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If you’re considering renting out your property, you should be up to date on all the rules and regulations involved. Doing so will ensure that renting out your property goes smoothly.
Renting out property can be very rewarding but you must also be sure that you are aware of your responsibilities to your tenants and you do everything required by the law.
Being a landlord is not as simple as just letting people move into your property in exchange for payment. You need to ensure that any property you let is safe and in good condition; as a result you have a number of responsibilities to your tenants.
Your responsibilities as a landlord include:
Before you rent out a property, you will need to carry out certain checks on it to ensure that it is safe for tenants to occupy.
You are responsible for the following areas:
Your property needs to be free of avoidable fire risks and there must be an escape route in case a fire does break out. You should also ensure that fire alarms are fitted and in some cases provide fire extinguishers (depending on the size of the property). You will also need to have a risk assessment carried out to ensure that your property is fully compliant with the necessary fire safety regulations.
You are responsible for arranging an annual inspection of any gas equipment or appliances you provide on the property and ensuring that any necessary maintenance is carried out. These tasks will need to be done by a Gas Safe registered engineer.
You must ensure that the electrical system of the property, as well as any electrical appliances you supply, are safe to use.
As well as these safety checks, you will also need to get an Energy Performance Certificate (EPC), which provides information about the energy efficiency of the property. To get one, you need to arrange for a domestic energy assessor to visit the property and carry out an evaluation. They will then provide an EPC, which you should show to your tenants.
Before taking on tenants, it is usually best to draw up a tenancy agreement for your tenants to sign, ensuring that both parties are aware of the terms and conditions of the tenancy and that they understand their rights and responsibilities. This is a requirement if your tenants are signing up to a fixed-term tenancy lasting more than 3 years.
The tenancy agreement should include:
You should be careful not to put any terms in the tenancy agreement that could be considered unfair or could breach the law. You cannot take away your tenants’ rights even if they sign an agreement which attempts to contravene them.
It is common practice to have your tenants pay a deposit to cover any financial losses you may suffer due to their occupancy. However, there are extremely strict rules on protecting these deposits, which you must follow otherwise you could face a hefty fine and potential restrictions on removing your tenants from the property. These rules apply if you are renting your home out on an assured shorthold tenancy (the most common type).
Within 30 days of receiving the deposit, you will need to place it in a government-backed tenancy deposit protection (TDP) scheme. The intention of a TDP is to ensure that any deductions you make from your tenants’ deposits are fair. The schemes available in England and Wales are the Deposit Protection Service, My Deposits, and Tenancy Deposit Scheme.
You must also supply the following information to your tenants within 30 days of receiving their deposit:
You do not need to protect any deposits you have received from future tenants in order to ‘hold’ a property (that is, to ensure that nobody else can become a tenant in that property instead). However, once they become tenants, this is no longer a holding deposit and you must protect it within the time limit (beginning from when their tenancy starts).
If you fail to protect your tenants’ deposits, the county court may force you to pay them up to three times the original deposit amount in compensation. It may also be more difficult to get the tenants to leave the property when their original tenancy ends.
While you have tenants in your property, you have certain responsibilities to them, one of the most important of which is to carry out certain repairs when necessary. Your tenants have the right to live in a property which is safe and in good condition, so you need to ensure that you take action if they contact you over any issues.
You are considered responsible for repairing or arranging repairs to:
If your tenants contact you requesting a repair, you should let them know when they can expect it to be completed. You may choose to allow tenants to carry out repairs in the tenancy agreement, but you cannot make them repair anything which is meant to be your responsibility.
When there are tenants living in the property, you need to give them notice if you wish to visit it, whether to carry out an inspection of the premises or to do repairs. You should give them 24 hours’ notice and arrange your visit for a reasonable time. However, if you need to carry out emergency repairs on the property, you do not need to give notice.
Another issue you may face during a tenancy involves raising the rent. Usually the tenancy agreement will set out the procedures you will follow in order to increase the rent. However, there are likely to be limits on this.
