Is it illegal to rent your house out privately in Scotland?
If you’re considering the idea of renting out your property, one of the first considerations you’ll have to make is whether to hire a letting agent or do part of the work yourself.
Whether you decide to rent your property out yourself or through an agency will be heavily influenced by how much time you are willing to commit to the project. A first-time landlord should also assess their level of confidence in the process, which includes advertising for and screening tenants as well as dealing with difficult situations like nonpayment of rent.
Most agencies, whether in-person or online, provide landlords with a variety of service options, including guidance on tenancy deposit schemes. So, you can hire a letting agent to find tenants, but handle the tenancy and property yourself.
To help you decide whether you’re ready for the DIY method, we go over what’s involved in renting out property at every step.
Check whether you are allowed to rent out your property
Before you start renting out your property, be sure you are financially able to do so. If you already have a residential mortgage, you’ll probably need to switch to a buy-to-let mortgage. Your building insurance may also be invalid, and the conditions of your lease agreement could prevent you from renting out your property to tenants. Check everything out.
Landlord Legal Responsibilities
In Scotland, being a landlord comes with a substantial amount of legal responsibilities. There are more than 140 regulations that must be followed to ensure the tenants’ health, safety, and overall well-being. If you want to rent out your property, you need to make sure that it is suitable for human occupancy by fixing any problems that may arise, such as insect infestations, moisture, or other potential risks.
Gas and electrical systems are required to be safe. Gas appliances should be installed, maintained and examined annually by an engineer who is registered with Gas Safe. A copy of the safety certificate must be given to your tenants. Another requirement is that an electrical safety inspection must be performed every five years, and you are obliged to provide a copy of this certificate to your tenants.
Along with smoke alarms that are functional on each level, carbon monoxide alarms in rooms that are heated by solid fuel, and an Energy Performance Certificate (EPC) with a minimum value of E, properties are required to have these safety features. In case your property does not meet this level, it is necessary to make the adjustments that are advised before it can be legally rented out.
Landlord Licensing that you should know
Understanding the licensing requirements is necessary if you own property in Scotland and intend to rent it out under the regulations set by the Scottish Government. Failing to do so might result in you violating the law. If you want to know if selective licensing is applicable in your area, you should check with your local council before you rent out your property. Under the Housing Act of 2004, these licenses were developed to ensure that landlords maintain rental units in a safe and well-maintained manner.
If you intend to rent a property to three or more unrelated individuals in Scotland, you will require an HMO license. Tenants in HMO properties usually share kitchen and bathroom facilities. The “family member” definition includes couples (married, unmarried, or same sex), their children, (including stepchildren and foster children), parents, grandparents, siblings, aunts, uncles, nephews and nieces. It does not include cousins or unrelated friends.
Landlord Insurance
You need to notify your buildings and contents insurer before renting out your house. This is because a lot of ordinary home insurance plans do not cover rental properties by default, making it essential to consider specialized coverage for new tenancies. Instead, you need coverage that is specifically designed for landlords. If you want to get the best coverage at the lowest price, it is a good idea to compare quotes from a variety providers.
Although landlord insurance is not mandated by law, it is usually required if you have a mortgage since your lender will ask that you have buildings insurance. It is also a good idea to think about getting contents insurance in order to protect everything that you bring into the house. In addition, you have the option of adding additional protections, such as a tenancy deposit scheme to safeguard the deposit.
- Rent Guarantee Insurance – Covers missed rent payments if your tenants default.
- Loss of Rent Insurance – Protects you if rent is lost due to an insured event like fire or flood.
- Legal Insurance – Helps cover legal costs if you need to take tenants to court.
- Liability Insurance – Protects against compensation claims if someone is injured on your property or if your property causes damage to another.
You will not only be able to protect your investment with the right coverage, but you will also have peace of mind as a landlord.
Paying Tax on Income from Private Tenancies
You are required to pay income tax on the profit you make from renting out property in Scotland. It is not only your rental income that determines the amount that you pay; rather, it is your overall taxable income that does so. If you are a landlord, this might mean paying a tax of 20%, while those with greater incomes could pay as much as 45%.
Under the property allowance, the first £1,000 of rental income is exempt from taxation. You should get in touch with HMRC for advice if your annual income is between £1,000 and £2,500. If your rental income is greater than £2,500, you will be required to file a tax return using the self-assessment method.
Landlords must also pay Class 2 National Insurance if the following requirements are met:
- Your annual rental profit is more than £6,475
- Being a landlord is your main occupation
- You rent out two or more properties
- You purchase properties with the intention of renting them out
Finding Tenants for a Private Rented Property
When you are renting out your property, one of the most important steps is finding tenants who are suitable for the property, especially if you are not using the services of a letting agency. Through the use of platforms such as local Facebook groups, community forums such as Nextdoor and Gumtree, or even more conventional approaches such as word of mouth and notice board posters, you will be responsible for handling advertising duties on your own.
