can choose from an insurance or custodial deposit scheme and must provide your tenant with prescribed information about the scheme within 30 days of receiving the deposit. Failing to do so can render you liable for a fine up to three times the amount of the deposit and cause problems with obtaining possession of the property from the tenant.

In Scotland, the Government has only approved the use of custodial schemes. You must provide your tenant with prescribed information about the scheme within 30 days of receiving the deposit. Failing to do so can render you liable for a fine up to three times the amount of the deposit.

For more information, read Rent, deposits and utilities.

There is a wide range of different lettings documents so you'll need to ensure you choose the right one for your particular situation. Having an appropriate agreement in place will secure the rights and set out the obligations of both landlord and tenant.

England

An assured shorthold tenancy (AST) - either for a flat or a house - is the most common type of agreement in England and gives the tenant the exclusive right to use and occupy a house or flat for a certain period of time. If you just want to rent out a spare room in your home, a Lodger agreement can be used. Meanwhile, a Room rental agreement is a type of AST used by landlords who wish to rent out several rooms to multiple occupants. Read Residential tenancies for more information.

Wales

Since 1 December 2022, most privately rented property will be let under occupation contracts. These give contract holders the right to occupy a property (known as a ‘dwelling’) and provide contract holders with enhanced rights regarding their tenancy. For more information, read Residential tenancies in Wales and Occupation contracts in Wales.

Scotland

All tenancies that started on or after 1 December 2017 in Scotland are private residential tenancies. These give the tenant the exclusive right to use and occupy a house or flat. They are open-ended tenancies that will last until the tenant wishes to leave the property or until the landlord relies on one or more of the 18 grounds for eviction. If you just want to rent out a spare room in your home, a Lodger agreement for Scotland can be used, while a Private residential tenancy for a room can be used by landlords who wish to rent out several rooms to multiple occupants. 

Read Residential tenancies in Scotland and Ask a lawyer for more information.

In England and Wales, there is legislation in place that bans landlords and agents from charging tenants, and prospective tenants, certain fees. The new legislation is designed to restrict the kinds of payments that landlords and letting agents can charge to tenants in connection with the letting of a property. Think of things like credit checks, reference checks, cleaning services, inventory checks, admin fees or check-out fees. In addition, the law sets out strict regulations for the treatment of holding deposits and cleaning costs. Certain fees are still permitted (for example, utilities and council tax and a refundable holding deposit to reserve the property, capped at one week’s rent).

For more information, read Tenant fees.