If your tenants are on a periodic tenancy (i.e. one which rolls from week to week or month to month), you can usually only increase the rent once a year. If there is no procedure for doing this in the tenancy agreement they signed, you could decide upon a new rent with your tenants and all parties would then sign an agreement to this effect, or you can use the governmental ‘Landlord’s notice proposing a new rent’ form.
If your tenants are on a fixed-term tenancy (i.e. one which lasts a set period of time, such as six months), you cannot increase the rent during this period unless your tenants agree to it. Once the fixed term is up, however, you will have the opportunity to raise the rent. This will simply involve having your tenants renew their tenancy agreement with the cost of the rent changed.
If your tenants pay their rent weekly or monthly, you must give them one month’s notice about any increase in rent. If their tenancy is yearly, you must give six months’ notice.
It is important to note that you are expected to only raise the rent by a fair and reasonable amount, and if your tenants feel that a rent increase is excessive, they may go to a rent assessment committee to challenge this.
Getting your tenants to leave at the end of their tenancy is not usually difficult, but you still need to follow certain procedures in order to ensure that you do things fairly.
If your tenants are in a fixed-term Assured Shorthold Tenancy (AST), and you wish to take back the property when their agreed period of tenancy comes to an end, you need to provide a ‘notice to quit’ at least two months before the end date of the tenancy. This is a written notice which states that you wish to take back your property. Once the tenancy period expires, the tenants should leave the property.
You can only end a fixed-term AST before the end of the tenancy period on certain grounds. These include factors such as your tenants failing to pay the rent or engaging in anti-social behaviour or criminal activity.
If your tenants are on a periodic AST, you will also need to give them two months’ notice if you want them to leave the property, and their tenancy must have started no less than six months ago.
If you follow these procedures and your tenants fail to leave the property, you will need to apply to the courts for a possession order, having notified your tenants that you are looking to do so. If you are granted a possession order but your tenants still do not leave, you can apply for a warrant of eviction, which will see the tenants removed from your property.
When a tenancy comes to an end, you will have to decide if you need to make any deductions from the tenants’ deposits and reach an agreement with them on how much they will get back. Once you reach an agreement, you must return the deposit within 10 days of this.
If your tenants are not happy about the amount of deposit you plan to return, the TDP scheme will withhold the deposit until you have reached an agreement. In these cases, you may use the TDP’s free dispute resolution service to help negotiate a solution which is acceptable to both parties. They will not release the funds until a decision is made, whether by you and your tenant, an ADR scheme or even the courts.
One of the hardest parts of being a landlord can be keeping up with all the paperwork, so we offer a variety of template documents to help you with the more formalised side of the task.
Among other things, we provide:
All of these documents and more are available in our tenancy documents section.
An HMO is a property where at least 3 tenants live, who form more than one household and share the kitchen and bathroom. Households consist of:
If you are renting out shared accommodation, you may be renting an HMO. An HMO can be any type of property which is shared.
An HMO will need a licence if the building has 3 or more storeys and is occupied by five or more tenants, who form more than one household. A landlord must get an HMO licence if required and must adhere to the terms set out in the licence.
If you fail to secure a licence for an HMO where required, you may be subject to prosecution by the local council. One possible complication of this situation is that your tenants could reclaim any rent they have paid by contacting the Residential Property Tribunal.
Changes to your HMO include the following scenarios;
Any changes that you make to your HMO should be referred to your local authority as they may mean that your licence needs to change. If you know that the changes you are going to make will affect your licence, you can apply for a change of licence by filling in a ‘Proposal for a variation of existing HMO licence conditions by consent’ form, which will include details of what will need to change in your licence and why the changes have been made. There may be a fee for changing your licence.
As a House of Multiple Occupation landlord, you must ensure that your HMO meets the health and safety requirements set out in your licence. You must;
Your local authority will carry out a Housing Health and Safety Rating System (HHSRS) risk assessment on your property to ensure that it is up to standard. You will have to carry out any work required as a result of the inspection or risk losing your licence.
