How to Become a Landlord – The Complete Guide [2023/24]

Before you begin any new project or investment, you need to fully understand what’s involved.

Before you start exploring how to become a landlord, there are a few things to keep in mind.

One of the most important things to understand is that to succeed, you should think of being a landlord as a business venture.

When you become a landlord, you make regular income, pay taxes, and have expenses and responsibilities. Just like you would with any other business.

You need to be aware of the rules you should stick to and the research that must be done to make your business venture as a landlord successful.

Spend as much time as possible reading up on landlord duties, costs, and potential income. Basically, before you get started, you need to fully understand what being a landlord entails.

You need to realise that being a landlord isn’t as simple as it may sometimes seem, and the more prepared you are, the higher the likelihood that your landlord venture will be profitable.

So what exactly is a landlord? What do landlords need to know before they get started? And how do you register as a landlord? We’ll cover all the essentials of being a landlord in the first of our tips.

Sometimes becoming a landlord isn’t all smooth sailing, and you may need to take certain action to protect yourself and your property.

This is where your rights as a landlord come in. There are several landlord rights for UK-based landlords to be aware of.

These rights revolve around ensuring your tenant is abiding by the rules set out in their tenancy agreement, as breaking these may cause you to lose income. If the tenant breaks the contract before the term is over, the landlord has the right to collect the rent for the term.

The Right to Have Your Rent Paid

One of the most important landlord rights in the UK is the right to have your rent paid. If a tenant doesn’t pay their rent by at least eight weeks, you can send written requests to both the tenant and their guarantor if they have one.

If the tenant still refuses to pay, you have the right to take further action to claim possession of your property under the 1988 Housing Act.

Access to the Property

As a landlord, you will only have the right to access your rental property after giving the tenant at least 24 hours’ notice.

Vice versa, if your tenant decides they no longer want to live in the property, you have the right to receive an agreed amount of notice from your tenant, depending on the contract.

Evicting Tenants

Being a landlord also means you have the right to request that a tenant leave the property.

Reasons for evicting tenants can involve the tenant not having paid their rent or breaking their tenancy agreement in some way, such as antisocial behaviour and causing disruptions to neighbours.

If you want to evict your tenant from the property, you need to give them at least two months’ notice. It is usually best to seek advice from experts such as the National Landlords Association to ensure you’re complying with all the legal measures of this process.

What Support Is Available to Landlords?

Landlord associations provide support to landlords in the UK. Examples include the National Landlords Association (NLA), the UK’s largest landlord organisation, which you’ll need to pay a membership fee to join, and the British Landlord Association, which is free to join.

Perks of joining a landlord association include having access to online forums and networking events to meet other landlords, access to training events, advice from other professionals, and more.

For some people, being a landlord is something unplanned that has happened by chance. Many landlords end up inheriting properties from loved ones and choose to rent the property out rather than live in it themselves. 

However, for many landlords, becoming a landlord is a pre-planned business strategy that serves more so as an investment.  

That’s where buy-to-let property investment comes in. If you don’t already own the property you plan to let out to tenants, you’ll need to be clued up on buy-to-let.  

What is a Buy-to-Let Landlord?

So what is buy-to-let investment, and what is a buy-to-let landlord? 

Buy to let is a term used to describe a property that has been purchased by an investor who plans to let the property out and generate income.  

A buy-to-let landlord has chosen to buy a property solely to rent it out and generate income. 

If you’re thinking of becoming a buy-to-let landlord in the UK, you should understand what makes a buy-to-let venture successful before you get started. 

Is Buy-to-Let a Good Investment?

If you’re looking to become a landlord, you’ll want to be sure that you’re making a good choice by investing in buy-to-let property.  

The good news is that buy-to-let is an excellent investment with a lot of earning potential. Those who invest in buy-to-let property can earn regular rental income on top of capital growth returns when they sell the property.  

What Are the Different Types of Buy-to-Let Property?

When you purchase a buy-to-let property, there are different types of buy-to-let investment you can choose from. The three most common types of buy-to-let purchase are as follows. 

• Traditional residential buy-to-let, which is when you buy a house or apartment and rent it out to tenants such as young professionals, families, or retirees.  
• Student buy-to-let, which is when you buy a property that is purpose-built for student tenants. 
• HMO investments, otherwise known as Houses of Multiple Occupancy, which is when an investor buys a house with the intention of renting it out to multiple tenants from different households. 

