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The rules and regulations for renting out a flat (or “apartment”, if you prefer) are largely the same as those for a house. Landlords must ensure that all required regulations are met.
However, because almost all flats in the UK are leasehold, there is one additional hurdle that is unique to buy-to-let flat owners. And it’s a biggie – it can potentially prevent landlords from renting out their flat altogether.
Just to clarify, this blog post isn’t about the steps residential landlords need to make to be legally compliant, whether they’re letting a house or flat. If that’s the kind of information you’re after, you should check out this blog post, which covers landlord legal responsibilities. It runs through everything from health and safety to taxation. It’s a whole lot of fun. No, really!
What I do want to cover in this blog post is a fundamental and necessary check that isn’t enforced by landlord law, but is essential for other reasons when letting out a flat. I’ll also cover a couple of other essentials that often go amiss (both unintentionally and *ahem* intentionally). While these aren’t exclusive to flats, they are just as critical and relevant when renting out any residential property.
1) Check your lease!
The reality is, many leases don’t permit “subletting” Yup, technically, renting out a leasehold property is subletting (many leaseholders don’t realise that!).
So before you rent out your flat, check your lease for any restrictive covenants that do not allow subletting.
If there isn’t any mention or any obvious restrictions, then you’re most likely allowed to. However, it’s best to get the lease checked by a conveyancer for confirmation, especially if you’re unsure (as with most legal contracts, they’re written in a form of English beyond the comprehension of us mere mortals!).
If your lease clearly states subletting is prohibited, you do not have permission to do so, and you will need written consent from the freeholder or landlord if you wish to let out the property. Generally speaking, most landlords do grant permission.
2) Check you have the correct building insurance!
Landlords who purchase a property specifically to let it out rarely make this mistake – they usually arrange the correct insurance policy suitable for buy-to-let (BTL) properties from the outset.
However, problems often arise when homeowners decide to rent out their own home. In many cases, they fail to inform their insurance provider of the change in circumstances. As a result, they end up with a standard residential insurance policy covering a BTL property, which, of course, is invalid.
The bottom line: if you’re renting out a property, make sure you have landlord building insurance. Without it, you won’t be able to make any claims. So, for example, if your bumbling tenant accidentally burns down your house after lighting an incense candle, your entire investment could go straight down the pan.
If you’re having an “Oh shit! I messed up!” moment, you can quickly grab some competitive insurance quotes from here and quickly get your poop in order.
3) Check your mortgage permits letting!
In a similar vein to ensuring you have a valid insurance policy in your back pocket, you also need to make sure your mortgage allows the property to be let. This usually means having a buy-to-let (BTL) mortgage, or at the very least, written permission from your lender to rent the property out.
Once again, this is rarely an issue for landlords who purchase a property specifically to let, as they typically arrange a BTL mortgage from the outset. Problems most commonly arise when homeowners decide to rent out their own home and fail to inform their lender of the change in circumstances. Ultimately, the landlord will have a residential mortgage for a BTL property. Not good. Not Valid. Don’t do it!
If your lender isn’t aware that you’re renting out your property, contact them immediately to notify them. If you’re in the process of buying a BTL, whether a flat or a house, I recommend using the mortgage comparison website Habito to see what’s available on the market. They are awesome.
Is your flat ready to rent out?
Yes, some of you may be thinking “that’s all pretty standard, I’m not a complete idiot!”
Honestly, you’d be amazed at how many idiots landlords fail to cover the basic essentials, and consequently end up in deep doo-doo.
Before I sign out, just a quick plug to my free landlord eBook, recommended for all new and upcoming landlords – you can download it from here!
As always, if you have any questions, hit up the comment box below!
Landlord out xo
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.
@Landlord
1. With Stamp Duty cut is now a good time to move property to a Limited company paying just 3% stamp duty?
2. Can you recommend the best source of BTL mortgage for such a new company?
3. Is it worth paying the new company the £15k for stamp duty on a 500k property as paid up share capital to make the company look more solid from a mortgage point of view?
4. Can you recommend what should be looked for in a mortgage to enable the lowest possible mortgage cost (& lowest deposit) considering that property prices in London are set to drop and rents in London for 1 bed properties do not leave a lot of profit.