Selective Licensing was introduced by Tony Blair’s Government in 2006 in an attempt to ensure the high quality of accommodation in the private rented sector.

Legislation in part 3 of the Housing Act 2004 gave local authorities the powers needed to introduce licensing schemes for private sector landlords in selected defined areas.

Many selective licensing schemes are now being operated across the country.

01 | An overview of selective licensing

A local authority can introduce a selective licensing scheme into an area for two reasons.

Firstly, if it is satisfied that there is a problem with low housing demand in an area, they can introduce selective licensing in order to contribute to the improvement of its social or economic conditions.

When deciding if an area is or is likely to become an area of low housing demand the local authority must consider the value of property in the area, the turnover rate of residents, the number of unoccupied residential properties in the area, and the duration they remain unoccupied.

Second, if an area is experiencing a significant persistent antisocial behaviour problem, and some or all of the private landlords in the area are failing to take appropriate action to combat this problem, the local authority can introduce a selective licensing scheme.

To do this, a local authority needs to believe that taking this action could help resolve the area’s antisocial behaviour problem.

Antisocial behaviour can include the intimidation and harassment of tenants or neighbours, noise, rowdy and nuisance behaviour, animal related problems, vehicle related nuisances, anti-social drinking, prostitution, the presence of illegal drugs, graffiti and fly posting.

Once a local authority introduces a selective licensing scheme it will put forward conditions for landlords operating under it.

These vary from council to council but are often quite extensive.

If a landlord fails to comply with a selective licensing scheme or its conditions the local authority can levy a fine of up to £30,000 on them.

Once a local authority has put a selective licensing scheme into effect, it will last for five years.

02 | What do landlords need to do to comply

Firstly, a prospective landlord needs to find out if their property is in a selective licensing area. They can do this by checking with their local authority.

If the property is in a selective licensing area, the local council will have a license application form available. The fees for this can vary but can be more than £1000. You must complete this application and prove yourself to be a “fit and proper person” to hold a license.

A fit and proper person is defined here but in short, is someone who has not been found guilty of unlawful discrimination, any offence involving fraud, other dishonesty, sex, violence or drugs and who has not contravened any provision of housing, landlord and tenant law.

Getting a license can be an onerous process.

The council may want to see safety certificates and know the location of smoke and carbon monoxide detectors, as well as seeing details of your tenants and their tenancy agreements.

If a landlord lives aboard the council may require that someone else holds this license. They will check that this person is appropriate and is involved in the day-to-day management of the property.

Licenses set out as part of a selective licensing scheme have conditions. These will vary from council to council but can be extensive.

Here are some example conditions from a scheme active in Greater Manchester. Landlords must:

• Ensure that their premises and its grounds are in a clean, safe, and habitable state prior to new occupiers moving in.
• Supply Electrical Installation Inspection Certificates and Portable Appliance Test Certificates on demand.
• Ensure that all important information is included in the tenancy agreement, that tenants are aware of any conditions of habitation, and that they are aware of how to report faults with the property.
• Ensure that the property is adequately secured with suitable locks on the doors and windows.
• Take reasonable steps to deal with nuisance and antisocial behaviour perpetrated by the occupants of the premises. This includes contacting and cooperating with relevant authorities if necessary, including the police and city council.
• Provide suitable accommodation for tenants during major works to their premises.
• Provide contact details to the property’s neighbours in case of an emergency.

03 | Why do landlords dislike the selective licensing system?

Landlords have a few reasons to dislike selective licensing schemes.

Firstly, local authorities can charge hundreds of pounds for a license.

One of the more expensive selective licensing schemes, active in Gateshead in Tyne and Wear, can cost landlords who are not accredited with the council as much as £1000, while new schemes are being introduced elsewhere with even higher fees.

The money raised with such license fees is intended to pay for the selective licensing schemes enforcement, but some landlords believe that councils are using the schemes to fill their coffers.

While the Guardian reported that a scheme in Nottingham could raise tens of millions of pounds, councillors claim it is not intended to make a profit.

Some landlords object to the fact these schemes are seemingly very poorly run, with the Telegraphs Secret Landlord complaining that they had paid for three such schemes, and had not heard back from a single council.

This is indicative that the schemes have another problem.