As a landlord you must honour what is in your tenancy agreements. You should include payment of utility bills, arrangements for when you need to access the property and regulations for keeping pets.
Tenancy deposit schemes
If you are letting your property under an assured short hold tenancy you must protect your tenants’ deposits in a government approved scheme. You must ensure that you tell your tenants how you are protecting their money within 14 days of them paying you the deposit. At the end of the tenancy, you should return the deposit in full unless you need to withhold any for any damages or unpaid rent at which point you should inform the tenant as to why you are withholding the money.
Ending a tenancy
If you wish to end a tenancy you need to follow the correct legal procedures or risk the tenant taking legal action against you.
Other obligations as a landlord
As a landlord you have several other obligations which you must act on:
You will become a resident landlord if you let out a room in the home that you live in. In these circumstances, you do not need to give the tenant as much notice to end their tenancy and they will not be able to challenge the agreed level of rent.
You will need to check that your mortgage lender will let you rent out a room. Also, if you are renting the property yourself, you will have to check that you are allowed to sublet your room. It is illegal to sublet a room in your property without the landlord’s permission.
If you are letting a room which you cannot enter without permission and is exclusively for the person renting the room, then the rent would be a tenancy. If you have permission to enter the room and they share with someone who they did not choose, then the rent would be a licence to occupy.
An excluded tenancy or licence is where your tenant shares rooms with you and your family, such as the kitchen or bathroom. A non-excluded tenancy or licence is where you do not share any rooms with your tenant.
When you let a room, you should ensure that you provide access to a kitchen and a bathroom, whether it is shared or separate.
There is no set amount of time that a tenancy should last, so it is a good idea to agree on a period before the tenancy begins. If you cannot agree on a length then it will automatically become a periodic let, which can run indefinitely from month to month. Licences can also be arranged in these ways. Written tenancy agreements can be a good way to avoid any confusion, but they are not compulsory unless the rent has been agreed for at least a three year period.
You will be responsible for any repairs or maintenance needed on the property and if you rent out your property to more than one person you may require a House of Multiple Occupancy licence, which will require your house to have certain features before you can rent it out to multiple people.
Both you and your tenant can apply to end a resident landlord tenancy agreement at any time, providing you are using a non-excluded periodic let. You or your tenant will need to provide four weeks’ notice of the end of the tenancy, which is known as a ‘notice to quit’. If your tenant refuses to move out you will have to apply to the court for a possession order, which will force the tenant to leave the property.
When you are renting out a property in your house you only have to give a reasonable amount of notice if you want your tenant to leave, which is usually classed as the rent period, so if rent is paid weekly, you will only have to give one weeks’ notice unless agreed otherwise before the start of the tenancy. Notice will not have to be given in writing but it can be a good idea to do so to save any confusion if a dispute arises.
A fixed term let will end on the agreed end date without any need for notice. It is however a good idea to remind your tenant near the end of their tenancy that their contract is about to end. Also, if you and your tenant agree, you can end the tenancy before the end of the fixed term. You may also be able to end the tenancy if the tenant breaks the tenancy agreement or behaves inappropriately.
If you leave your property the tenant can continue to live there but the type of tenancy will change to reflect the fact that you no longer live there. If you put your house up for sale, you will need to inform your tenant that the new owners intend to move in within 28 days of the house being sold. They must also move in at least 6 months after the sale. If you die, the tenancy will continue as if you were still living in the property until a new owner takes the property on. If you sell your property the existing tenants will continue to be protected by the terms set out in their original agreement. If they were renting under a licence to occupy, however, they will need to seek a new licence with the new owner.
Both tenants and landlords may have additional rights and responsibilities, the specifics can be defined in the agreement terms. An agreement can run for a set period, the average time scale is six months or longer, this is known as a fixed term tenancy. A landlord can also set out a tenancy known as a periodic tenancy which runs on a monthly rolling basis.
A more common form of tenancy agreement is an assured shorthold tenancy, known as an AST agreement. An agreement AST automatically applies in the following instances:
All new tenancies are automatically ASTs. You can set up another type of tenancy - called an 'assured tenancy' - but this gives the tenant more rights to stay in the property.
