Use this guide to help you: 

• understand your duties as a residential landlord in the private rented sector in Wales; 
• understand what a buy-to-let mortgage lender can do if you fall behind with your mortgage payments; and 
• negotiate with a buy-to-let-mortgage lender. 

This guide provides information for landlords who let residential property as a person’s home in Wales in the private rented sector only.  

• It does not provide information for private registered providers of social housing.  
• It does not give advice about letting a room to a lodger in the home you live in. 
• It does not provide information for landlords who let residential property in England.   

For information for landlords who let residential property as a person’s home in England in the private rented sector, see our Buy to let: landlord duties and mortgage debt in England guide. 

Check your mortgage agreement allows you to let

Unless you own your property outright, check what type of mortgage agreement you have for the residential property you plan to let.  

If you have a buy-to-let mortgage agreement, the agreement should give you permission to let the property as a person’s home. Check the terms and conditions of the agreement for any restrictions covering how you can let the property. 

If you have a domestic mortgage agreement, you usually need your lender’s permission to let the property. If you let the property without your lender’s permission, you are at risk of breaking the terms and conditions of the agreement. In some situations, this could allow your lender to call in the whole amount owed under the mortgage agreement and ask a court to let them have possession of the property. 

If you have a domestic mortgage agreement and do not have permission to let, contact your lender to ask for permission. If your lender gives permission, ask for confirmation in writing and check whether the permission is for a set period only. Your lender may discuss changing the terms of your existing mortgage agreement or taking out a new buy-to-let mortgage agreement with them.  

• Find out how any proposed changes will affect the rate of interest you pay. 
• Check that any new terms are affordable.  
• Check whether you need to pay any additional legal costs to cover the changes.  

It is also a good idea to find out what buy-to-let products are available from other lenders so you can compare their offers. This will also be necessary if your lender refuses to give you permission to let, or gives you permission for a time-limited period only.  

It may help to use the services of a financial adviser to find a new buy-to-let mortgage product. Make sure any adviser you use provides the right service for you. Information about key questions to ask a financial adviser is available on the MoneyHelper website. 

Landlord duties

Make sure you are aware of your legal obligations as a landlord if you are letting or plan to let a residential property as a person’s home. It is important to do this to prevent any unnecessary civil or criminal action being taken against you. 

We have listed some key areas to be aware of in this guide. If you are unsure of your obligations, contact us for further advice. If needed, we can also help you to find specialist services, such as a solicitor to help with your situation.   

The occupation contract

If you let a residential property as a person’s home, you will usually do so under a standard occupation contract. If you let a property in Wales, you must give your contract-holder a written statement of contract containing certain information within a set timeframe. This is usually within 14 days from when they are able to start occupying your property. For more information, including sample occupation contracts, see GOV.Wales. 

If you are unsure which type of occupation contract you need to provide, get advice from a housing specialist.  

HMRC requirements

If you personally receive an income from property you let as a person’s home, check whether you need to tell HMRC about the income and complete a self-assessment return. HMRC has an online tool to help you check your situation.

You may qualify for the Property allowance if your gross annual income from your property (before you take account of costs) is £1,000 or below. If so, you do not usually need to tell HMRC about this income. For more information about the Property allowance, including eligibility, see Tax-free allowances on property and trading income at GOV.UK. 

Otherwise, you usually have a legal responsibility to notify HMRC that you are receiving income as a landlord. You need to do this by 5 October after the end of the tax year you start receiving the income. For example, if you started getting income from your property in the 2023 to 2024 tax year (6 April 2023 to 5 April 2024), you should have let HMRC know by 5 October 2024. It is important to do this because HMRC can add penalties for non-disclosure, which can increase the amount you owe. Although rare, in extreme cases, HMRC can take criminal action against you.    

HMRC will decide whether you need to complete a self-assessment return for the rental income you get. If HMRC tells you that a self-assessment return is required, you will need to meet the submission deadline (for online returns this is 31 January after the end of the relevant tax year). You will also be expected to pay any tax you owe on time. If you fail to meet HMRC deadlines, HMRC can add penalties, interest or both to the amount you owe.  