The Secret Landlord said only 66% of landlords in their area had signed up for the local selective licensing scheme and posed the argument that the remaining 33% were probably the ones renting out substandard accommodation.

David Smith, policy director for the Residential Landlords Association offered a similar point of view, saying selective licensing schemes rely on landlords making themselves known to the local authority, and that “criminal landlords… will not come forward.”

While the penalties for not complying with selective licensing can be enormously high, with fines of up to £30,000 being levied on “rogue landlords”, many landlords question whether much enforcement is being carried out.

04 | Will the government do anything about it?

A 2019 report from the Ministry of Housing, Communities and Local Government adds to the impression enforcement is spotty at best, indicating that local authorities often struggled identifying the full extent of their private rented sector, particularly when the area of the selected licensing program was large.

The report also identified that local authorities struggled with methods of enforcement and found the door knocking approach used by many was ineffective.

It added that in its current form, selective licensing was sometimes ineffective at ensuring an areas residential rental properties quality was up to standard, as it did not offer the powers to enforce this issue properly.

While the report noted that selective licensing could improve the quality of a localised areas housing and reduce anti-social behaviour, it generally only worked well if it was used in concert with other measures. In addition, it found that schemes which were self-funding and had effective enforcement were much more effective at improving housing quality.

Three years following the report, the UK Government is still considering the results, and has seemingly yet to decide if selective licensing schemes are worthwhile.

However, there is occasionally talk in the House of Commons about extending a similar scheme across the country. In early 2022, Michael Gove spoke of introducing a landlord register and holding all private rental properties to the Decent Homes Standard.

While in theory, this would not be a problem for good landlords, the reality of how selective licensing has worked up till this point indicates that good landlords will be footing the bill while rogues simply hide in the shadows.

In conclusion

Selective licensing legislation was introduced with lofty ambitions to improve the UKs housing stock but often proves to be a burden for legitimate landlords while failing to achieve this goal and letting rogues slip through the net.

The substantial extra cost and hassle this causes good landlords gives them yet another reason to want to get out of the private rental sector.

If you are looking to sell a buy to let property quickly, with or without tenants in place, you should contact one of our experts at National Property Buyers.

Has this article been helpful? Let us know by leaving a short comment below.

If you are looking to sell an HMO property 2026 could be a great time to do so. Why? Because right now HMO’s are in favour due to their potential for strong investment yields.

Research by the British Landlords Association shows that HMOs make more profit than a traditional buy to let, with an average gross yield of 12% and net yield of just 5% (owing to increased mortgage costs). This compares to an average gross yield of 6% and just 3% net yield for single let (Buy to Let) properties.

Most recently we have been hearing from landlords looking for a way to sell student property. This has been driven by increasing numbers of larger Purpose Built Student Accomodation (PBSA) blocks continuing to be built in larger UK cities. The net result of which has been weakened student demand for standard HMO properties.

In this blog we explain step by step how to sell an HMO property with the minimum of fuss.

01 | What defines an HMO?

In general, a property is considered a house of multiple occupation if both of the following conditions apply.

There needs to be at least three tenants, forming two or more rent paying households, living in the property, and they need to share a kitchen, bathroom, or toilet facilities.

A household is defined as either a single person living alone, or a family living together. A family includes people who are married, in a relationship, relatives, half relatives, and step relatives.

Some councils require licenses for landlords to operate HMOs. Landlords running large HMOs must meet certain standards and obligations. All Large HMOs need a license from the relevant local council.

The definition of a large HMO is when there are five or more tenants living in a property, forming two or more households which share facilities.

Lots of diverse types of accommodation are considered HMOs. These include shared houses operating as student property or for working professional, lodges, hostels and more.

02 | Is it difficult to sell HMO property?

HMOs can be difficult to sell for a few reasons.

Firstly, by definition, usually HMO’s have tenants in place. Selling a HMO property with existing tenants can be more difficult than selling one without them. However, in the case of an HMO, this can be beneficial for reasons explained later.

Second, the pool of buyers looking for this kind of property tends to be smaller. This is because HMO buyers tend to be exclusively investors and landlords.

While smaller HMOs can be treated as residential properties for valuation, marketing, and sale purposes, many HMOs, particularly larger ones, are not suitable for residential use and cannot be sold in this way.

This is why having sitting tenants is not always a bad thing—investors looking for larger properties will see them as an immediate rental income. This cna take the pressure of needing to tenant the property quickly.

