Home > Property Investment > Landlords Guide To Letting > Legal And Tax Issues

The following legal and tax issues will affect nearly all landlords. Please note that the information below only highlights these issues and it is recommended that you seek further professional advice.

Income Tax

The income derived from letting your property is subject to UK taxation, although this position will vary depending on whether you are a UK resident or non-UK resident. Either way, you would be advised to seek further advice from an accountant.

Income earned is subject to self-assessment and generally the amount you are taxed on is the profit you have made after agent fees and other expenses are deducted.

Again it is worthwhile consulting an accountant over this matter and more information can be found at www.hmrc.gov.uk.

Gaining Consent to let

If you have not bought a property using a specific buy-to-let mortgage then you will need to gain consent from your mortgage company prior to letting. Failure to doing this could result in you breaking the mortgage covenant.

Most lenders will give their consent provided that they have seen and approved the tenancy agreement and are satisfied that satisfactory references are provide by the tenant.

If your property is a leasehold, then you may also be required to seek consent to underlet the property from the freeholder. In some cases you will be required to pay for this consent to be provided and be required to provide a copy of the lease to be incorporated into any tenancy agreement that is prepared.

Gas Regulations

Regulations state that all appliances are properly installed and maintained to avoid the risk of carbon monoxide poisoning. The landlord is required by law to hold a current Gas Safety Record at the commencement of the let.

The tenant must be provided with a copy of this record before they occupy the property and inspections must be carried out annually on all gas appliances by an authorised CORGI registered engineer.

Electricity Regulations

Currently there is no specific statutory requirement for electrical appliances to be regularly checked and tested. However the landlord does have a duty of care, so any dangerous wiring, flexes, exposed cable and damaged sockets must be repaired or replaced. All appliances should be fitted with a sleeved insulated plug.

Furniture And Furnishings

Legislation introduced in 1997 states that any furniture supplied as part of a letting must comply with fire and safety regulations. This applies to all furniture that has a fabric cover and fillings, including cushions and headboards. Antique furniture produced before 1950 is exempt.

Any piece of furniture that does not comply and does not have the appropriate safety label, should be removed from the property.

Smoke Detectors

These are compulsory in all new homes built since June 1992 and have to be fitted via a mains feed on each floor.

Although there are no specific statutory regulations stating that smoke detectors need to be fitted in older buildings (unless the property is registered in multiple occupation), it is advisable to fit a battery detector in halls, landings and stairs and is something that many tenants will be looking for.

To emphasise the safety feature, you may also want to provide a fire blanket and extinguisher in the kitchen.