What You Need to Know as a Landlord

It is becoming increasingly more difficult to keep on top of what you need to do when you are renting out a property - in this article we’ve listed some key things you should be considering whether you are thinking about renting out for the first time, or are already an experienced landlord.

Energy Performance Certificates (EPCs) for Landlords

What is an Energy Performance Certificate (EPC)?

Energy performance certificates, or EPCs, are a legal requirement for all house owners and landlords in the UK. These certificates show the energy performance of a building on a scale from “A” to “G”, with “A” being highly efficient and “G” being a very low efficiency which is not suitable for habituation. You can use these certificates to estimate your average energy running costs for the near future - which is especially useful to landlords who rent out their properties with bills included.

If you are asked by an inspector to produce a valid EPC and your property does not have one in place, you could risk a fine of up to £5000 depending on the type of property.

How do I know if my rental property has an EPC?

If your property is located in England, Wales, or Northern Ireland and you are unsure whether your property has a valid EPC in place, you can check online for free. If it is located in Scotland, you can check for its EPC here.

If you need an EPC, you should arrange for an accredited assessor to visit the property. You can find more details here. Once you have received your EPC, it will be valid for ten years.

The future of EPCs

It is currently illegal to rent out properties with an “E” efficiency level or below. The UK government has also announced plans to enforce all new tenancies to have a “C” efficiency level by 2025, stretching to cover all rented properties by 2028. So even if you already have a valid EPC, you may need to take steps to improve the efficiency of your property, such as changing windows and doors, replacing boilers and radiators, and improving insulation.

While this change has not yet been enshrined in law (as of April 2022), rising energy costs mean that making upgrades to improve your property’s energy efficiency is something you may want to consider sooner rather than later.

 

Gas Safety Records and Electricity Installation Condition Reports for Landlords

What is a Gas Safety Record and why do I need one?

A Gas Safety Record is the documentation you receive from an engineer after a gas safety check or servicing has been performed at your property. While it is not a legal obligation for engineers to produce a Gas Safety Record for every safety check or servicing they carry out, it is a legal obligation for landlords to obtain one.

Under UK law, landlords must arrange annual safety checks on all gas appliances (by a Gas Safe registered engineer) in their rental properties, and obtain a copy of the Gas Safety Record. You must also provide a record of this safety check to your tenants.

What is an Electricity Installation Condition Report and why do I need one?

An Electrical Installation Condition Report (EICR) is a report carried out to assess whether or not a property’s existing electrical installation is in a safe and serviceable condition. The report will detail whether the property is in a satisfactory or unsatisfactory condition, as well as indicating any areas that require immediate attention or improvement.

In the event of an unsatisfactory report, you have 28 days from the date of the inspection to ensure the necessary work is carried out by a qualified person. You must then submit both written confirmation of the work being carried out and a copy of the original report to your tenants and the local housing authority.

The UK government requires that all tenancies must have the electrical installations in their properties inspected at least every five years, and landlords must produce a copy of the electrical safety report to their tenants and local authority if requested. If found within breach of your duty as a landlord, you could risk a fine of up to £30,000.

Landlords and property licensing

Does my property need a rental licence?

Holding the correct licence for your rental property demonstrates that it is suitable for occupation and appropriately managed to an acceptable standard. As a landlord, it is a legal requirement to ensure that you obtain the correct licence for your property. The licence allows councils a level of control over the quality of landlords and rental properties in the area.

The rules for registering and licensing vary across the UK, but you can check if you need a licence on your local council’s website. If you let property in England, you will be subject to “selective licensing” - this means your local authority will have the power to introduce licensing for all privately rented properties in a given area.

Do I need a House in Multiple Occupation (HMO) licence?

A House in Multiple Occupation (HMO), also commonly known as a house share, is a property rented out to at least three tenants who are from different households but share facilities such as the bathroom and kitchen. In England and Wales, you must have a HMO licence if your property is a large HMO, in which the following all apply:

  • You are renting to five or more tenants who form more than one household
  • At least one tenant pays rent
  • Some or all of your tenants share bathroom or kitchen facilities

In some areas you may still need a licence even if you have fewer than five tenants, so it is important to check with your local council. This licence is valid for five years, and you will need one for each HMO you run - otherwise you could face an unlimited fine. As well as obtaining the appropriate licence, as a landlord of a HMO you must:

  • Ensure that the property is suitable for the number of tenants
  • Ensure that the property’s manager (this could be you or a letting agent) has no criminal record or history of breaching landlord laws
  • Send a copy of your annual gas safety certificate to the council every year
  • Provide safety certificates for all appliances in the property (when requested)
  • Install and maintain smoke alarms in the property

Your council may also impose other rules and conditions for your licence. If you disagree with any of them, you can appeal to the First-Tier Tribunal.