Third, most estate agents are unwilling to market HMO properties for sale. Even if a conventional estate agent is willing to take on the property it is unlikely that they would have much experience marketing and selling a HMO property investment.

Fourth, not all buyers are necessarily suitable for an HMO purchase. Inexperienced buyers might be seduced by the potential profit without understanding what running an HMO involves, and or understanding the licensing requirements.

In addition, finance can be harder to secure and more expensive for an HMO than for a residential home. Choosing an inexperienced buyer can lead to your sale taking many months, or potentially even falling through.

When selling an HMO to someone you fear is inexperienced, you should ask them if they intend to use an agent, and which HMO lender they are using to raise their finance.

If they are not using an agent, and do not have an HMO lender lined up, you should view their offer with extreme caution.

03 | How is an HMO valued?

Smaller HMOs which could be sold as a single-family home are normally valued in the same way as residential homes.

Generally, larger HMOs are not valued like a normal residential property and are instead valued as a business.

This is because the value of a larger HMO tends to be based on the income it generates, rather than the structure itself.

The best way to get a rough estimate of your HMOs value is to look at what comparable properties have sold for in your local market.

As with any property sale, a lower price will lead to a faster sale, and a higher price will lead to a slower sale.

There are methods to increase the perceived value of an HMO. These include cleaning, preparing, and staging the property, removing clutter, and ensuring all necessary maintenance has been completed.

04 | How to prepare for selling an HMO

To sell an HMO, you will need to have all the relevant documents to hand. These include:

• Your HMO license if it is a large HMO, or if your local authority requires HMOs to be licensed.
• Proof of planning permission, especially if your HMO is in an area covered by an article 4 direction regarding HMOs. If this is the case permitted development rights do not apply and converting a single residential home into an HMO requires planning permission.
• Tenant’s details, tenancy agreements and rent payment records.
• Safety certificates.
• Fire risk assessments and test certificates for fire alarms and emergency lighting
• A valid EPC (Energy Performance Certificate)
• The maintenance record for the property
• The properties floor plans
• Your HMO accounts
• The management contract if you have an HMO manager in place

Once you have these documents you should notify your solicitor that you intend to sell the property. This is so they can get ready to collaborate with the buyer’s solicitor when beginning conveyancing.

This is also a suitable time to tell your tenants you intend to sell the property. While you are not legally required to inform them at this point it can be a good idea to tell them. This is so they do not hear about the sale elsewhere, worry about the future of their home, and look to move out.

In most cases, buyers will want your tenants to stay on, and an HMO is generally easier to sell with reliable tenants in place.

Once you have gathered the documents and informed the relevant parties, you need to decide how you intend to sell your HMO.

05 | Is it a good idea to sell an HMO at auction?

Selling your HMO at auction is a viable option.

It can lead to a quick sale and the 10% deposit required to make a purchase at auction reduces the chances of buyers backing out.

In addition, multiple buyers engaging in a bidding war can drive up the price and given that auctions often attract professional investors, there is a reasonable chance that their will be interest in your property.

Auction houses do have downsides, however.

Firstly, you must allow time for promotion. This can take a while, and not all auction houses are experienced in marketing HMOs.

Second. It will take at least 28 days following the auction to complete the transaction.

Third, you may not get the price you are looking for. While you can ensure a minimum sale price by setting a reserve, if this is too high then the property will not sell.

Fourth, auction houses charge sellers entry fees for putting their properties up for sale, and commission when the sale is completed.

06 | Why using a specialist agent is the best way to sell HMO property

While selling an HMO via auction in a profitable manner is viable, it’s often not the best way.

Using a specialist agent who fully understands the intricacies of HMOs can ensure that your sale is as painless as possible. They will have the expertise to screen buyers and ensure that you receive an offer from a suitable person or company.

Specialist agents also have access to extensive lists of private HMO buyers, including property funds, as well as strong access to the open market. This can help ensure a dependable buyer and profitable sale.

However, even with a specialist agent in your corner, waiting for a buyer to come to you takes time.

A third option is selling your HMO to a cash property buying company. This often leads to a lower sale price but will ensure that you acheive a quick property sale within 28 days.

This approach is recommended by the British Landlord Association, though they advise that you screen potential buyers to ensure that they know what they are doing and have their payment ready.

