Landlords need to be fully aware of their legal and financial obligations and it is not as simple as handing over the keys in return for cash, says the report, Renting and Letting, from consumer organisation Which?
'More people than ever are becoming accidental landlords as they struggle to sell their homes, and for many, letting them out is the only option,' said Kate Faulkner, author of the report.
'However, it's not just a case of swapping a set of keys for money each month. Being a landlord comes with many responsibilities and obligations, and failure to comply with these could result in problems for landlord and tenant alike,' she added.
The report highlights key points that people need to know. For example since the beginning of October 2008, all landlords must provide tenants with the opportunity to view an Energy Performance Certificate before any contract is signed, which outlines how energy-efficient the property is. Anyone marketing a property without an EPC may be fined up to £200.
If the rental property is mortgaged, landlords must first get the lender's consent to let it. Without this consent the lender may have the right to demand full repayment of the loan and ultimately to take possession of the property and sell it to recover the loan.
Since April 2007, all deposits paid by tenants must be placed into one of three approved deposit protection schemes. If it can be proved that a landlord hasn't paid deposits into one of these schemes, the landlord may be forced by a court to pay back the tenant three times the amount of the deposit.
Also anyone earning extra income from property must declare this to the taxman. Any tax owed can be paid through the PAYE scheme if the landlord is already employed and income from renting is less than £2,500, or it can be declared through a self-assessment form.
It points out that tax evasion is a serious offence and can result in a large fine or imprisonment.
Landlords are also responsible for the general upkeep of the property, including the structure and exterior of the property, supplied appliances, heating, hot water, gas supply and electricity. By law, only qualified tradesmen can carry out electrical and gas work on property, such as installing central heating and showers and conducting an annual safety check on any gas boilers.
And all furniture and furnishings must meet the requirements of the Furniture and Furnishings (Fire) (Safety) Regulations 1988.
