Realising Rental Revenue: Renting Out Your Home In The UK

Wooden house with Brown roof

Amid rising property prices, UK homeowners increasingly consider renting out homes as an income stream, whether when moving, as an investment, or during transitions. However, successfully renting property requires understanding legal obligations, tax implications, safety duties and tenant relationships. This guide covers key steps for homeowners new to renting properties in the UK, from permitted rental schemes through to tenant selection and management, so you can tap rental potential responsibly and profitably.

Is My Property Suitable for Renting Out?

Most privately owned residential properties can qualify for rental, if:

  • The property meets national minimum space, safety and amenity standards. Landlords cannot rent unsuitable rooms or derelict buildings.
  • Home insurance covers renting, since standard policies may exclude when tenants occupy.
  • Local authority planning permissions allow renting residential property. Limitations exist in some areas.
  • Lease terms permit subletting if leasehold. Many leases restrict short-term lets.
  • Mortgage terms allow letting – many mortgages require consent from lenders before renting long-term.

Check all these factors before pursuing property rental.

Choosing the Best Rental Scheme

Various rental models suit different needs of homeowners:

  • Long-term tenancies (6-12 months) – Steady option for reliable tenants, common for spare rooms or whole homes.
  • Short-term lets – Higher returns but increased legal obligations. Requires frequent changeovers so suits local landlords.
  • Holiday rentals – Only permitted in specifically licenced properties.
  • Lodgers – Renting rooms in homes while owners still reside on-site. More informal agreements.
  • Corporate rentals – Companies rent for staff. May pay above market rates but require high specifications.

Consider options aligning with your goals, circumstances and ability to manage.

Understanding Legal Responsibilities as a Landlord

Critically, renting property comes with major legal obligations around:

  • Safety – Gas, electric, fire, legionella, furniture, outdoor areas. Regular certified safety checks are required.
  • Deposits – Must protect in approved schemes, perform inspections, and return fairly per dispute resolution processes.
  • Repairs and maintenance – Promptly fixing issues raised and maintaining comfort. Cannot pass costs to tenants.
  • Evictions – Strict procedures to follow with court oversight. No illegal eviction allowed.
  • Discrimination – Cannot decline tenants for protected characteristics like gender or race.
  • Licencing – Requirements to register and meet council conditions.

Non-compliance risks fines, lawsuits or criminal prosecution. Seek legal advice to ensure full landlord compliance.

Tax Obligations as a Landlord

Rental income also creates tax responsibilities:

  • Declaring rental profits and expenses on self-assessment tax returns yearly.
  • Paying Income Tax on profit above allowance after deducting costs like agent fees, repairs, and mortgage interest.
  • Paying Capital Gains Tax when selling a property that was rented out. Letting property is considered a business asset disposal.
  • Withholding and paying tax on rental income from overseas landlords under NRLS requirements.

Good record keeping proves allowable deductions and rental days to calculate tax dues accurately.

Choosing Between Letting Agents and DIY Renting

New landlords must decide whether to use a letting agent or self-manage rentals. Letting agents:

  • Handle tenant sourcing, referencing and agreements.
  • Manage inventory, inspections and deposit handling.
  • Are local contacts for tenant maintenance issues.
  • Guide compliance.

However, fees typically cost 8-15% of rental income. DIY renting means:

  • Placing your ads and filtering tenants.
  • Organising viewings, contracts and procedures yourself.
  • Being on call to handle any property or tenant issues.

DIY renting requires experience but maximises rental income. Many landlords use a hybrid approach – agents find tenants but owners self-manage thereafter.

Preparing a Property for Tenants

To attract tenants, properties must be safe, compliant and appealing:

  • Visit first for a deep clean, repairs, cosmetic improvements and photography.
  • Arrange an EICR electrical check, gas safety certificate and any other required safety certificates.
  • Furnish appropriately based on agreements, providing required amenities.
  • Remove all clutter and personal possessions. Tenants rent an empty shell.
  • Check CO and smoke alarms are properly installed and functional.
  • Ensure outside areas and boundaries are tidy and safe.

Presenting a professional quality rental ticks key compliance boxes and attracts good tenants.

Marketing Your Rental Vacancy

To fill vacancies quickly:

  • List on major portals like Rightmove and Zoopla.
  • Leverage your website and social media if established as a landlord.
  • Create eye-catching and honest listing photos to engage tenants. Highlight benefits and space.
  • Advertise locally via papers, rental agencies and community venues.
  • Avoid language or image choices that could be discriminatory.
  • Provide property address after initial interest checks for security.
  • List your property ahead of completion when renovating or between tenancies.

