There are plenty of things that you need to know about being a landlord, from how to rent out your property to the need to pay your taxes. It might also come in handy to familiarise yourself with industry terms; after all, you’re likely to come across them every now and then.
It can be frustrating when you see specific terminology without knowing what it means. Which is why we’ve put a list together detailing some of the most important jargon terms that you will probably come across during your landlord journey.
Much like our renter jargon guide, we’re bringing you all the definitive key words, from lodger to subletting and capital gains to HMO. So, read on and become a pro landlord when it comes to key industry words.
A buy-to-let is a property bought with the intention of renting it out
Once your buy-to-let is rented, you become the landlord, the owner of a property who rents it out to a renter.
A resident landlord is much the same as a regular one, only you live in the property along with the renter.
Many landlords buy and let property as a business, but some end up renting out their home without prior intentions. This is because they have inherited a property or can’t sell it. They’re called accidental landlords.
Subletting occurs when a renter lets all or part of the property to another renter. They must have the landlord’s permission to do this.
A house of multiple occupations is when a single property is occupied by at least three people who are not from the same household (e.g., a family). You will need a licence if you rent out a property as an HMO.
Assured Shorthold Tenancy
Often referred to as the AST, an assured shorthold tenancy is the most common form of contract between the landlord and the renter. It details the conditions of the lease and acts as a binding contract.
The inventory is an in-depth report of your property. It stats the current condition as well as items – such as furnishings – in the home.
Check-in and check-out
Landlords should conduct a check-in and check-out when the renter moves in and moves out. This process involves cross-checking the inventory with the condition of the property before and after the tenancy commences.
Renter referencing, otherwise known as tenant referencing, is a thorough check on the incoming renter and looks at their previous renting history and current employment.
A credit check determines a renter’s credit score to see if they are creditworthy and suitable to move into your property.
Someone who guarantees the rent if the applying renter fails the renter referencing and credit check.
Right to Rent
An official document that states a renter’s right to live and rent in the UK.
A deposit paid by renters that acts as security should they cause any damages to the property. Security deposits are capped at five weeks and are returned to the renter at the end of the tenancy.
Zero deposit scheme
The zero deposit replaces traditional security deposits, with renters paying just one week's worth of rent. Landlords and renters receive the exact same protection as they do with regular security deposits.
Tenancy deposit protection
After the renter has paid a security deposit, you need to place it in an official scheme that protects the deposit during the tenancy.
You must inform the renter about your chosen deposit protection scheme within 30 days of your registering the deposit.
If you own a property in an apartment building, the ground rent is the amount you will need to pay. You’re responsible for the ground rent, even when the property is rented out.
Similar to ground rent, the service charge is billed for upkeep on the general maintenance of the building.
States the ownership of the property but not the land that it is built on. Leaseholds are common in apartment buildings where there is more than one home in the same section of land.
The majority of buy-to-let mortgages are offered interest-only, meaning you only pay the interest rather than the amount borrowed. This keeps monthly costs down and means you can enjoy higher rental income.
Capital gains tax
The tax paid on profits when selling your property. E.g., if you bought a property for £350k and sold it for £450k, you would need to pay capital gains tax on the £100k increase.
The tax you pay on the rental profits, much like the tax you pay on a job where you earn over £12.5k.
A clause that states landlords will be taxed on rental income and not just profit, capping interest-only repayments to a basic rate of 20%.
The process used in England and Wales to evict renters. However, after recent legislation, this is set to be abolished and replaced.
The monthly bills owed on a property – electricity, gas et cetera. You decide whether the renter is responsible for paying them or if you will include them in the rent.
Wear and tear
Natural and fair damage that occurs in a rental property over time. As a landlord, you are responsible for repairing items that suffer from fair wear and tear.
Landlords must get an energy performance certificate for their property, and it needs to have a rating of E or higher. EPCs must be renewed every 10 years.
An electrical installation condition report is mandatory for all rental properties as of July 1st 2020 and states the condition of electrical installations in the rental property.
Gas safety certificates state that all gas appliances in the property are safe and in working order. The document is a legal requirement if you want let your property and a check must be carried out annually.
An independent professional body that investigates companies on behalf of customers against estate agents, letting agents, solicitors and insurance companies.
The Association of Residential Letting Agents (ARLA) is a professional body which sets and regulates standards of its members. Many letting agents are part of ARLA.
Using a letting agent is one of the ways to rent out your property. The market is competitive, which means most agents want an exclusivity period where they are the only ones marketing your property. This can last between three and six weeks and is known as sole agency.
Many landlords use a property management company to manage the day-to-day runnings of their rental property. The property manager looks after the in-life tenancy of the renter and is the primary point of contact.
The rental property income calculated against its overall value.
Best in class landlord
Now that you’re familiar with some of the most important landlord keywords, you can go about your role as a landlord like a pro. Navigate yields, property management and more with no problems at all.