Setting up a tenancy

You’ll need to think about some practicalities before renting out your property.

Renting your property as furnished or unfurnished

Decide whether to rent your property with or without furnishings. Make sure your advertising is accurate and reflects what’s included with the tenancy. 

There are different tax allowances for furnished properties. Speak to HMRC or an accountant for more information.  

Furnished properties 

Furnished properties often appeal to tenants who are new to renting. There’s no legal definition of a ‘furnished’ property.

Usually renters will expect a furnished property to have: 

• a bed and storage for clothes in each bedroom 
• a sofa or soft chairs in a living area 
• a table and chairs in a dining area 
• appliances such as a fridge, cooker and washing machine in the kitchen 
• flooring and curtains or blinds in all rooms 

All furnishings you provide must meet legal safety standards.  

You must repair or replace the items you provide if they break during the tenancy. If the damage is due to neglect or misuse, the tenant will have to pay to fix or replace the item. If the damage is due to normal wear and tear, you’ll be responsible for dealing with repairs. 

Complete an inventory before the tenancy starts to record furnishings and their condition.  

Unfurnished properties 

Some people might be looking for an unfurnished property. For example, they might already have their own furniture.

If you rent an unfurnished property, you should: 

• still provide flooring and blinds 
• consider charging a lower amount of rent than a furnished property 
• make it clear that tenants are responsible for repairing their own furnishings 

Deciding how much rent to charge

You are free to set rent at the level you choose unless your property is: 

• a protected tenancy, or 
• subject to rent control 

To figure out how much rent to charge, you should consider: 

• costs such as mortgage, rates and insurance 
• the condition of the property and furnishings 
• features such as a garden or parking space 
• the average rent for similar properties in the area 

Setting the rent at the average level for the area may not be affordable for many tenants. If a tenant relies on Housing Benefit or Universal Credit to help with rent, this may not cover the full rent.

You can choose whether to take a tenancy deposit.

If you take a deposit, you must: 

• not ask for more than one month's rent as the deposit
• give your tenant a receipt 
• protect the deposit in a deposit protection scheme within 28 days of receiving the money
• give the tenant information about the deposit. You have 35 days from the date you receive the deposit to do this.

Sorting out utility bills

You need to decide how to manage utilities, such as electricity and gas, for your property.

You can: 

• install prepayment meters 
• make tenants responsible for paying bills 
• include bills with rent 

Make it clear in your tenancy agreement who has to pay for utilities. 

Installing prepayment meters in rental properties 

Prepayment meters can help you avoid the risk of unpaid bills. The accounts can still be put in the tenant's name.

If you have a house in multiple occupation (HMO), you might not be able to have a prepayment meter. This is because you cannot use a prepayment meter for fire alarms and emergency lighting in a HMO. 

Making tenants responsible for paying bills 

If you choose to make tenants responsible for dealing with utility bills you should: 

• contact the supplier to say you’re no longer responsible 
• take a meter reading on the first and last day of the tenancy 

Tenants have the right to change supplier without your permission.  

Sometimes a tenant might not have paid a bill. If the supplier asks you to pay it, you do not have to if the bill was in the tenant's name. You can tell them this. You can also show them a copy of the tenancy agreement if it says the tenant must pay utility bills.

Including bills with rent 

While some landlords decide to include bills with rent, this can cause problems as: 

• there are rules about how much you can charge to ‘re-sell’ energy 
• you must check usage with a meter to charge fairly 
• you may have to change the amount of rent if energy prices change 
• some tenants may use more energy than you expect 

You are not allowed to restrict a tenant’s usage as this could be seen as harassment.