First time landlord: the step-by-step UK guide

A rental is an investment before it is a property. Start with gross yield (annual rent ÷ purchase price), then work down to what actually reaches your account: mortgage interest, insurance, ground rent or service charge, a maintenance provision, and a void allowance of a few weeks a year. A property that looks strong on gross yield can be loss-making once a stressed interest rate and a realistic repairs budget are applied.

Stress-test the mortgage payment at a rate meaningfully above today's, and check the rent still covers it. Lenders do the same: buy-to-let affordability is normally assessed on rental cover of roughly 125–145% of the payment at a stressed rate, not on your salary.

Letting a property on a residential mortgage without consent to let breaches your terms, so a buy-to-let product or formal consent is the starting point. Deposits are typically 20–25%, and product fees are often a percentage of the loan rather than a flat amount — factor them into the true cost.

Personal ownership is simplest. A limited company can be more tax-efficient for higher-rate taxpayers because finance costs remain deductible against corporation tax, but it brings higher mortgage rates, company accounts and extra admin. This is a decision to take with an accountant before you buy, not after.

Compliance is not paperwork you catch up on later: several documents must exist and be served before or at the start of the tenancy, and missing them can block possession later on.

• Gas Safety Record — annually, from a Gas Safe registered engineer, served to the tenant within 28 days and at the start of the tenancy.
• EICR — an electrical installation condition report at least every five years, with any remedial work evidenced.
• EPC — a valid certificate provided before letting, meeting minimum energy efficiency standards.
• Alarms — a smoke alarm on every storey and a carbon monoxide alarm in any room with a fixed combustion appliance, tested at the start of the tenancy.
• Licensing — HMO licensing, or selective licensing where your local authority operates a scheme.
• Insurance — landlord buildings insurance; standard residential cover does not apply to a let property.

Work through the full landlord compliance checklist before you advertise, and read the EICR certificate guide if the electrical report is the item you are least sure about — it carries the largest single penalty on the list.

Advertise with clear photographs, an accurate description and the EPC rating, then reference properly: identity, affordability against the rent, employment or income evidence, previous landlord reference, and Right to Rent checks in England. The Tenant Fees Act means you cannot charge the tenant for referencing, inventories, admin or renewals — only permitted payments such as rent, a capped deposit, a capped holding deposit and limited default fees.

A thorough inventory with dated photographs at check-in is the single cheapest piece of protection you will buy. Without it, deposit deductions at the end of the tenancy are very hard to evidence.

Under the Renters' Rights Act, tenancies in England are periodic rather than fixed-term, Section 21 no-fault eviction has gone, and possession must be sought on a statutory ground with its own notice period and evidence. Rent increases run through the statutory process, once a year, with notice — and the tenant can refer the increase to the First-tier Tribunal, so keep comparable market evidence.

Protect the deposit in an approved scheme within 30 days and serve the prescribed information, serve the current How to Rent guide, and register on the national landlord database and an approved redress scheme. Read our Renters' Rights Act guide for the detail on each of these.

Register for Self Assessment and declare rental profit; it is taxed at your marginal rate alongside other income. Individual landlords no longer deduct mortgage interest in full — instead a 20% tax credit applies to finance costs, which is why higher-rate taxpayers often find their real return is lower than the headline yield suggests.

Allowable expenses include letting agent fees, insurance, repairs (as distinct from improvements), safety certificates, service charges and accountancy. Keep every invoice and certificate against the property it belongs to — reconstructing a year of records in January is how deductions get missed.

Full management typically costs 10–15% of rent plus VAT, with tenant-find often charged as several weeks' rent on top. On a property let at £1,200 a month, full management can absorb well over £1,500 a year — money taken from your net return, not your gross.

Self-management keeps that margin, and for a small portfolio the work is mostly calendar and record keeping: certificate renewals, inspections, rent reviews, and having the evidence to hand when you need it. That is exactly the part that is easy to systemise and expensive to get wrong.