Written by Chris Richards, Managing Director
The English Housing Survey published by the Ministry of Housing recently revealed that there are 4.5 million households in the private rental sector in England, and another 4 million live in the social renting sector: that's 1/3 of the UK population.
'Generation rent' is predicted to increase, as the proportion of 16-24-year-olds renting privately has grown from 51% in 1998/99 to 73% in 2017/18, and from 20% to 46% for 25-34-year-olds. So, is this a good time to become a landlord? Becoming a landlord could bring you some extra monthly income, as well as providing an option for investing your savings.
But you might want to know what counts as a landlord? What are your responsibilities if you do decide to become one? And what are the costs involved? This article will guide you through how to become a landlord in the United Kingdom. You'll find all the information you need on the various aspects of being a landlord, from landlord insurance to tenancy agreements.
We'll go through what, exactly, is a landlord, the benefits of being a landlord, your responsibilities and legal requirements as well as the potential costs involved. You'll soon have a better understanding of what's involved in being a landlord, and how to meet regulations if you decide owning rental property is an exciting venture for you.
A resident landlord is a landlord who lives in the same shared house or flat with their tenant(s). If you live in different parts of the same property with someone who is paying you rent, then you are, by law, a resident landlord.
This includes properties where there have been a loft or basement conversion, or if part of the garage has been turned into a bedroom or annexe. However, this doesn't include if you live in separate flats which are in the same building or block.
If you're considering renting out part of your current property, it's important to check if you need any permission before signing a tenancy agreement. If you own your current property and have a freehold agreement, then you shouldn't need any permission before becoming a resident landlord. However, if you have a mortgage, or own a leasehold property, you'll have to get consent before sub-letting your property.
If you decide to become a landlord there are some good benefits involved, that include:
Whether you're interested in owning one buy-to-let property or starting a property portfolio, becoming a landlord offers a great opportunity to earn a secondary income, as it is a flexible position where you set your own terms: much like running your own business.
Private rental property prices have been steadily increasing in the UK for the past few years, with asking rents in London currently at a record high of £817 per month. Demand for rental properties within the UK rose by 7% overall, and even more in certain areas such as London, which saw a 13% increase in rental demand.
In some hot spot areas such as Scotland and the Midlands, rental prices are predicted to increase, so it could be a fantastic time to invest in rental property. Instead of putting your money in a savings bond – where interest rates are at an all-time low – why not protect your assets by buying property instead?
As well as providing exciting investment opportunities, becoming a landlord and renting out property also means that:
Before you let your property, you'll need to decide whether to provide furniture as part of the rental agreement, or whether to rent out your house or flat unfurnished.
Furnished properties usually attract higher rental prices, but you'll need to invest a lot of money upfront in order to fit out the property with adequate and good-quality furniture. You'll also be fully responsible for the repair and maintenance of any furniture that you provide. Unfurnished properties tend to attract less rent, but don't require an initial investment or furniture upkeep costs.
Your decision should be influenced by the location and size of your property. For example, if you have a small, city-centre flat you are likely to want to let it as a furnished property, as you will attract students and young adults who have little possessions and will likely be looking for this type of property.
Alternatively, if you own a larger, outer-city or countryside house your tenants are likely to be families who tend to stay in rental properties for a longer time and will usually have their own furniture to bring with them.
As a landlord, it can be hard to decide whether to let your tenants keep pets live in your property or not. They may be cute and furry, but pet hair can be extremely hard to remove from carpets and soft furnishings such as sofas: this can cause cleanliness and allergy issues for future tenants. As well as this, badly behaved pets can cause damage to furnished flats by chewing and scratching the furniture.
However, having a strict no-pet policy could put off a lot of potential renters who are looking for a property to let with their furry friend. Did you know that 3.2 million households purchased a pet in 2020? This means that the country now has 17 million pet-owning homes! That's quite a lot of potential renters you'll be missing out on if you place a pet ban on your property.
Smoking inside properties has become a lot less common, as more and more people recognise the health and hygiene consequences of smoking indoors.
Nevertheless, you'll need to make it clear to tenants if you don't want them to smoke inside your property. Smoking can cause stained walls and permanent damage to soft furnishings, as the smell is incredibly difficult to get rid of. As well as this, smoking inside is a significant fire hazard, and so we would strongly recommend having a no smoking policy in place for your properties.
Make sure that you have a clear policy in place in your tenancy agreement, so that you can penalise tenants who don't follow the rules.
Gas statements will include important household data like your gas consumption, displayed in a measure of energy called kilowatt hour (kWh).
You are billed in kWh by your utility company because this measures how much energy your appliances use, and for how long. A kilowatt (kW) is the power required for an appliance to work, and a kilowatt hour (kWh) is the energy used each hour that appliance is operating.
Even with kWh as the global measurement for energy, there is no single, consistent price for gas. It varies depending on who you are buying it from and what is written in your contract, so the cost of each kWh could be different for each gas supplier or energy tariff. According to National Statistics, the average cost of gas is 4.17p per kWh.
Most contracts will also include a daily standing charge, which remains the same no matter how much gas you use. The average price of standing charges is £84.62 per year.
Energy companies decide what to charge for gas based on a range of factors including regulations and energy price caps, global production and supply chain costs. Price changes can even be caused by the weather.