If you would like to find out more about selling your HMO to a cash buying company, contact one of our expert team today at National Property Buyers.

Has this article been helpful? Let us know by leaving a short comment below.

07 | Frequently asked questions

2026 HMO Regulations & Compliance

Valuation & Fast Cash Offers

Financials, Tax & Strategy

Asking your tenants to put a deposit down before they move in can save a landlord an awful lot of trouble.

If the let goes to plan, then this deposit is returned to the tenant, while if something goes wrong the landlord can claim some or all this money to help cover their costs.

Whether it be used for covering missed rent payments or paying for repairs to damaged property, reclaiming the deposit can make an otherwise costly and challenging situation manageable.

Generally, the tenant pays up to five weeks rent up front, which must be looked after by a tenancy deposit protection scheme. In most cases no more than this can be taken, due to rules brought in under the Tenants Fees Act 2019.

01 | Do I have to use a tenancy deposit scheme?

If a tenant on an assured shorthold tenancy pays a deposit it must be secured by one of three UK Government approved tenancy deposit protection schemes.

This was brought into law in the United Kingdom Housing Act 2004 and has been a requirement since 2007.

These schemes help keep tenants’ deposits safe from a minority of unscrupulous landlords and ensure that they are returned.

This is provided that the tenants do not break the terms of their tenancy agreement.

If tenants do break the agreement, for example by damaging the property or not paying rent, the landlord can claim their costs from the deposit.

If a landlord takes a deposit but fails to protect it using one of the three government approved tenancy deposit schemes, the tenant can get a court order for the landlord to repay up to three times the deposit.

Not protecting a deposit also means a landlord can no longer evict their tenant using a Section 21 no fault eviction.

A tenant’s deposit must be protected in one of these schemes within 30 days of it being received by a landlord. If the deposit is not protected in this timeframe, it should be returned to the tenant.

02 | What are the types of tenancy deposit schemes?

There are two types of tenancy deposit schemes, custodial and insured.

In a custodial scheme the deposit is held by the scheme provider, while in an insured scheme the landlord keeps the deposit.

There are benefits to using both types of tenancy deposit scheme.

03 | Custodial schemes

The first type of tenancy deposit scheme is the custodial scheme. This type of scheme is free and is the most popular.

A custodial scheme will hold on to the deposit until the tenancy has come to an end.

It will release the required money to both parties when they agree on how it is to be split or after any disputes have been resolved.

One downside of a custodial scheme is that if a dispute takes place, a landlord will not receive any funds until the end of the dispute and can be left to fund remedial works themselves.

04 | Insured schemes

The other type of deposit protection scheme is an insured scheme. In an insured scheme, a landlord can keep the deposit while paying insurance in order to protect it for as long as the tenancy lasts.

Providers charge for this type of scheme and the scheme provider guarantees that tenants will always get any money which they are entitled to.

The benefit of an insured scheme for a landlord is that they can accrue interest on the deposit for the duration of the tenancy.

This makes it an attractive proposition to people with large property portfolios or expensive individual properties, as the total interest on their deposits can dwarf the registration cost.

Landlords do not have to involve an insured scheme when returning the deposit. They are free to confer with their tenants and agree deductions without any need to contact their provider.

05 | Dispute Services

If a landlord and tenant do not agree on how a deposit should be divided all tenancy deposit providers offer a free dispute service.

Using these services is easier and much quicker than pursuing a claim through the courts, and claims can be resolved within as little as 28 days.

Both a tenant and a landlord can initiate the dispute process, however, the burden of proof is placed on the landlord.

This means they must prove that their claim on the deposit is legitimate using evidence. A tenant only needs to provide evidence in response to the landlord’s claims.

Evidence can include things like the tenancy agreement, bank statements, utility and council tax bills, inventory reports, email or letter correspondence, cleaning charges, photographs, and witness statements.

Once the evidence has been gathered the case is then sent to an impartial adjudicator at the deposit scheme, who will decide how the deposit should be divided.

Occasionally, including in situations where the police are involved, an adjudicator may decide that the case needs to be resolved through a formal court process.

In the case of a dispute involving a landlord using an insured scheme, the landlord must pay the tenancy deposit scheme the disputed amount.

For example, a tenant has put down a deposit of £500 for a property.

