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Overseas Landlords

For those of you who own a UK rental property but live overseas, you need to comply with the Non-Resident Landlords (NRL) scheme as this sets the rules as to how you pay tax. The scheme requires UK letting agents to deduct basic rate tax from any rent they collect for non-resident landlords. You can set this tax off against your own tax bill at the end of the year.

  • A non-resident landlord is a person who has UK rental income but whose usual home is outside of the UK.
  • Individuals who are outside of the UK temporarily (less than six months) are not non-residential landlords.
  • If we, or any other agent, receive rent on behalf of a non-resident landlord, they have a statutory obligation to deduct 20% of the net income and make payments to the Inland Revenue on a quarterly basis.
  • In cases where properties are jointly owned, each individual is liable to pay tax. Both the income and the expenditure is split equally between the two parties.
  • Non-resident landlords include members of the HM Armed Forces and other Crown Servants who are outside of the UK for more than 6 months.
  • When a non-resident landlord receives rent direct from the tenant, the tenant has a statutory obligation to deduct 20% of the net income and make payments to the Inland Revenue on a quarterly basis.
  • Non-resident landlords can apply to the Inland Revenue for approval that will permit their letting agent not to deduct tax at source by completing an NRL1 form. However, approval of an NRL1 does not mean that the rent is exempt from UK tax.
  • In cases of a jointly owned property each owner must complete their own NRL1 application form.
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What is a large HMO?

A rented property is considered a large house in multiple occupation if:

  • The Property is at Least Three Storeys High
  • At Least Five Tenants Live There, Forming More Than One ‘Household’
  • The Tenants Share a Toilet, Bathroom, and/or Kitchen Facilities

Houses in Multiple Occupation (HMO)

When a house is let to sharing occupants who are not a family unit, landlords must ensure that the property complies with rules around Houses in Multiple Occupation (HMO). These rentals are either defined as a standard HMO or large HMO.

What is a House in Multiple Occupation (HMO)?

A rented property is considered a house in multiple occupation if at least three tenants live there. Forming more than one ‘household’, the tenants share toilet, bathroom and/or kitchen facilities.

What is a ‘household’?

A household is defined as either a single person or members of the same family who live together. A family includes people who are:


  • Married or Living Together (Including Same-Sex Couples)
  • Relatives or Half-Relatives (E.g. Grandparents, Aunts, Uncles, Siblings)
  • Step-Parents and Step-Children

What are my responsibilities if I let a HMO?

As well as all your normal legal responsibilities, you must ensure:

  • Smoke Detectors Are Installed
  • Electrics Are Checked Every Five Years
  • That The Property Is Not Overcrowded - (There should be a separate room for sleeping for each couple, each single person over 21, and for every two young people aged over 10 years).
  • There Are Adequate Cooking and Washing Facilities
  • Communal Areas and Shared Facilities Are Clean and in Good Repair

What are my responsibilities if I let a large HMO?

As well as those responsibilities covered by a standard HMO, you must ensure you have been approved for a HMO licence by your local council. A HMO licence will last for five years and will only be granted if:

  • The Property Meets an Acceptable Standard (i.e. It Is Large Enough for All Occupants and Well Managed)
  • The Property Is Managed by a ‘Fit and Proper’ Person (No Criminal Record or Breach of Letting Legislation)
  • You must contact your local council to determine whether you need a HMO licence before you let to tenants. If not, you could risk a fine of up to £20,000.

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