The type of buy-to-let property you choose should align with your goals, budget, and the kind of tenant you hope to attract. Read our buy-to-let guide for more information on the different strategies available.  

The amount of money you can make through being a buy-to-let landlord depends on the property you rent out, its area, and the amount you end up paying in taxes and other costs.  

Be sure to focus on high rental yields, strong capital growth predictions, and high tenant demand if you want to make as much money as possible through buy to let. 

What is a Rental Yield and What is Capital Growth?

Rental yields are something that buy-to-let investors focus on when selecting an investment. A rental yield represents how much rental income an investor can expect to receive. The higher the rental yield is, the more rental income you can expect from renting out your property.  

Capital growth is when a property increases in value over time, allowing the investor to sell it for a higher price than they originally purchased it at.  

What About if You’re Renting Out a Property You Already Own?

There are certain situations in which investing in a buy-to-let property isn’t necessary to become a landlord.  

A common example of this is an inherited property that has been passed down from a relative.  

This way, the landlord already owns the property in full, and can begin renting it out once they’ve met all necessary legal requirements to be a landlord and ensured that the property is in a fit state for tenancy. 

Unless you already own the property you’re planning on renting out to tenants, another rule on how to become a landlord is to find the right property.  

The property you choose plays a big part in the overall success of your venture. Your property and area can mean the difference between high demand and strong yields versus void periods and low returns. 

By doing research and taking the right steps when looking for your investment property, you give yourself a better chance of making high returns and securing desirable tenants. 

On the other hand, if you’re thinking of renting out a property you already own, don’t worry too much. There are other ways you can make your property more successful which we’ll cover in this section of our guide to becoming a landlord. 

Research Different Buy-to-Let Areas

One of the most important tips for landlords buying a property is researching the best buy-to-let areas.  

In the UK, certain areas will have more to offer than others. The two requirements which are crucial to focus on when looking for the best investment areas are rental yields and capital growth.  

Areas with high rental yields will ensure being a landlord is profitable, thanks to regular returns that come with renting out a property. Whereas capital growth represents the returns you will make on your investment if the property has grown in value by the time you come to sell it. 

What are the Best Buy to Let Areas in the UK?

If you’re renting out a property to become a landlord in the UK, the best areas to focus on are those up North.  

Compared to Southern regions in the UK, areas like the North West offer some fantastic potential for those renting out a house or flat.  

Home to top property hotspot cities Liverpool and Manchester, the North West is definitely a UK area worth exploring before purchasing a new buy-to-let property. 

Property prices in the North West are expected to increase by 28.8% by 2025, which is a significant rise compared to the UK’s predicted growth of 21.1%.  

This means that purchasing a buy-to-let property in the North West is one of the best tips for becoming a landlord if you focus on capital appreciation. 

For those seeking high rental returns, investing in areas like Liverpool is also a great piece of landlord advice since rental yields in many Liverpool postcodes are ranked some of the best in the country.  

L1, for instance, is said to boast 10% yields making it the most lucrative buy-to-let postcode in the UK, according to Totally Money.  

This shows that if you want to know how to become a landlord in the most profitable way possible, researching the top UK areas is essential. 

Think About What Will Appeal to Your Tenant

While the city the property is based in is important, this isn’t the only thing that people becoming a landlord need to think about.  

There are other ways to make your property stand out and boost your chances of a successful landlord journey, and creating a tenant profile is a good place to start.  

By getting a good idea of the type of tenants you hope to attract to your rental property, you make it more likely that you’ll see high demand and potentially be able to benefit from a higher rental value. 

In the UK, young professionals are the most popular type of tenant that landlords rent out a property to.  

This is because renting is more common for this tenant type, as they may not be financially ready to buy a house of their own yet or prefer the increased freedom from renting.  

If young professionals are the tenant group you plan to target with your rental property, you should aim to make your property as appealing as possible to these types of renters.  

So what is the best landlord advice for selecting a property that’s going to appeal to tenants? 

If you’re looking for a buy-to-let property and want to make sure your investment appeals to young professionals, you should focus on centrally located new-build apartments.  

Renters who work in the city centre are more likely to want to live in proximity to their workplace and have access to all of the city’s top attractions, bars, restaurants, and shops. 