It is important to collaborate with an established estate agency or an online letting service to have your home listed on major portals such as Rightmove or Zoopla. This is because private landlords are not permitted to display their properties directly on these websites. Achieving more viewers and obtaining a decent tenancy in a short amount of time requires this step, which is vital.
Property Viewings for Rental Success
Viewings are an essential part of the process of renting out your property. There are obvious advantages to doing viewings on your own, even though some landlords would rather pay an agent for property management to handle this stage.
When you manage viewings, you have a chance to do tenant screening on the spot. This includes not only evaluating possible tenants’ credit and references at a later time, but also seeing them in person to get a sense of their personality. Taking this into consideration can assist you in making the appropriate decision, protecting your investment, and initiating the development of a good landlord–tenant relationship from the very beginning.
Make sure the property is in the best possible condition before any viewings. The most important aspects of the property should be highlighted, together with the perks of the neighbourhood, to make it more appealing to potential tenants.
If you feel uncomfortable about doing viewings, you have the option of outsourcing the task to a reliable friend or member of your family, or you can hire a professional viewing agency to ensure compliance with the model private residential tenancy agreement. When compared to becoming fully committed to property management, this may be a more cost-effective option.
When it comes to properties that already have tenants living in them, there is a legal need to provide them with advance notice before any viewings take place. Moreover, appointments must be scheduled at a fair hour in order to respect the tenants’ lease rights.
Vetting Your Tenants for a Secure Tenancy
A thorough screening of prospective tenants is essential to the protection of your property. It is important that you always verify references, preferably from past landlords, and that you get evidence of income as well as bank documents. To verify payment history, a credit check from an agency can be performed.
Never choose tenants based on protected traits, and always comply with anti-discrimination rules in the UK. Your tenant will be dependable and legally eligible if you do thorough screenings.
Setting Up Your Tenancy Agreement
Make sure that all of the conditions in the tenancy agreement are legal and that it is tailored to your standards. In Scotland, all tenancy agreements are standardised using the Private Residential Tenancy (PRT). Provide instructions for appliances and important information such as waste collection, as well as clean and repair the home before the move-in date.
Using videos or pictures of the furnishings and fixtures, create an inventory that has been signed. You should provide the tenants with the necessary documentation, which includes an Energy Performance Certificate (EPC), a gas safety certificate, an electrical installation condition report (EICR), a Legionella Risk Assesment. Finally, you must protect your tenant’s security deposit in a government-approved scheme.
Landlord’s Responsibilities During the Tenancy
There are a variety of repairs and maintenance tasks that fall within your responsibility as a landlord. These tasks include the maintenance of the building, as well as the electrical wiring, plumbing, heating, and hot water systems.
Be prepared to handle tenant concerns on time if you rent without the assistance of an agency. Keep a list of reliable contractors on hand, or think about purchasing breakdown insurance in case of an emergency.
By providing a written notice of at least 48 hours’ duration, regular checks should be carried out to assess compliance with the leasing agreement. Tenants have the right to deny access.
Rent Collection
Include in the lease agreement how and when rent is to be paid in order to prevent disputes from occurring. Among the most common approaches are:
- Standing order – Most common option
- Direct debit – May cost more without an agency
- Cash or cheque – Not dependable
- Apps – Modern tools that track payments
You also have the option of outsourcing the collection of rent to a letting agent or a specialised service.
End of Tenancy
You must follow the correct legal process if you want a tenant to leave your property. Under the Private Residential Tenancy (PRT), a landlord can only end a tenancy by issuing a Notice to Leave citing one of the 18 available grounds. Please consult the website of the government of Scotland for the most recent guidelines and notice periods.
Why Choose Western Lettings for Your Property Management
Becoming a private landlord in Scotland is legal, but it comes with over 140 rules and responsibilities. These include the creation of a private residential tenancy agreement that complies with the law, as well as the responsibility of ensuring that safety inspections, rent collection, and property maintenance are carried out in the right way.
At Western Lettings we assist landlords in managing all aspects of the property management process, from the search for dependable tenants to the management of the entire property. This ensures that you remain in compliance with the law, optimise your rental income, and protect your investment. No matter if you are a newbie or a seasoned landlord, our Glasgow team can make renting your property easy, stress-free, and profitable for you.
Are you ready to make renting your house stress-free? Contact Western Lettings right now to learn more about the ways in which our professional letting services in Glasgow can assist you in finding the right tenants and increasing the amount of income you make from renting out your property. For more information, please contact us at 0141 357 0436 or send an email to enquiry@westernlettings.co.uk.
