With experts predicting that over half of 20-39 year olds will be renting privately by 2025, the UK’s attitude to renting has changed dramatically – offering would-be landlords the chance to invest in a fast-growing sector and generate immediate income. 

But there’s more to consider than collecting rent each month. If you’re thinking of becoming a landlord, here’s everything you need to know…


What is a landlord?

The government defines a landlord as someone who rents out a property

This sounds obvious, but there are a couple of different routes to becoming a landlord. Some find themselves in this position through circumstance – perhaps they inherited a house, or are having to rent out their current home while they look for a buyer. These are often called accidental landlords. Others choose to become landlords through purchasing properties with the express purpose of renting them out. 


The costs of becoming a landlord

Whatever the background, the first major consideration is the cost. There are a few outgoings to be aware of, including:

  • Mortgage repayments

For those renting out a property they don’t own outright, a buy-to-let mortgage is a requirement – a standard residential mortgage is not an option for landlords.  As with all mortgages there are different options, and a larger deposit will land a better rate.
In addition, because most buy-to-let mortgages are interest-only, landlords need to consider how they will pay off or refinance the full loan.

  • Maintenance and repairs

Landlords are expected to keep their properties in a good state of repair and in most cases, a landlord would be expected to pay for repairs – for example, to fix a pipe – although these may be tax deductible.

  • Agent’s fees

Letting agents can be useful for finding tenants and collecting rents. They can also handle some of the admin, such as dealing with repairs. An agency typically charges between 10 and 20% of the monthly rent, depending on their services.

  • Insurance

It is a good idea for landlords to have insurance and some mortgage providers require this. The actual monthly costs depend on the property and the level of cover.

  • Tax

Depending on circumstances, landlords may also need to pay income tax on any profit made from renting out a property.


A landlord’s rights and responsibilities 

Becoming a landlord also brings with it a number of responsibilities, including the need to:

  • Keep a tenant’s deposit securely in one of three government-approved schemes: MyDeposits, Deposit Protection Service or the Tenancy Deposit Scheme
  • Keep up-to-date records of costs relating to the property
  • Complete a self-assessment tax return
  • Ensure fittings such as gas appliances are regularly monitored and safe to use
  • Ensure tenants have the right to rent, that they have a tenancy agreement in place, and they have signed all the relevant paperwork

In terms of a landlord’s own rights, it is worth keeping in mind that:

  • Landlords have to give their tenants 24 hours notice before entering
  • A landlord has the right to have the rent paid in full every month (or other agreed time period)
  • Depending on the terms, a landlord generally has the right to evict a tenant if there are problems
  • If a tenant breaks the terms of their agreement before their term is up, the landlord can collect the rest of the rent for that term


Getting started

Are you thinking of becoming a landlord? If you’ve investigated your buy-to-let mortgage options and lined up your rental property, we can help with the next stage. Whether an investment opportunity or an unexpected inheritance, just get in touch – we’ll be very happy to go through your options.