New landlords who want plenty of demand and high yields should seek out modern and stylish developments based in and around the city centre.  

If, on the other hand, you plan on renting out your home to another tenant type, such as a young family, you would need to focus on different qualities.  

This would require purchasing a buy-to-let property based near schools and transport links and focusing on houses rather than apartments.  

Keep in mind that if this is the route you hope to take, you may find that your yield is lower depending on the area you invest in, as apartments tend to be cheaper to buy while often having a similar rental value to houses. 

Think of Ways to Add Rental Value

For soon-to-be UK landlords who already own the property they plan on renting out, you should focus on making the property as appealing as possible.  

This is something to also keep in mind if you’re a buy-to-let investor planning on buying a property that needs refurbishment before it can be rented out. 

If the property you own or will own is outdated, be sure to spend time and money refurbishing it to a high standard.  

Properties with up-to-date décor and features boast a higher rental value and are more likely to see lots of enquiries from interested tenants. If you have the budget to do so, think of different ways to add value.  

This could mean adding a conservatory or extension to the property, fitting a new luxury kitchen and bathroom, and transforming a yard or balcony into a beautiful outdoor space. 

How Has Covid-19 Changed the Rental Market?

The Covid-19 pandemic has changed the UK rental market by encouraging a rise in demand for certain properties and properties with certain facilities. 

Rental properties with a garden or balcony have risen in popularity over the past year due to the pandemic and the national lockdowns that resulted. Renters now want a space to spend time outdoors, and properties that can offer this are in high demand.  

With more people now working remotely, rental properties with a home office or space for a desk area are much more desirable than in the past. Properties offering high-speed internet access are also being favoured for this same reason. 

Once you’ve decided what kind of property you plan to invest in, one of the next most crucial tips for becoming a landlord is to use due diligence before making a purchase.  

Due diligence is a research process where buyers must look into the company selling the property and the property developer creating it.  

Doing due diligence is essential before buying a rental property, especially for new landlords, as it ensures you’re not putting your money at risk. 

Look for Online Reviews

Reviews are a useful tool when researching any company. When making such a huge purchase as a buy-to-let property, they become even more essential.  

As part of your due diligence when becoming a landlord, UK investors should look online for client reviews.  

This means looking for reviews from both the property investment company where the opportunity is listed and the property developer who has created or is creating the development.  

Here at RWinvest, we believe that customer satisfaction is key, which is why you’ll find so many four or five-star reviews from past clients on our Trustpilot and Google Reviews page.  

If a company has lots of negative reviews, all with similar themes, this is a sign that you may need to be more cautious before purchasing a rental property. 

Look for Positive Press

Another of the most important landlord tips when carrying out due diligence is to look online for positive press, which mentions the property investment company and development company behind the property. 

Established companies will normally have several mentions from publications online, covering things like new project launches, new awards and accolades, and any other interesting details.  

The more press you see, the more experienced and successful they’re likely to be. 

Trust Your Own Judgement

Sometimes you can sense whether or not to work with a company based on your own first impressions.  

You may not feel happy with your initial phone call with the property company, or you could feel that the development company doesn’t have a large enough portfolio of successful projects.  

If you’re not sure whether this is the right opportunity for you, you should carry out as much research as you can before deciding whether this is the company you want to use to become a landlord. 

If you’re planning on purchasing a buy-to-let property to become a landlord, you’ll need to think about possible finance options.  

While having the necessary lump sum of money available to buy a suitable property would be ideal, this isn’t realistic for most landlords. That’s why arranging some financial help is crucial. 

Explore Buy-to-Let Mortgages

Buy-to-let mortgages are the most popular option for those who want to know how to become a landlord without having the full amount of money needed for a property purchase.  

When buying a rental property, a buy-to-let mortgage works in the same way as a regular mortgage. You’ll put down a deposit to pay off a chunk of your property price and then stay on top of regular mortgage repayments.  

The most significant difference between buy-to-let mortgages and traditional mortgages are buy-to-let mortgages require a larger deposit.  

To obtain a buy-to-let mortgage, you need to pay a deposit of at least 25% of the total property price.  

You also need to earn a salary of at least £25,000 a year, and you should also already own your own home, whether or not this is with the help of a traditional mortgage.

Consider Payment Plans

If you don’t fit the criteria for a buy-to-let mortgage and wonder how you become a landlord without a large budget, you can always look at ways to split up payment costs.  

