The ultimate guide to renting out your property

The ultimate guide to renting out your property

Whether you are an accidental landlord or planning to invest in property long-term, renting out your home can be rewarding - but it also comes with important legal and financial responsibilities. This guide explains everything first-time landlords need to know, from mortgage permissions and licensing to safety checks and tax obligations.

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Why rent out a property?

There are many reasons to rent out a home. For some, it’s a temporary move while living elsewhere; for others, it’s part of a property investment strategy.

Common motivations include:

• Covering mortgage payments while away
• Generating additional income
• Building a long-term rental portfolio

The key is to ensure your property and finances are set up correctly before letting tenants move in.

How to rent out your property

You can either:

• Self-manage the property, handling all legal, maintenance, and tenant matters yourself, or
• Appoint a letting agent to manage marketing, referencing, contracts, rent collection, and property care.

You must also decide whether to rent the property as a single household or convert it into a House in Multiple Occupation (HMO).
HMOs can generate higher income but require more work, investment, and compliance with stricter licensing rules.

 Check with your Mortgage Lender

If you are considering renting out your property for the first time you will need to speak to your existing mortgage lender. If the length of the property rental will be less than 12 months your lender may give you consent or permission to let your property on your existing mortgage terms. A long term rental may mean that you will have to transfer to a ‘buy to let’ mortgage.

Landlord Licensing Explained

Some areas of the UK operate landlord licensing schemes to improve housing standards. Check with your local council to see what applies in your area.

Types of Licensing

1. Mandatory Licensing – required for all HMOs in England and Wales.

2. Additional Licensing  may apply where councils feel HMOs need extra regulation.

3. Selective Licensing – applies to all landlords in designated local areas.

Check with your local council if they operate a licensing scheme. A license will cost a small annual fee.

How much can I rent my property for?

Knowing what rent to charge will depend on:

• Local market rates for similar properties
• Property size, condition, and amenities
• Target tenant type and demand in the area

Charging too much can delay finding tenants, while pricing too low may reduce profitability. Online rent calculators and local letting agents can help identify the right balance.

Tax and National Insurance for landlords

Rental income counts as taxable income. Income tax is calculated on the profit you make as a landlord, so you will need to deduct any expenses first. Mortgage interest payments also qualifies for 20% tax relief.

Key points:

• You pay tax on profit, not gross rent (deduct allowable expenses first).
• Mortgage interest relief is capped at 20%.
• The first £1,000 of rental income is tax-free under the property allowance.
• Class 2 National Insurance applies if property letting is your main business, you own multiple properties, and earn over £6,725 per year.

Always keep detailed records of income and expenses for accurate reporting.

Legal Responsibilities for landlords

Gas and Electrical Safety

Landlords must:

• Conduct an annual Gas Safety Check by a Gas Safe registered engineer.
• Arrange an Electrical Installation Condition Report (EICR) every five years by a qualified electrician.

Copies of both certificates must be given to tenants.

Fire Safety

Properties must have:

• Smoke alarms on every floor
• Carbon monoxide alarms in rooms with solid fuel appliances
• Safe, accessible escape routes
• Fire-resistant furniture (for furnished lets)
• Fire extinguishers in HMOs

Right to rent checks

Right to rent checks are mandatory for landlords and letting agents. Landlords must ensure that before a tenancy can be agreed or begin, they have proved that a tenant is in the UK legally, and has the right to rent a residential property. Landlords are liable for significant fines if checks are not made, or tenancies commence with tenants who fail the checks. 

Find out more about how landlords can check on the immigration status of their prospective tenants on our dedicated Right to Rent page.

Tenancy Agreements

A tenancy agreement is a legally binding contract outlining rights and obligations for both landlord and tenant.

Most private lets in England and Wales use an Assured Shorthold Tenancy (AST). The agreement should cover:

• Rent amount and payment terms
• Length of tenancy and notice periods
• Tenant responsibilities (e.g. maintenance, pets, utilities)

Standard AST templates are available, but professional drafting is recommended for clarity and compliance.

Protecting Tenant Deposits

Landlords must protect deposits in a government-approved  tenancy deposit scheme (TDP). Options include:

• Deposit Protection Service (DPS)
• MyDeposits
• Tenancy Deposit Scheme (TDS)

Deposits must be registered within 30 days of receipt. Failing to protect a deposit can result in fines and legal restrictions on regaining possession.

Landlord Insurance

While not a legal requirement, landlord insurance provides essential protection. It typically covers:

• Buildings and contents damage
• Loss of rent due to tenant default
• Public liability
• Legal expenses

Standard home insurance policies do not usually cover tenanted properties. Premiums may vary depending on tenant type, property use, and risk.

Regaining possession of your property

Landlords can regain possession through:

• Section 8 notice (when tenants breach the tenancy agreement)
• Section 21 notice (for no-fault eviction under specific conditions)
• Court orders for squatters or illegal occupiers
• Voluntary surrender or proof of abandonment

Legal procedures must be followed precisely to avoid penalties or delays.

How can a letting agency help?

As you can see, a first time landlord has plenty to do before and during a tenancy, and has many responsibilities to their tenants. Property management isn’t for everyone, so if you are thinking of renting out your property, haart can help with our full management service. A dedicated property manager oversees all communication with the tenant, including conducting repairs and replacements.