Prompt, proactive marketing when spaces become available avoids voids where no rent gets collected.

Screening Tenants and Referencing

Tenant selection involves:

  • Assessing affordability -tenants should have steady jobs and earnings covering rent comfortably. Request payslips.
  • Taking references from employers, previous landlords and character referees.
  • Performing credit checks and reviews to highlight any red flags around arrears.
  • Confirming identities via photo ID, visas etc.
  • Agreeing occupancy limits based on property size and room numbers.
  • Negotiating start dates and initial tenancy terms.
  • Requesting a holding deposit to secure the tenancy upon referencing.

Avoid discrimination by assessing all tenants by the same criteria.

Handling Deposits and Tenancy Agreements

To make things official:

  • Collect the first month’s rent upfront – this can be part of the deposit amount.
  • Protect the deposit in a custodial scheme like DPS or TDS within 30 days.
  • Create an Assured Shorthold Tenancy agreement setting out all responsibilities of both parties. Use templates then tailor.
  • Include inventory lists and condition reports signed by tenants for deposit protection evidence. Photograph supporting proof.
  • Get the signatures of all joint tenants before they receive keys. This binds them equally to the contract.

Following best practices on documents creates security for landlords and tenants.

Ongoing Management of Your Tenants

Once occupied, landlords must:

  • Arrange regular inspections to check property condition – at least annually for longer tenancies but quarterly is best.
  • Handle maintenance issues promptly while documenting everything.
  • Collect rent monthly and provide annual rental summaries.
  • Pay any property management fees and service charges.
  • Mediate any disputes or neighbour issues professionally.
  • Stay friendly but firm on contract rules – don’t compromise reputation.

Proactive cordial management ensures stable, rewarding tenant relationships.

Handling Tenant Departures

When tenancies end:

  • Perform a final home inspection assessing changes to condition.
  • Agree on any essential repairs or cleaning required and associated costs.
  • Return the deposit promptly meeting disputes using mediation if necessary.
  • Check for abandoned possessions and arrange removal if relevant.
  • Change locks and codes between tenancies.
  • Review property condition and features – refresh and update between tenancies to appeal to new tenants.

Properly closing each tenancy avoids subsequent disputes and prepares for the next rental.

Maintaining Positive Tenant Relations

The best landlords:

  • Respond promptly to queries and issues – this prevents small problems from worsening.
  • Show understanding of renters’ perspectives and needs.
  • Communicate respectfully and avoid over-familiarity.
  • Follow rental agreements impartially if disputes arise.
  • Are proactive on property standards, not just reactive.
  • Avoid placing unfair liability for repairs on tenants.
  • Periodically update tenants on inspections, changes or contract renewals.
  • Diplomacy and professionalism create amicable, responsible tenants.

Handling Problem Tenants

If issues emerge, address them firmly but calmly via

  • Respectful verbal warnings when problems first arise.
  • Follow-up written notices to evidence warnings.
  • Fair formal procedures – don’t make threats.
  • Eviction is only a last resort using court processes.
  • Penalties are only permissible if contractually agreed.
  • Calling on tenancy deposit dispute mediators if required.
  • Seeking legal counsel before acting if unsure of rights.

Even difficult tenants deserve due process. Prompt intervention prevents major detriment.

Maximising the Profitability of Your Rental

Boost rental yields by

  • Setting market-aligned rents yearly – check local rates and demand. Don’t underprice.
  • Minimising voids between tenancies.
  • Keeping maintenance costs low through preventative upkeep.
  • Claiming available tax reliefs for landlord costs like repairs and agent fees.
  • Avoiding over-leveraging with excessive mortgages.
  • Refinancing when interest rates drop to reduce repayment costs.
  • Reviewing property management contracts to find cost savings.

Savvy financial management optimises net incomes from renting.

Adapting to Regulatory Changes

Landlords must

  • Stay updated on legal and tax changes affecting the PRS sector.
  • Make any adjustments to comply, such as minimum efficiency standards.
  • Avoid letting standards slip – follow best practices.
  • Be open to training to keep accredited.
  • Consult experts on major regulatory changes.

Embracing evolving regulations protects rental businesses.


If you still have this question in mind “Will renting out my house be a smart option?”. Renting can generate solid returns for savvy landlords. But success requires compliance with legal and tax duties, astute financial management, tenant selection and building strong relationships. Avoid amateur errors – take regulated approaches aligned with your goals. With the right property, preparation and professionalism, rental yields provide reliable long-term revenues. Treat tenants and rent fairly, and both landlord and tenant gain from the experience.

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