You will also need to make sure your property is correctly registered as a HMO before you can take out HMO landlord insurance.

Tenancy Agreements for Landlords

What tenancy checks must I carry out as a landlord?

Pre-vetting your potential tenants is a vital step in renting out your property, as not only can it put your mind at ease that your property is in safe hands, but you must also check that they have the right to legally reside in the UK - you can ask to see their passport or immigration documents in order to assess their residential status. This is called the “right to rent check”. If you are caught renting a property to a tenant who does not have the right to rent, you could face an unlimited fine and up to five years in prison. In cases where the tenant cannot provide documentation, you can contact the Landlord Checking Service to find out their status.

Asking for references from previous landlords is a good way to root out potential tenants who may not respect your property or may cause harm or distress to other tenants in the property. In cases where the potential tenant is renting for the first time, you can ask for a guarantor - this is someone who agrees to pay the rent on behalf of the tenant if they are for some reason unable to pay.

You may also wish to obtain a reference from the tenant’s employer, to ensure that your tenant has a steady income from which they can pay their rent.

What is a tenancy inventory?

A tenancy inventory is a report, often including videos or photos, that documents the property and its contents as well as their condition. These inventory reports are carried out both before a tenant moves into the property and when they move their belongings out of the property. They are crucial for both landlords and tenants, as they are used as evidence in disputes over the return of the deposit. Taking as many photographs and videos as you can will help you in the event that a tenant damages or steals anything from your property.

Your inventory report should include:

  • Names and addresses of the landlord and tenants (and letting agents if necessary)
  • The date the report was conducted, and the name of the person who conducted it
  • A list of all items, decor, fixtures and fittings (both exterior and interior) and their condition
  • Photos of the items
  • Signatures from both the landlord and tenant agreeing to the inventory’s contents

What are Deposit Protection Schemes?

You must pay your tenant’s deposit into a government-backed Deposit Protection Scheme within 30 days of receiving it from the tenant. There are two types of scheme:

Custodial scheme

For these schemes, you must submit the full amount of the tenant’s deposit, where it will be protected until the end of the tenancy. At the conclusion of the tenancy, both you and the tenant can contact the scheme administrator to request the release of the funds. If a dispute arises due to damage or loss, the money will remain in the scheme until you and the tenant agree upon a resolution - this could be in the form of deductions from the deposit, or a court order.

These schemes are usually free of charge.

Insurance-based scheme

Insurance-based schemes allow you as the landlord to retain the deposit in your own bank account during the tenancy, although you must pay a premium for this. You can use the funds however you wish, but must repay the amount to the tenant at the end of the tenancy. If a dispute arises, the disputed amount is moved to the deposit protection scheme until a resolution is reached. If you fail to return the money to the tenant, the scheme will pay the tenant directly before proceeding with you.

Repairs and Responsibilities for Landlords

As a landlord, you are responsible for most repairs to the exterior or structure of a property - including the roof, chimneys, windows, doors, walls, guttering and drains. Just like any property, it is important to make sure you have the relevant insurance in place to protect you in the event of fire, floods, escape of water, or subsidence. Towergate’s landlords insurance also offers cover for loss of rent and alternative accommodation.

You are also responsible for arranging safety checks and repairs on boilers, so it is advisable to take out landlord home emergency cover as part of your landlords insurance, which will ensure that your boiler will be fixed promptly even if it breaks down in the middle of the night.

Landlords are also responsible for repairing:

  • basins, sinks, baths and other sanitary fittings including pipes and drains
  • heating and hot water
  • gas appliances, pipes, flues and ventilation
  • electrical wiring
  • any damage you cause by attempting repairs

In emergency cases such as leaking pipes, lost keys, pest infestations, or failure of central heating, your landlord home emergency insurance can help cover you. In cases where the tenant is directly responsible for damage (such as broken furniture or blocked drains), you can obtain the cost of repairs from them (although this does not apply to general wear and tear).

This is a marketing article by Towergate Insurance.

Landlords Insurance from Towergate

At Towergate, we can cover a wide range of rental properties and types of tenants including multi occupancy, students, and local authority placements. Our policies can include cover for loss of rent, loss of keys, accidental damage, alternative accommodation costs, and more. You can compare prices from a range of leading insurers, as well as add-ons such as landlord home emergency insurance. Take a look at our landlords insurance page for more information.

About the author

Alison Wild BCom (Hons), MAAT, ATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (AAT) and also has considerable experience as a residential landlord.