The landlord wishes to deduct £200 for damages, and the tenant is disputing £100 of these deductions.

In this case the landlord needs to return the undisputed £300 to the tenant and send the £200 disputed to the deposit scheme so it can be divided as the adjudicator sees fit.

06 | Who are the three tenancy deposit scheme providers?

There are three different tenancy deposit schemes available in England. These are the Deposit Protection Service, My Deposits, and the Tenancy Deposit Scheme

Each is owned by a different company, and their services have slight differences.

07 | The Deposit Protection Service (DPS)

The largest of the three available schemes, the Deposit Protection Service holds more than 7 million tenant deposits.

It is owned by Computershare, an Australian publicly listed financial services company. It offers both insured and custodial deposit schemes.

The first step to protecting a tenant’s deposit with DPS is to create an account on their website. You will need to provide an email address, create a password, and answer some security questions for identity validation reasons.

To use the Custodial Scheme, you first create a free custodial account with the DPS. You can then add properties and tenants to your account.

When you receive your deposit, you need to transfer it to the DPS. The easiest way to do this is via bank transfer.

Note that you can add a property without tenants, meaning that you can set up the deposit scheme before your tenant even pays their deposit.

To add a tenant, you will need their name, title, contact details, the start and end dates of the tenancy, the rent amount, and the deposit amount.

To use the insured scheme, you need to create an account and pay your required fees. This is £18.75 for deposits under £500 and £27.75 for deposits of £500 or more.

In addition, in order to use the DPS insured scheme, you must have Client Money Protection in place.

DPS is well suited to larger corporate landlords and offer a discount for landlords with more than 100 deposits.

08 | My Deposits

A second deposit protection scheme trades under the name My Deposits.

It is part of the Hamilton Fraser Group, which is indirectly owned by Brown and Brown, an American publicly traded insurance company.

It also offers both free custodial and paid insured deposit schemes and is the only scheme endorsed by the National Residential

Landlords Association, offering members a discount on their insured deposit schemes.

Deposit protection on deposits below £500 costs £20 for non NRLA members and £13.20 for members.

If your deposit is more than £500, the prices are £27.20 and £17.95 respectively.

09 | The Tenancy Deposit Scheme

The oldest deposit protection scheme, established in 2003, The Tenancy Deposit Scheme is the only UK owned and not for profit option among the schemes.

They are run by The Dispute Service ltd, a UK based not for profit company.

Like the other two providers, the Tenancy Deposit Scheme offers both insured and custodial deposit protection services.
Deposits of £499.99 and under cost £18.50 to protect as part of their insured scheme, while for larger deposits the fee is £25.50.

The custodial service is free. Discounts to £13.20 and £17.95 are available for NRLA members.

In conclusion

The type of tenancy deposit scheme you use is up to you, with both custodial and insured variants offering advantages.

Insured schemes can be better for larger landlords and can give landlords access to money from the deposit faster. Alternatively, custodial schemes are free, and require less work on the part of the landlord but have the downside of losing out on the potential interest the deposit could have earned.

Similarly, each company’s product is suitable for a landlord in a different situation— My Deposits offers the lowest rates on insured schemes for NRLA members, while the Deposit Protection Service offers discounts for large landlords.

You will need to weigh up the benefits and costs of each scheme and provider in order to figure out which one suits you best.

Has this article been helpful? Let us know by leaving a short comment below.

Regulations updating electrical safety standards in privately rented properties were brought into law in England on 1 June 2020.

Published as The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020, this new legislation added requirements for renting out a property.

These requirements are intended to protect tenants from the small minority of landlords who fail to ensure the safety of property they are renting out.

The UK Government website described the legislation as meaning “all landlords now have to do what good landlords already do: make sure the electrical installations in their rented properties are safe”.

The Government hopes that this attempt to improve the standards of electrical safety will be a major step towards “levelling up the private rented sector” and ensuring that it offers the “high-quality, safe and secure housing” the “country deserves”.

01 | What do these new requirements entail?

The 2020 electrical safety regulations place two requirements on landlords.

Firstly, landlords must now ensure that their property meets national standards for electrical safety, as set out in the 18th edition of the wiring regulations.

Second, they must ensure that the electrical installations in each of their properties are inspected and tested at least as regularly as once every five years. These inspections and tests must be carried out by a “qualified and competent person”.

