There’s more to life as a landlord than simply collecting monthly rental payments. Landlords must meet certain legal obligations. Be clear about what these are – otherwise you could wind up seriously out of pocket or in court.
Be a good landlord
By law, you must keep the property in good repair (I know you would anyway, but I’m just saying). It must be structurally sound, and you must take action to prevent damp. There are also regulations around fire and smoke alarms, gas safety and water quality. Make sure you follow all of these.
Fail to comply and you could wind up in the small claims court (if it’s a minor issue). If it’s a more serious matter the local authority could hit you with a hefty, on-the-spot fine. Do the job properly the first time and avoid all this.
Understand the tax implications
Even if you get an accountant to deal with this, it’s good to know what the taxman requires.
The good news is that the first £1,000 in rental income is not subject to tax. All the rest however needs to be reported to HMRC. You must declare amounts between £1,000 and £2,500. Anything above this figure needs to be reported in a self-assessment form.
Expenses, including letting agents’ fees, can be claimed back. Your National Insurance Contributions could also be impacted.
The rules around rental deposits
When a tenant pays you a rental deposit, you must put this money in a government approved tenancy deposit protection (TDP) scheme. There are three such schemes in England and Wales, and separate ones in Scotland and Northern Ireland.
As part of the Immigration Act, landlords must check a tenant has the legal right to live, work – and thereby rent – in the UK. You should request copies of a tenant’s ID (this is usually a passport) and, if relevant, work or residential visa. Be aware that this is an “evolving” situation. Politicians are currently debating just what kind of physical proof EU citizens should be given after Brexit to show they have Leave to Remain. Keep an eye out for developments on this. At the end of the day you don’t want the Home Office removing your tenant because they don’t have the right paperwork.
Evicting a tenant
Let’s hope it never gets to this. But if it does, follow the law. The rules relating to evictions have tightened up significantly in recent years, so don’t leap in and evict without having done your homework. Check the paperwork, and if in doubt, get legal advice.