Gas suppliers often purchase gas well in advance, sometimes even years ahead of time. This strategic move helps protect the energy companies from gas price rises. Just like suppliers protect themselves from prices hikes, you can too. Choose a fixed-rate tariff to know exactly what you’ll be paying for gas for an agreed period of time, regardless of whether the global price of gas changes.
Customers also have the power to influence the price of energy. Suppliers must price energy competitively in order to keep customers happy long term, or risk losing them to cheaper alternatives. The best thing you can do as a customer is to shop around.
Switching tip: Look up gas deals regularly to check you are purchasing energy at fair rates. Comparing and switching supplier keeps the gas market competitive and ensures you make the most of your money.
If you choose a fixed rate tariff, you can agree the price you will pay for each unit of gas for the duration of your contract. This protects you from unexpected price rises, but your bill could still vary depending on how much energy you use.
For an indication of what you’ll be charged, your supplier will prepare a personal projection for you. This is a type of financial forecasting that is calculated using your history of energy usage and the price you pay for gas. It’s an estimate based on your data.
Switching tip: You can use this same data to enter your annual consumption in kWh when comparing energy deals with Utility Saving Expert. With this information, we can tell you exactly how much you can save by switching.
Inputting your annual energy consumption when comparing gas deals ensures accurate quotes tailored to your household needs are generated in the comparison results.
If you don’t have a physical copy of your bill, check to see if you have access to your energy usage in emails from your provider, or using their website or app.
Even if you can’t access your gas bill, it’s still possible to find quotes. As long as you have knowledge of how much you’re spending and can answer some questions about your household and energy usage, you’ll be able to compare energy deals to find a cheaper gas supplier.
Another way to review whether you are overpaying on your utility bills is by familiarising yourself with the types of tariffs and plans that are available. With a better understanding of the deals on offer, you’ll get an idea of where your current tariff and supplier sit in relation to competitors.
Every home will have different requirements, so it’s no surprise that the best supplier will not be the same for everyone. However, some tips for achieving cheaper bills apply to most households. Here are our suggestions for how you can find the best gas tariff:
These are default tariffs that are typically very expensive. You might be automatically shifted to this type of tariff after a fixed rate contract ends, so it’s important you always compare your options when your contract end date is approaching.
If you compare energy tariffs using information that is inaccurate, you might not end up finding the optimal deal for you. It’s best to be completely transparent about your energy usage and reference correct data from your gas bills and annual statement.
Energy suppliers may offer you a discount for choosing to purchase both gas and electricity from them. Dual fuel options reduce the administrative costs for the company supplying the energy and they will often reward customers with better deals.
Regularly compare gas tariffs to find out whether there’s a cheaper deal. You might even find that your current supplier has a more cost-effective option that you could switch to. Don’t put off comparing gas prices because you think it will be time consuming or confusing, that’s a common misconception. It’s quick, easy and could save you hundreds of pounds.
Don’t just compare, switch! When you find a better gas tariff, all you need to do is confirm you want to switch. The suppliers will handle all of the processes for you. There’s no need to worry about being left without gas, your supply won’t be interrupted.
For the cheapest gas prices, use Utility Saving Expert to compare and switch. The UK’s leading socially-conscious comparison site, we are independent and generate unbiased results to help you save money. Our comparison tool is regulated and fully accredited to the Ofgem Confidence Code.
After you choose to switch supplier, rest easy. We’ll get in touch with your new supplier and they will start all of the paperwork and processing. You won’t even need to get in touch with your old supplier to inform them of the switch. All of the heavy lifting is done for you, making switching stress-free.
Switching tip: To switch gas supplier, your home doesn’t need to undergo any building work and there are no changes required to pipes. You will use the same meters and supply lines as you did before, it’s just the company that you pay for the gas that will change.
All that you will need to do after switching gas supplier is provide a meter reading. This ensures your final statement from your old supplier and your first bill from your new supplier are correct.
Switching gas supplier won’t cause any disruption to your supply. You can continue heating your house comfortably throughout the process.
Even though your supplier switches, your gas supply remains the same. Despite the fact that you change who you buy your energy from and how much you pay, your home uses the same gas. There won’t be any unexpected gas outages. The only change you’ll notice is your savings!
You can switch gas supplier at any time of year. There’s no chance of any disruption to your energy supply, so it doesn’t matter if you switch during the winter months. However, you might choose to compare and switch supplier in the autumn to avoid overpaying for energy in the winter months.
It’s a good idea to use a comparison site to research the best energy tariffs for your household on a yearly basis. This keeps you up to date and ready to switch whenever you come across a better deal.
You should look around for new deals when your fixed tariff contract is coming to an end to avoid being rolled over to a default tariff, which are typically very expensive. Switching within the last 49 days of your contract is free, but if you choose to switch before this, you may have to pay an exit fee.
Comparing deals online and confirming you’d like to switch gas supplier takes just a few minutes, and the entire switch usually happens within 21 days.
During this time, you’ll be granted a two-week cooling off period in case you change your mind and want to cancel the switch.
Choosing a cheaper energy deal doesn’t mean you’ll need to compromise on high quality customer service, though that’s a common worry for consumers who are considering switching gas supplier for the first time.
All of the companies we list are trusted providers. When you browse through the quotes in our comparison results, you’ll see plenty of information displayed, including star ratings for all providers. Whoever you choose, you can make your decision based on all of the factors that are important for you.
After you’ve compared deals and switched to the cheapest gas tariff, there are plenty of other ways to keep your costs down including easy changes that you can make at home: