Essential information for landlords Finding a suitable tenant is just one consideration when letting out your property. This guide covers a range of information you will need to be aware of, including safety regulations, taxation of rental income and essential paperwork.
1. Safety regulations In the UK landlords must comply with a number of strict safety regulations designed to protect their tenants from avoidable hazards.
Gas Under the Gas Safety (Installation and Use) Regulations 1998 there is a legal requirement that all gas appliances are checked and certified every year by a Gas Safe registered engineer. A record of this must be kept and a copy provided to the tenant within 14 days. Andrews can organise this for a small charge. Because this regulation is so important we must receive a copy of this certificate at least 48 hours before the agreed occupancy date or we will instruct an inspection to be carried out at the landlord’s cost.
Electricity As a landlord you have a legal duty to ensure all electrical appliances are safe. Obtaining an Electrical Equipment Safety Certificate (EESC) is not currently a legal requirement. However you will be legally liable if your tenant suffers injury or is put at risk because of faulty electrical goods or wiring so we recommend that all landlords obtain such certificates. It is also advisable to have a Portable Appliance Test (PAT). Andrews can organise this on your behalf.
Furniture and fittings The Furniture and Furnishings (Fire Safety) Regulations 1993 makes it a criminal offence to let a property with upholstered items that do not comply with the safety regulations. The regulations apply to beds, mattresses, sofas, cushions and other soft furniture. These must all carry a label showing fire resistance. Any noncompliant furniture must be removed from your property before letting.
Smoke and Carbon Monoxide Alarms Under the Smoke and Carbon Monoxide Alarm (England) Regulations 2015, a Landlord must ensure that before any new tenancy begins that the following are installed in the property and have been checked and are in working order:
• A smoke alarm must be fitted to each storey of the property that is adapted or used as residential accommodation • A carbon monoxide alarm must be present in any room that contains a solid fuel appliance
Legionella The Health and Safety at Work Regulations and Management of Health and Safety Work Regulations requires Landlords to ensure that they manage and control any risks relating to legionella bacteria in water systems. Landlords must ensure that their properties are assessed regularly.
2. Taxation of rental income While an income from property letting is always welcome, there are some tax implications that you need to be aware of. We explain how you can offset costs and expenses associated with the general running and maintenance of the property you rent out. Here’s a quick guide to your tax liability as a landlord.
UK resident landlords If you are a landlord who lives in the UK, any profit you make from renting your property will be subject to Income Tax. When we collect the rent on your behalf, we don’t deduct any tax from the rent we pay you, so you will need to inform the Inland Revenue of this income yourself. There are a number of expenses that can be offset against rental income and we would therefore recommend that you contact an accountant to find out more.
Non-UK resident landlords If you are treated as a non-resident landlord for UK tax purposes, you will still have to pay UK income tax on any profits you receive from renting your property. In these circumstances, we are obliged by law to deduct basic rate tax from any rent we collect and send it to the Inland Revenue on a quarterly basis. To qualify for an Exemption Certificate, the Inland Revenue usually require that: • Your UK tax affairs are up to date, or • You never had any UK tax obligations, or • You do not expect to be liable to UK income tax
If your property is in joint names we will need one certificate for each of the joint owners and we will need to receive the Exemption Certificate(s) before we can pay your rental income gross.
How to reduce your tax liability The Inland Revenue views landlords in the same way as businesses, which means that any costs associated with running and maintaining the property that you incur may be offset against the rental income. This can substantially reduce or even eliminate your tax liability. • Typical costs and expenses include: • Loan interest (but not capital repayments) • Rent, ground rent, rates and water rates • Professional fees: letting agents, accountants, legal fees, etc. • Any costs of providing services included in the rent, for example, gardening • Costs of property repairs and maintenance • For furnished properties – a ‘wear and tear’ allowance of 10% of the annual rental income • Buildings and contents insurance Make sure you keep all receipts and invoices. If you make a loss on the rental property, you can carry this loss forward to offset against profits from the property in future years. For more information on tax please go to www.hmrc.gov.uk.
3. Other requirements Energy Performance Certificates (EPCs) An Energy Performance Certificate (EPC) gives prospective tenants information on the energy efficiency and carbon emissions of a building. These certificates look similar to the energy labels found on domestic appliances. It is now a legal requirement that all rental properties being marketed for let have an EPC and the EPC must be prepared before marketing the property can begin. We can arrange this for you.
Landlord insurance It is a landlord’s responsibility to arrange buildings insurance on their property, including cover for their own contents and public liability. We strongly recommend that you take out specialist insurance aimed at landlords. We work with our insurance partner LetRisks who can provide you with specifically designed policies that are particularly suitable for landlords. This cover protects and safeguards your needs as a landlord and includes many additional features associated with letting property, including the risk of damage caused by tenants. If you are already insured and consider that you have the necessary cover, you still need to inform your insurance company that you are going to let out your property. This is to confirm that your level and type of insurance cover are indeed appropriate and sufficient. Please ask your local branch for details.
Houses in Multiple Occupation (HMOs) Houses in Multiple Occupation are properties occupied by three or more people who do not form a single household. For those properties which have three storeys, have five or more occupiers living in two or more households, a license will be required. Many local authorities operate additional licensing schemes, known as Additional and/or Selective Licensing. These types of licensing covers all types of properties. If any type of license is required, you must have applied for the license before you are permitted to let your property. For more information please contact your local council or visit www.communities.gov.uk.
Immigration Act As a Landlord, you have a legal responsibility to check the Right to Rent status of all tenants living in your property. We can undertake these checks for you as part of the referencing process and that way, you know you have complied with the law.
It’s time to get moving Letting properties successfully is one of the things we do best and we can’t wait to get started. Contact us 8 ‘till 8 Monday to Friday. We’re also available on Saturdays from 8.30am to 5.30pm and Sundays from 10am to 4pm. We have branches across Bristol, Bath, Gloucestershire, Oxfordshire, Surrey, Kent & Sussex and London.
Talk to us today Andrewsonline.co.uk or find your branch at andrewsonline.co.uk/branches