A tenancy cannot be an AST when:
You may have set out an assured tenancy in the event that the agreement commenced prior to 28 February 1997. The rights involved for both the landlord and tenant are similar to that laid out in AST, the main difference being that the tenant is able to stay in the property for an unspecified period of time. No automatic rights are set out for the landlord to be able to repossess the property post tenancy expiration. A landlord must be able to inform the court of adequate reasoning for wanting possession, following one of the grounds for possession within the legislation.
A landlord may issue a regulated tenancy when following instances apply:
A regulated tenancy provides additional rights to the tenant as apposed to an AST agreement, an example of additional rights include increased protection from eviction. The tenant will also have the right to apply for a fair rent to be registered for the property. A fair rent is a set amount issued by a rent officer, allowing a maximum figure for the landlord to charge at.
In the event that a tenancy had been agreed between 28 November 1980 and 15 January 1989, the property may be a protected shorthold tenancy. This form of regulated tenancy has the same legal protection, although it ordinarily applies within shorter agreements.
In the event that a tenant dies, the tenancy rights automatically transfer to the spouse or qualifying family member.
If your tenant has an assured short hold tenancy agreement, which is now the most common tenancy agreement, and you are attempting to remove them with the use of a section 21 notice, you will be able to use the accelerated possession procedure, which will enable you to get possession of your property much quicker and will not require you to have a court hearing. This procedure can only be used if the tenant has a written tenancy agreement and you have given them at least two months notice that you require the property back. You cannot give notice before the end of a fixed term tenancy. Also note that this procedure does not apply to section 8 claims.
You will need to apply for an accelerated possession order from your local county court. You will need to fill in a standard ‘claim for possession’ form and provide the court with the following information:
You should also include all the relevant documents, such as copies of the tenancy agreement, to support your claim.
The court will make a decision after looking at written evidence provided by both parties. You should ensure that you include all the information possible in order to ensure possession is given back to you.
If you are granted possession, you will be able to ask the tenant to pay for the cost of applying for the order. You will not however be able to claim back any costs, rent arrears or unpaid deposits.
It will usually take two weeks for the possession order to come into effect, unless the court believes that this will result in the tenants being faced with exceptional hardship, in which case the possession order can come into effect in up to six weeks.
If you are a tenant and you are informed of your landlord’s plans to get a possession order, you have 14 days in which to file your defence. You should seek legal advice as soon as possible.
It’s important to be aware of the legal rights concerning both parties when committing to a tenancy agreement, ensuring all obligations are fulfilled preventing liability claims and confusing of terms regarding any end of tenancy or licence agreement.
In the event of ending a tenancy or licence in order to reclaim property, notice must be given providing the date of the amended tenancy or licence expiry. The form of notice and timeframe required depends upon the form of agreement and whether the tenancy is a licence or not.
A tenant must always be officially informed in writing regarding the end of a tenancy, with details including the latest date by which they must leave it. The type of licence or tenancy determines the lengths of notice required, and the reason for termination of agreement.
Generally the period is no less than two weeks and is ordinarily around two months. In the event that the tenancy is an excluded tenancy (where by the tenant shares facilities with the landlord); then the notice period must be that of a reasonable amount.
In many tenancies, the notice required must arrive in a particular form, including regulated information and warnings. A standard form of notice can be obtained from legal stationers.
A landlord has an automatic right of possession at the expiry of an assured shorthold tenancy, however only in the event that two months' notice has been provided to the tenants.
A tenant may have a licence in the event that they do not hold exclusive use of the accommodation in question i.e. if the landlord has unrestricted access to part of the property they are renting. A landlord is entitled to end a licence by serving a 'notice to quit'. The notice period can depend upon the agreed terms, often however four weeks notice is required at a minimum.
In the instance that a tenant has an excluded tenancy or licence (i.e. they live with you or are in holiday letting, or hostel accommodation) only 'reasonable notice' is required.