Landlords can fulfil these requirements by obtaining an Electrical Installation Condition Report (EICR) for each of their properties once every five years, and by carrying out any improvements or repairs it indicates are necessary.

02 | How do Electrical Installation Condition Reports (EICRs) work?

An EICR assesses the safety of an existing electrical installation within a property and grades if it is satisfactory.

This report involves examining elements of the property’s electrics, including fuse boxes, lights, switches, and sockets, as well as any protective bonding.

It will show whether a property’s electrical installation is satisfactory or unsatisfactory, offer a list of observations of issues which affect safety, and set a date for the next inspection and test.

Each of the safety observations made are given codes which indicate how serious they are.

A C1 code indicates danger is present, there is a risk of injury, and immediate remedial action is required. A C2 code indicates something is potentially dangerous and that urgent remedial attention is required. An FI code indicates further investigation is required.

All three of these codes are considered unsatisfactory and require remedial work to be carried out.

If an EICR has a C1, C2 or FI code the owner is responsible for organising a repair within 28 days, or a shorter period if specified as necessary by the report. If A C1 code is discovered the electrician will often take temporary action to ensure the properties electrical installations are safe. This making safe will often require further work to put it right.

Following an unsatisfactory EICR, the landlord does not need to obtain a second full EICR.

The only document needed is written evidence from a qualified and competent individual that the required work to make the properties electrical installations satisfactory has been carried out.

Not all observations made on an EICR are as serious as a code C1, C2, or FI.

An observation with a C3 code indicates that an improvement is recommended but not required. It is given to aspects of the electrical installation which do not present a danger, but which could be updated to improve safety standards in the property.

This code does not indicate that any action needs to be taken and does not mean that the installation is unsafe.

Note that an electrical installation does not need to comply with the 18th edition of the Wiring Regulations. A C3 code is often given when an element of the electrical installation is safe and compliant but does not match the latest edition of the regulations.

03 | Who is considered “qualified and competent” to undertake an Electrical Installation Condition Report (EICR)

An electrical inspector undertaking an EICR on a property must fulfil several requirements.

The inspector must have qualifications covering the current version of the wiring regulations (BS 7671), and qualifications covering the periodic inspection, testing and certification of electrical installations.

In addition, they must have at least two years of experience carrying out periodic electrical inspections and tests.

The National Residential Landlords Association (NRLA) recommends using a company on the National Association of Professional Inspectors and Testers (NAPIT) electrical inspector register.

The NRLA advise that advantages of using someone registered with NAPIT include that the experience and competence of registered contractors is regularly assessed and verified. This involves the contractors having some of their work checked for compliance, and can lead to subpar contractors being sanctioned, or even having their NAPIT approval removed.

04 | Why do you need to keep hold of your EICR?

There are several reasons to keep hold of a copy of your EICR.

Landlords are required to provide copies of their properties EICRs to existing, new and prospective tenants, as well as future contractors and the local housing authority.

They are required to give a copy of the EICR to any existing tenants within 28 days of the report being made and to any new tenants prior to their move in date.

The report must also be supplied to any prospective tenant within 28 days of them making a written request for it.

Local housing authority requests are different. The EICR must be supplied to the local housing authority within 7 days of the authority making a request for it in writing.

Landlords are also expected to keep a copy of their EICR report to give to the inspector and tester undertaking their next report on the property, five years down the line. If a landlord decides to sell their property they will also be asked to provide a copy of this as part of the conveyancing task.

In addition, if any remedial work is specified in an unsatisfactory EICR, the property owner must ensure that their tenants and the local housing authority are supplied with written confirmation that said work has been completed.

This confirmation must be provided within 28 days and must come from a “qualified and competent” person.

05 | Who do these requirements apply to?

The 2020 regulations apply when a private tenant has a right to occupy a property as their only or main residence and pays rent.

This includes conventional assured shorthold tenancies (ASTs), and less formal licenses to occupy, where for example, part or all the rent is paid in labour. These cover the vast majority of private rented property.

The regulations also apply to houses in multiple occupation (HMOs). An HMO is defined as when a property is rented out by more than three people who are not from one household. While previously, HMOs had their own regulations regarding electricity safety, these have been repealed and they are now covered by The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020, along with most other tenancies.

