The short version: Rent to rent is when you rent a property from a landlord, then rent it out to someone else at a higher price. You pocket the difference. It’s legal if you have permission, but it comes with risks.
How does it work?
You agree a fixed rent with the property owner, often for several years. You then find tenants and charge them more than you’re paying. The gap is your profit. It’s popular with HMOs (houses in multiple occupation) where you can rent individual rooms.
Is it legal?
Yes, if you have explicit permission from the landlord and follow all the terms of your agreement. Without permission, you could be in breach of your tenancy and face eviction.
What about tax?
Your rental income is taxable, just like any other landlord. You can deduct the rent you pay to the property owner as an expense, plus other allowable costs. You’ll need to file Self Assessment.
What are the risks?
Void periods where you can’t find tenants. Problem tenants. The landlord changing their mind. Regulations around HMOs and licensing. It’s not passive income.
Doing rent to rent and need to get your tax sorted? Talk to us about your situation.
