Renting Out Your Home
Renting out your home requires a valid EPC.
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The Rules on Renting Out Your Home in the UK
Renting out your home in the UK can be a great way to generate extra income, whether you're looking to temporarily relocate, downsize, or invest in a buy-to-let property.
However, it's not as simple as handing over the keys. There are important legal and regulatory requirements that landlords must meet to ensure everything runs smoothly and lawfully. Below is a guide to help you understand the key rules you need to follow when renting out your home in the UK.
Obtain Permission from Your Mortgage Lender
If your home is mortgaged, you will likely need permission from your lender before renting it out. Most residential mortgages include a clause that prohibits letting without consent. You can either apply for “consent to let” or switch to a buy-to-let mortgage, depending on how long you intend to rent out the property. Without lender approval, you could breach your mortgage terms, potentially leading to financial penalties or even repossession.
Notify Your Insurance Provider
Standard home insurance policies typically don’t cover rental properties, so you'll need to inform your insurer that you're renting out your home. Failing to do so could invalidate your insurance in the event of a claim. You should switch to a specialist landlord insurance policy, which covers risks such as damage caused by tenants, loss of rental income, and legal liabilities.
Register as a Landlord
In certain parts of the UK, landlords are required to register with local authorities. For example, in Scotland, all landlords must be registered, and in Wales, you need to register and obtain a Rent Smart Wales licence. Although registration is not currently required in England, specific local councils may have their own licensing schemes for private landlords, especially in areas with high rental demand or where issues like overcrowding exist. It’s essential to check with your local council to find out if you need a licence.
Ensure Your Property Meets Safety Standards
Landlords have a legal duty to ensure their rental properties are safe. This includes:
Gas Safety: You must arrange an annual gas safety check by a registered engineer and provide tenants with a copy of the certificate.
Electrical Safety: All electrical systems and appliances must be safe. Since 2020, landlords in England are required to carry out electrical safety checks every five years and provide tenants with an Electrical Installation Condition Report (EICR).
Fire Safety: You must ensure that smoke alarms are installed on every floor and that carbon monoxide detectors are in rooms with solid fuel appliances. Furnishings must also meet fire safety regulations.
EPC Rating Requirement
In the UK, all rental properties must have an Energy Performance Certificate (EPC) with a rating of E or above. This certificate shows how energy efficient the property is and gives advice on how to improve it. Failure to provide a valid EPC can result in fines.
You can use our free property check to check if your property has an EPC.
Protect Your Tenant’s Deposit
By law, any deposit taken from tenants must be protected in a government-approved tenancy deposit scheme within 30 days of receiving it. In England and Wales, these schemes include the Deposit Protection Service (DPS), MyDeposits, and the Tenancy Deposit Scheme (TDS). The tenant must also be informed in writing which scheme has been used.
Right to Rent Checks
In England, landlords are required to check that their tenants have the legal right to rent in the UK. This involves verifying the tenant’s identification, such as a passport or visa. These checks must be carried out before the tenancy begins, and landlords who fail to do so could face fines.
Create a Tenancy Agreement
A tenancy agreement sets out the terms and conditions of the rental. The most common type is an Assured Shorthold Tenancy (AST), which provides a legal framework to protect both the landlord and tenant. It’s advisable to have a solicitor draft the agreement to ensure it’s legally sound and compliant with current regulations.
Understand Tax Implications
Rental income is subject to tax, and landlords need to report this income to HMRC via a Self-Assessment tax return. Depending on your personal situation, you may also be able to claim deductions for certain allowable expenses, such as repairs, letting agent fees, and mortgage interest (though recent changes have reduced mortgage interest relief for many landlords).
Conclusion
Renting out your home can be a rewarding venture, but it comes with a set of obligations and responsibilities. By ensuring you comply with the relevant rules and regulations, you can protect yourself legally and financially while providing a safe and comfortable home for your tenants. If you're unsure about any aspect of renting out your property, seeking advice from a letting agent or property solicitor can provide valuable guidance.