One notable exemption to these regulations is in the case of properties housing lodgers. Landlords hosting lodgers are not required to follow these regulations. Here a lodger is defined as a person who pays rent to live in the same property and share amenities as their landlord or a member of their landlord’s family.

Private registered providers of social housing, and owners of student halls, hospitals, hostels, care homes and refuges are also exempt from these rules. Note that these properties are often regulated by different, often more difficult legislation.

06 | Why might these requirements prove onerous to landlords?

The main concern landlords have with this legislation is the potential for five-digit fines.

These can be levied upon a landlord by a local housing authority if the landlord fails to get a satisfactory EIRC for their property within the timescales outlined by the regulations.

In addition, if an EIRC reveals that a property needs work to improve its electrical safety standards and the landlord fails to undertake the work within 28 days, the local authority can take action to arrange for an authorised person to undertake any required remedial work.

The local housing authority can then recover reasonable costs from the landlord.

In both cases, the local housing authority can impose a financial penalty of up to £30,000.

In Summary

The changes to EICR regulations add another task for a landlord complete and give the regulators another opportunity to impose substantial fines.

While having the electrics checked every five years is not the most onerous requirement landlords have to deal with, this additional cost and hassle could be the motivation some need to sell up, and move their assets into another, potentially more profitable venture.

If you are interested in selling a buy-to-let property quickly, with or without tenants in place, you should contact our expert team at National Property Buyers today.

Has this article been helpful? Let us know by leaving a short comment below.

In todays’ unstable market, becoming a landlord and acquiring buy-to-let property can seem like a reliable and safe investment.

The appeal of having your money invested in a tangible thing like a house is strong, but it also concentrates risk. If something happens to the property, your entire investment can be affected.

There are numerous calamities that can befall any property owner, and a few more that are specific to landlords in particular.

Landlords’ insurance, including landlords’ building insurance can cover these dangers, reducing the amount of risk your investment is exposed to.

01 | Why would I need insurance?

Insurance covers various risks, known as perils, up to a certain amount of money. This amount of money is known as the sum insured.

If one of the risks covered by the insurance policy occurs, the insurer will pay an amount up to the sum insured to repair or replace whatever is covered by the insurance policy.

Resident homeowners buy home insurance, which often covers perils like fire, theft, storms, and floods. Home insurance is divided into two main categories, buildings, and contents, which are often bought separately.

Building insurance covers the permanent and structural parts of the house, such as the walls, roof, windows, and bathroom while contents insurance covers of the items inside the building, such as electronics, furniture, clothes, and jewellery.

There may be some cases where building insurance is unnecessary. For example, if you own the lease to a flat, and the building’s freeholder has their own building insurance, your property could be covered under this.

Not all freeholders have a comprehensive building insurance policy however, so ensure that you double check your own circumstances.

02 | Is home insurance sufficient for landlords?

Regular home insurance is generally insufficient for landlords, as landlords are exposed to several perils that owner-occupiers are not.

Even if this were not the case, standard home buildings and contents insurance is unlikely to cover you if you are renting your house out and have tenants in place.

This is because the insurers view the risk of renters making a claim on the insurance as different to the owners. For example, a house full of students poses a greater claim risk to the insurer than a family who own their home.

However, you have lots of options as many companies offer specialist landlords insurance.

03 | What perils are landlords at risk of?

Landlords are at risk of several perils that do not affect owner occupiers.

Exposing the property to tenants can lead to nightmare situations including them:

• Damaging the property, either accidentally or maliciously
• Refusing to pay rent for months at a time
• Using the property as a base for illegal activity, including potentially drug production
• Squatting the property, and outright refusing to leave

In addition, disputes with tenants can result in substantial legal expenses. Even with perfect tenants, landlords are exposed to risks including potentially being liable for any injuries sustained on the property.

Therefore, specialist landlord insurance is advisable.

Elements which can often be provided by landlords’ insurance include legal cover, building cover, landlords’ contents cover, cover for loss of rent, cover for damage caused by tenants, cover for public liability, and cover for the eviction of squatters.

04 | The types of landlords’ insurance

Landlords’ insurance tends to be divided up into various categories, each of which covers a different thing.

A list of the various types of coverage has been included below. Ensure that your policy has all the types of coverage you feel are necessary to protect your investment.