Many properties, particularly those at RWinvest, come with a payment plan option that lets you pay a percentage of the property price in different stages. 

This way, you can secure the property and then pay the rest of it off at a later date when you may be able to part with the funds more comfortably. 

If you’re looking for information on how to become a landlord, it’s likely that you’re hoping to do so in the most lucrative way possible.

This is where working out your possible income from being a landlord comes in. This is crucial to think about, especially if you use a buy-to-let mortgage to help fund your investment.

Without knowing how much you could potentially earn from renting your property, you put yourself at risk of actually losing money.

How Much Do Landlords Make?

The amount that landlords make from letting out a property varies. Findings from a Private Landlords Survey in 2019 showed that UK landlords earn around £15,000 on average per year before tax.

Of course, this figure is only an estimated landlord salary based on averages.

The amount you can make from being a landlord will depend on the rental value of the particular property you plan to rent out.

If you own or buy a property in an area where rental prices are high, you can expect to make higher returns from letting out your home.

This is why rental yields in Liverpool are so impressive, as the cost of rent in this city is high compared to the purchase price of properties.

Rental properties in Liverpool, and most UK cities, tend to be higher in rental costs when they’re based in the city centre.

This is because young professional tenants – one of the most desirable tenant groups – are more likely to want to live somewhere central and close to their workplace.

According to Zoopla, the average asking rent for property in Liverpool city centre is £894, while Manchester city centre’s average is £1,172.

The other way that landlords make money is through capital growth returns when they sell the property.

Figures from a 2019 study by Hamptons International revealed that landlords who chose to sell their property in 2018 made an average profit of £79,770 in capital gains.

Researching areas where property prices are rising at the fastest rate is one of the most essential tips for landlords who want to make large returns in this way.

Setting Rental Costs

If you’re investing in property privately and without the help of a property investment company, you’ll need to set your rental costs.

When setting rental costs, you need to research the local area that your property is based in and look at the current average rental price for similar properties in that area.

Zoopla is a great tool for this. Their UK area guide provides the latest average rental costs for different property types in specific postcode areas.

Make sure whatever amount you set as your rental income leaves you with enough money to use as income after paying any mortgage repayments, maintenance costs, and other fees.

Work Out Your Rental Yield

When you buy property through a property investment company, you’ll normally be provided with your rental yield. At RWinvest, we offer assured rental yields for a set period, so that investors know exactly what kind of rental income they can expect.

If you need to work out your own rental yield, you can do so with the sum below.

• Take your expected monthly rental income and multiply it by 12.
• Divide this figure by the purchase price of the property.
• Then multiply this figure by 100 for your percentage.

A lot of people choose to become a landlord alongside their day-to-day career.

If working in a 9 to 5 job, with other commitments to take care of, such as socialising and taking care of family, it can be difficult to successfully manage a rental property at the same time.

This is why so many people choose to hire a property management company to help them take care of the day-to-day duties involved with being a landlord in the UK.

This is a popular strategy for first-time landlords who lack experience in the field.

If you don’t have experience being a landlord, you may stumble across some issues regarding tenant requests, sourcing the right tenants, and responding to any property-related matters.

It’s important to provide your tenant with good service throughout their tenancy, taking care of any queries or issues promptly.

If a tenant isn’t happy with you as a landlord, they may choose to vacate the property and look to rent elsewhere, leaving you with void periods.

If you’re unsure whether you would like to manage the property yourself, known as a hands-on investment, or have a hands-off investment where a property management company is used, a good piece of landlord advice is to weigh up the pros and cons of each method.

Pros of Using a Property Management Company

• You’ll have more free time. While a property management company takes care of your property for you and carries out all the necessary landlord duties, you have more time to attend to other commitments in your life, while still generating a regular income.
• A property management company has more experience in properly dealing with tenants. If you’re a first-time landlord, you may not know the right way to respond to certain queries or issues. This can keep tenants happy and ensure they stay in your property for a longer period of time.
• They have the right connections and resources to find you the most desirable tenants. They’ll also have a detailed screening process in place to ensure you find a suitable tenant for your property.
• They’ll be able to identify the current market rate of your property, which will ensure you’re able to get the highest rental payments possible.

