Checklist for Granting an Assured Shorthold Tenancy

Preparation Before Letting

  • before investing, prepare a business plan that considers the cost of the investment, running costs, cash flow and rent level. Allow at least a 10% return to cover costs and voids
  • if necessary, obtain permission from a mortgage lender and freeholder to rent the property
  • consider what part of the private rented sector market the property is designed to serve
  • decide on the kind of tenant to let to. Is a tenant needing Housing Benefits an issue? Is the property to be let furnished or unfurnished?
  • calculate realistically whether the rental income will cover loan or mortgage payments, repairs and all the other rental costs. If not, budget to set aside money from earnings each month (in the early years) to cover any shortfall
  • decide on the likely market rent
  • determine whether gas, electricity and water charges are included in the rent
  • consider who will manage the property and the cost of this. If using an agent, agree on costs and levels of service
  • ensure adequate levels of relevant insurance (check the policy is suitable for the rented property)
  • deal with the tax implications of the revenue stream and inform the Revenue and Customs
  • consider joining a landlord association and undertaking professional development
  • obtain planning or Building Control approval for significant improvement work done to the property
  • make sure the property is both safe and healthy for any potential occupiers or visitors, including;
  • adequate heating and insulation
  • free from tripping and falling hazards
  • free from significant disrepair
  • good lighting and ventilation
  • good security
  • good sanitation, food preparation and is hygienic
  • obtain a tenancy agreement suitable for your letting and avoid unenforceable unfair terms
  • decide on the length of letting
  • advertise through the internet, agent, newspaper or other means
  • obtain an Energy Performance Certificate (EPC)
  • undertake an annual gas safety check by a Gas Safe registered engineer
  • get an electrical inspection and test report every five years (or less if the report requires less) by a qualified engineer
  • ensure the property meets the relevant fire safety standards by fitting alarms, smoke/heat detectors, and emergency lighting.

If the property is a House in Multiple Occupation (HMO):

  • contact your local authority to check whether a licence is needed and if it is, apply for a licence and comply with the conditions of the licence and the HMO regulations
  • ensure a fire risk assessment is carried out under the Fire Safety Order
  • ensure that smoking does not take place in public areas by the Smoking and Health Act 2006

Before the Tenant Moves In

  • check the ID of the tenant. One ID is required if a passport or other travel document, but two forms of ID will be required otherwise, such as a driving licence and birth certificate. Ensure from the documents that the tenant has a "right to rent" and has either an indefinite or time-limited right to remain in the UK
  • all documents obtained should be copied in electronic or hardcopy and kept for at least 12 months after the tenancy ended
  • provide a copy of the How to Rent Guide, gas safety record, electrical report and EPC (can be supplied with the tenancy agreement as long as they are provided "before occupation")

When the Tenant Moves In

  • create a tenancy agreement and attach the documents as described earlier
  • sign the tenancy agreement - typically, remote signing is used, and all parties will receive a completed copy
  • consider asking the tenant to sign a bank standing order form for rent payments or letter of authority to the Housing Benefit office if the tenant is on benefit
  • complete and agree on an Inventory and Schedule of Conditions (consider using a professional inventory clerk, if appropriate)
  • give the tenant the landlord's (or agent's) contact details for repairs and other problems - name, address and telephone
  • notify the utility suppliers and the local authority (for Council Tax etc.) of the details of the new tenant/s
  • inform the tenant/s of utility suppliers etc., and read any relevant meters
  • if charging a deposit and letting on an assured shorthold tenancy, ensure that the deposit is protected under one of the schemes available and give the required information to tenants to confirm this
  • consider any local council schemes such as deposit guarantees
  • keep tax records of income and expenditure and if rental income exceeds (allowable) expenditure, set an amount aside to cover future tax demands. Complete a tax return ideally soon after the end of your tax year
  • provide receipts to the tenant for any cash rent payments
  • keep detailed records of repair requests, inspections, safety checks, repairs done, other management issues and a rent statement.

When the Tenant Moves Out

  • make a note of when a tenancy is due to end and see if the tenant wants to renew their agreement or leave it to become periodic automatically
  • if leaving, arrange a joint inspection of the property and agree on any damage or decoration that needs rectifying
  • provide information about any cleaning required
  • advise the tenant about taking final utility readings for an end-of-tenancy bill
  • make arrangements for the handover of keys.

View Related Handbook Page

Types of Tenancy - Assured and Assured Shorthold Tenancies

These types of tenancies are governed by the statutory code set up in the Housing Act 1988, which was amended slightly by the Housing Act 1996. Today's vast majority of tenancies will be assured shorthold tenancies, and both assured and assured shorthold tenancy can charge a market rent for the property.

Investing in a Property

Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.