• Landlord liability insurance covers landlords against the cost of compensating against injury to a tenant or visitor because of something going wrong with your property. This is important, as claims of this sort can be extremely expensive.
• Landlord building insurance covers damage caused to the building itself by potential perils including fire, flood, and vandalism.
• Landlord contents insurance covers the landlords’ possessions in the property, such as white goods and furniture, against theft and damage. It is worth noting that this policy does not protect your tenants’ possessions. You should inform them of this and advise them to consider taking out their own policy.
• Loss of rent insurance, also known as a rent guarantee, will ensure that you have an income if your property becomes uninhabitable because of an insured event. Note that this is not the same as tenant default insurance and does not cover tenants missing rent payments.
• Tenant default insurance can cover missing rent payments if tenants refuse to pay the rent. This type of insurance can be extremely helpful if you still have mortgage payments to make. Landlords in the past have found themselves in great financial difficulty due to ongoing mortgage costs and unpaying tenants, sometimes even being made homeless themselves.
• Accidental damage insurance covers you against accidents, including things like spilled wine on a carpet, or a DIY disaster. Depending on the protection, it can also cover accidents outside the property, such as smashed windows.
• Landlord home emergency insurance provides you with access to help with plumbing, drainage, heating, or power, as well as locksmiths and builders who can help if the property’s entrance is broken into or made insecure. This is often available on a 24-hour basis.
• Legal expense insurance can help fund legal expenses you can incur when dealing with problem tenants. This can include court costs associated with chasing down rent payments and eviction fees.

05 | Is landlords’ insurance obligatory?

It is not a legal requirement for someone renting out a property to have landlords’ insurance.

However, many lenders offering mortgages for buy-to-let properties require that their customers have landlords’ insurance in place before they agree to them renting out the property.

Given the risks that are posed by renting a house, it is almost always advisable to have at least some cover from landlords’ insurance.

06 | How does it work?

When you buy landlords insurance you will be asked questions about your property and what you want your policy to cover.

They will want to know how much the property needs to be insured for, what perils you want to be covered from, and what type of people you want to rent to.

The higher the insured sum and the more perils you want to be covered, the more you pay.

What type of people you rent to can also alter the cost of landlord’s insurance.

Generally, tenants are split into the following categories:

• Employees
• Students
• Those in receipt of housing benefit
• Unemployed
• Self Employed
• Asylum Seekers
• Retired
• And a mix of the above

This matters as some types of tenants cost a different amount to insure than others. Students, the unemployed and those in the receipt of housing benefit are more expensive as their low level of take-home pay makes them a bigger risk to insurers.

If you want your policy to cover non-payment of rent, housing these groups can lead to very high premiums.

While most insurers will cover most tenants, you must make clear who you are renting to as failure to do so can lead to your policy being invalidated.

07 | What does it cost?

The financial advice website Nimblefins has conducted research on the average price of landlords’ insurance.

They placed the average cost of a basic policy at approximately £170. Note that this is only building insurance— adding tenant default cover could add more than £100, while home emergency cover would cost a further £144, and accidental damage cover another £299.

In total, they calculated that a comprehensive package covering £5000 of landlord’s contents cover costs on average £1,043 per year.

Other things can also affect the cost of landlord’s insurance, including the estimated total cost to rebuild the property.

A property with a higher total rebuild cost has higher building insurance premiums. For example, a £150,000 rebuild cost property has an average annual premium of £137 compared to a £1,000,000 rebuild cost property, which would have an average annual premium of £420.

Older properties are also more expensive to insure, with building insurance on a property built before 1850 costing on average £26 more a year than on a property built after 2000.

Ways you can save money on landlord insurance include comparing the market for a range of quotes, paying annually instead of monthly, adding to your security arrangements and increasing the excess you will pay if you make a claim.

In Summary

Landlords’ insurance is an essential tool to ensure that a buy to let property doesn’t end up costing you more than it makes.

While the expensive premiums can dig into your profit margins, the risks posed by the potential of nightmare tenants, or a disastrous liability claim makes having comprehensive landlords’ insurance worthwhile.

Some landlords may find that their buy to let is not as good as an investment as they hoped after they consider these additional costs.

If you need to sell your property fast, with or without tenants in place, please contact one of our expert team at National Property Buyers.

Has this article been helpful? Let us know by leaving a short comment below.