Cons of Using a Property Management Company

• Paying a property management company will add to your list of landlord fees as a UK landlord. If you don’t own a rental property with a high yield, this could leave you with little income after your outgoings have been paid.
• If you hope to learn more about being a landlord and experience first-hand all of the legal requirements for letting a property and dealing with tenants, a hands-on experience would be better for you.

What is a Tenancy Agreement?

A tenancy agreement is a legal document that sets out what’s expected from both the tenant and the landlord throughout a tenancy.

If you’re a first-time landlord and you don’t have a lot of experience with writing up legal paperwork, your letting agent/property manager can assist you in drafting up your tenancy agreement.

Once you’ve learned all the key UK landlord responsibilities, have looked at ways to finance your investment, and thought about finding the perfect property to make your landlord venture as successful as possible, you need to search for prospective tenants.

By taking all the right steps and carrying out tenant referencing, you’ll be on the right track for a happy tenancy for both parties.

Marketing is Key

If you use a letting agent or property manager to help you with landlord duties, it’s unlikely you would need to be involved in marketing your rental property.

However, it doesn’t hurt to learn about the best landlord tips on how to properly market your property to tenants.

For most tenants, the photographs they see will be the first impression they’ll have of your rental property.

This is why it’s vital to make the images as sharp and clear as possible while taking them from angles that show the property off in the best light.

When it comes to listings, lettings agents will normally list your property on sites like Zoopla and Rightmove, but there are other ways to promote your property too.

Many private landlords in the UK opt to advertise their property in newspaper ads, on smaller property portals, on message boards like Gumtree, and through social media.

Get the Property Ready for Viewings

Once you’ve generated some tenant interest, you need to get the property ready for viewings.

This means making sure everywhere is clean and tidy, blinds and curtains are drawn to let in lots of natural light, and ensuring the space looks as inviting as possible.

If you’re renting a house out privately, it’s up to you how you want to hold tenant viewings. You can either host an ‘open house’ where prospective tenants can come and go or arrange one-on-one viewings.

Doing viewings one-on-one is usually a good choice. This gives more of a chance to speak directly to interested tenants and lets you or the letting agent find out more about them.

Completing Background Checks

Experienced lettings agents/property management companies will identify the best tenants and carry out in-depth background checks.

If you’re renting your property privately, you can use a background check tool offered by the National Residential Landlords Association.

It’s possible to get certain details from the tenant directly, including career and financial information such as their job title, salary, lifestyle habits such as smoking, and people you can contact for a character reference.

When researching a prospective tenant, other things to look out for include their credit history, current debts, criminal records, and past tenancy evictions.

If any references come back positive and nothing gets flagged up during checks, you’ll have the green light to begin renting your property out to your first-ever tenant.

Once you’ve established the type of property you’re going to rent out to tenants, another of the most important tips on becoming a landlord is deciding whether or not you plan to rent your property out with or without furniture.

This may seem like a small part of the big picture, but making the right decision can dictate how popular your property is in tenant demand.

As discussed in point number 9, certain tenants want certain qualities from their rental property. In the case of furnished vs unfurnished properties, young professionals and students are more likely to seek out a property that is furnished.

On the other hand, tenants such as families or retirees may prefer an unfurnished property to style it with their own furniture. This is another reason why establishing your ideal target tenant is such a good piece of landlord advice.

If you do decide to offer your rental property furnished, you should aim to include furniture pieces that are as modern as possible to try and appeal to a wide range of tenants.

If a property contains furniture that’s old and outdated, a tenant may avoid renting your property as they would have to deal with storing the existing furniture elsewhere while they fill the property with their own pieces.

This is why more minimal-looking furniture works so well when renting out a property.

For landlords who choose not to furnish their rental property, there are certain items you should still aim to provide.

Even if a property is unfurnished, tenants will typically still expect white goods to be supplied. This includes appliances like a fridge, freezer, and washing machine.

Now that you’ve read all of our tips for becoming a landlord keep the following checklist in mind before renting out a property for the first time in the UK:

• Understand What Being a Landlord Means 
• Know Your Rights as a Landlord
• Understand UK Landlord Responsibilities
• Learn About Buy to Let
• Find the Perfect Property
• Use Due Diligence When Investing
• Consider How You Will Finance Your Venture
• Learn About the Costs Involved
• Calculate Your Possible Income
• Decide Between a Hands-On Vs a Hands-Off Venture
• Find and Reference Tenants
• Choose Between Furnished or Unfurnished