Becoming a landlord – before you start
Most tenancies that started after 28th February 1997 will be Assured Shorthold Tenancies (ASTs) and even if you are not provide a written tenancy agreement, this will be the default tenancy type. An assured shorthold tenancy is a tenancy that gives your tenant a legal right to live in the property for a period of time. Tenancies might be for a set period such as six months – this is known as a fixed-term tenancy or roll on a week-to-week or month-to-month basis. This is known as a periodic tenancy.
There are other types of tenancy including Excluded Tenancies or Licences, Assured Tenancies or Regulated. For more information on these less common types of tenancy please visit the GOV.UK website.
There may be costs associated with setting up a property to rent privately and these will be important to think about before you start.
You will have to pay Income Tax on your rental income, minus your day-to-day running expenses, and this has to be reported to HMRC every year as part of your tax return. See www.hmrc.gov.uk/taxreturn for further details.
If you have a mortgage on the property you want to rent out you must get permission from your mortgage lender, unless you have bought the property specifically to rent it out. Most mortgage lenders will also ask that you have specific landlord home and contents insurance so you will need to check this.
There may be additional work to carry out to make sure the property complies with health and safety standards and you may wish to decorate the property before a tenant moves in.
Demand for rental properties within the Stroud district remains high and based on the latest Gloucestershire County Strategic Housing Market Assessment (2013), there are over 1000 households in need (gross) every year. Some of these will buy properties and some will rent from social landlords but with house prices rising and the availability of social housing outstripping demand, a large proportion of households in need are looking in the private rented sector.
The assessment suggested that there is a need for all sizes of housing, particularly affordable housing. The largest need was assessed as two bedroom accommodation, followed by one and three bedroom homes. Anecdotally, there is a need for accommodation for singe person households – both 1 bedroom accommodation and also shared housing.
Private rented properties can be either furnished or unfurnished and it is normal for landlords to provide tenants with “white goods” – a fridge/freezer and sometimes a washing machine. If you plan on providing any furniture you will need to check if it is fire resistant and complies with safety regulations.
Properties occupied by more than one household
If your property has one or more separate households sharing facilities such as kitchens, toilets and bathrooms, it is classed as a House in Multiple Occupation (HMO). If a HMO has three storeys or more, is occupied by five or more people and two or more households, then it must be licensed. For more information and to apply for a licence please visit the council’s private sector housing pages.