Learn about becoming a landlord – from choosing the right property to tips on caring for your tenants.
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Why become a landlord?
Becoming a landlord might appeal to anyone with a spare room, access to additional properties, or someone looking to expand their existing property portfolio. It’s a common way to earn extra income, either as a supplementary source, or as a full-time occupation for some.
Growth of the private rental sector
Up until the 1980s, the private rental sector was in steady decline. The introduction of the Right to Buy scheme allowed council tenants to purchase council homes from local authorities, with little new housing built to replace them.
As a result, traditional social housing decreased by 1.4 million over the next few decades, and private rentals grew to dominate the UK rental market. Between 2000 and 2022, private renting tripled.
Challenges in today's market
As the private rental market has grown, landlords today face new challenges. Factors like global events and domestic politics can affect interest and mortgage rates, leading to higher costs for both homeowners and landlords.
Tax changes in the UK, such as the reduction of mortgage interest tax relief, have also placed additional financial strain on landlords, making it harder to offset costs.
While some landlords have been forced to sell up their properties, others have passed on the cost to tenants. In April 2024, rents increased by almost 9% year on year – the highest ever recorded.
Getting started
There’s a lot more to becoming a landlord than simply collecting rent. There’s legislation, responsibility, expenses and costs at play too.
What’s more, simply converting mortgage costs into higher rent isn’t always a viable option – as your tenants may not be able to afford it. How and when landlords increase rent could also be subject to future Government policy.
Let’s go through the considerations you need to take step by step.
Choosing the right property
The first step to becoming a landlord is finding the right property. You may have a house already that you want to rent out, or perhaps you have the cash available to invest in a new property.
Either way, there are a few factors to consider before your tenants can sign on the dotted line.
Financial considerations as a landlord
While being a landlord can bring money in, it also comes with a range of associated costs. Like any business, there are a variety of incomings and outgoings that you’ll need to manage and prioritise accordingly. These include:
1. Choosing a buy to let mortgage
2. Paying tax
3. Setting rent
4. Landlord expenses and fees
5. Understanding rental yield
2. Paying tax
Other outgoings you’ll have to consider when becoming a landlord are taxes and further property fees. As you’ll be self-employed, it’s important that you fully understand what needs paying, how much and when.
4. Landlord expenses and fees
Besides considering the bigger picture numbers – like tax, for example, there are smaller costs to consider when becoming a landlord.
Arranging privately
There are a number of ways you can advertise your homes and find the right tenants independently. For example, by uploading listings to online property sites, where potential renters can filter by their preferences.
You could also turn to social media, with some platforms like Facebook Marketplace offering another way to advertise rental properties.
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Using an agency
Letting agencies – and individual agents – can also help you advertise and find the right renters, but keep in mind that this will come at a cost. They are especially useful if you own multiple properties, as the admin can be a lot to keep on top of.
You can approach online letting agents, who will upload your properties to both their and third-party sites. There are also street letting agents, who actively showcase properties in high street branches.
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Responsibilities of a landlord
When you become a landlord, your main responsibility will be to provide a safe and pleasant environment in which your tenants can live or work.
The safety and wellbeing of the occupiers of your properties should be your number one priority. As a start, you should make sure that:
- your properties do not present any health hazards (such as mould and asbestos)
- you have all the relevant electrical, fire and gas safety certificates
- all electrical and gas equipment is installed and maintained correctly
- your properties have all the correct fire and carbon monoxide alarms fitted
- your tenants’ deposits are protected by an official Government protection scheme
- you provide your tenant with all the necessary renting information (for example, a How to Rent checklist)
- you undertake all the necessary health and safety inspections, as regulated by the Housing Health and Safety Regulating System (HHSRS).
Managing your rental property
Similar to advertising your property and finding your tenants, you can choose to manage your property as an individual landlord or hire an agency.
The latter helps manage your properties on your behalf and acts as an intermediary between you and your tenants.
Depending on the type of agent you pay for, they can help manage:
- setting and collecting rent
- managing tenant references and credit checks
- contracts and tenancy agreements
- general property management and maintenance
- property inspections
- moving tenants in.
If you have multiple properties, hiring a letting agent might be a good idea. It can help free up your time so you can focus on managing your business.
Letting agents are also incredibly experienced so, if you’re new to becoming a landlord, they can provide a valuable helping hand.
Be responsive and reliable
Your tenants are your first priority. Show this by responding to any issues as soon as you’re able.
Being a reliable landlord means providing effective tenant care and efficient solutions in a timely manner.
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Fix, repair and maintain
As the owner of the property, it’s your responsibility to maintain it. Accidents happen, as do general wear-and-tear and equipment malfunctions.
At the end of the day, your property is the tenant’s home. Care for it like you'd care for your own home.
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Be flexible and understanding
Sometimes unforeseen circumstances can arise, such as missed rent payments or accidental damage to your property.
If this happens, renters might briefly rely on you to be flexible and understanding.
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