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The rules and regulations for renting out a flat (or ‘apartment’, whichever you want to call it) are the same as a regular house. Landlords must ensure certain laws are complied with.
However, since almost all flats are leasehold, at least they are in the UK, there is one extra hurdle to jump over that is unique to BTL flat-owners.
In fact, the hurdle is a critical one, because can potentially stop 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!
So 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), which aren’t exclusive to flats, but are just as critical and relevant to 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 (most 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, then you do not have permission to do so, and you’ll need written permission from the landlord if you wish to let out the property. Generally speaking, most landlords grant permission.
2) Check you have the correct building insurance!
Usually, landlords that purchase a property with the intention of letting it out don’t make this mistake; they get the correct insurance policy that is suitable for BTLs.
However, often, when homeowners decide to rent out their own home, they don’t inform their insurance provider of their change in circumstances, so they have a residential insurance policy covering a BTL property, which of course, is invalid.
Bottom line, if you’re renting out a property ensure you have landlord building insurance, otherwise you won’t be able to make any claims. So, for example, if your bumbling tenant decides to accidentally burn down your house after lighting up an incense candle, that’s your entire investment 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 shit in order.
3) Check your mortgage permits letting!
In similar vein to ensuring you’ve got a valid insurance policy in your back pocket, you also need to ensure you have a mortgage specifically for BTL. Or at least, permission from your lender to let.
Again, this usually isn’t an issue for landlords that buy a property with the intention of letting it out, because they typically finance their purchase with a BTL mortgage from the offset. So the issue of landlords having the wrong mortgage type most commonly occurs when homeowners decide to rent out their own home and then fail to inform their lender of the new 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 of the fact your renting out your property, I would contact them immediately to notify them. If you’re in the process of buying a BTL, whether it be a flat or house, I recommend using the mortgage comparison website Habito to see what mortgages are 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!
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.