If HMRC tells you that a self-assessment return is not required, try to get written confirmation of the decision, and take screen shots of any digital advice you receive. Also monitor your situation in case it changes.  

If you are concerned about meeting your obligations to HMRC, or have already failed to do so, contact us for advice. You will need specialist tax advice from an accountant or bookkeeper if you have been asked to complete a return and think the request is incorrect. 

Making Tax Digital for Income Tax

Also be aware that from 6 April 2026 onwards, HMRC is introducing a requirement for some individual landlords to use Making Tax Digital for Income Tax. If required, this will introduce a new way of reporting your income and expenses to HMRC. For more information and to check whether the changes will affect you, see HMRC’s Guidance: Find out if and when you need to use Making Tax Digital for Income Tax.

Licensing requirements

Unless you are exempt, you have a legal duty to register with Rent Smart Wales as a landlord. As part of the registration process, you will also be expected to complete certain training.  

In addition, you must also obtain a landlord licence from Rent Smart Wales if you carry out letting activities, such as arranging viewings of your property with potential contract-holders, or property management activities, such as collecting the rent.  

Rent Smart Wales charges a fee to register and to apply for a licence. Details about fees, how to register and how to apply for a licence are available on the Rent Smart Wales website.  

If you let a property without the appropriate registration and/or licence, action may be taken against you. The action taken will depend on the type of non-compliance being considered. 

• The council could give you a fixed penalty notice or ask the criminal court to fine you.  
• You may be given a rent repayment order, telling you to repay up to 12 months of rent, Universal Credit housing element and/or Housing Benefit for the occupation contract. 
• You may be given a rent stopping order, which would prevent you from charging your contract-holder any rent for a set period.  

Non-compliance can also affect your ability to use a ‘no fault’ notice, such as a section 173 notice to recover the property. 

Fees and charges you can make

If you let private residential accommodation, you are only allowed to charge your contract-holder certain fees, and in some cases, the amount you can charge is also restricted. For example, in most cases you are not allowed to charge a fee for carrying out an inventory or a credit check. You can also charge no more than the equivalent of one week’s rent as a refundable holding deposit to reserve a property. 

While a limit isn’t currently placed on default charges you can make, such as for late payment of the rent and lost keys, these charges can only be made if there is a term in the contract that allows for the charge.  

If you charge fees that you are not legally allowed to charge, the local authority or Rent Smart Wales can give you a fixed penalty notice, or may prosecute you. Non-compliance can also affect your ability to use a ‘no fault’ notice, such as a section 173 notice to recover the property. 

It is important to familiarise yourself with the rules. For a full list of the fees and charges you can apply, see the GOV.Wales Letting fees: Guidance for landlords and letting agents. 

Use a government-approved deposit scheme

If you take a security deposit (also known as a tenancy deposit) for a standard occupation contract, you must secure the deposit with one of the government-approved deposit schemes. There are three schemes available: 

• Deposit Protection Service;
• MyDeposits; and
• Tenancy Deposit Scheme.   

You can secure a deposit by paying the deposit into the scheme or arranging to insure it with the scheme. You must do this within 30 days of receiving the deposit. Different rules apply to deposits taken between 6 April 2007 and 6 April 2012. 

Non-compliance with the rules can affect your ability to use a ‘no fault’ notice, such as a section 173 notice, to recover the property. The contract-holder may also be able to raise a compensation claim against you in the County Court for up to three times the amount of the deposit. If you ask the court to return the property to you because the contract-holder has rent arrears, the contract-holder could also use your non-compliance with the security deposit rules to raise a counterclaim.  

For more information about using a government-approved deposit scheme, including what information you need to provide to contract-holder, and what to do at the end of the occupation contract, see GOV.UK Deposit protection schemes and landlords. 

Insurances

Check that any insurance policies you have taken out for your property, such as for buildings, contents or boiler maintenance, allow the property to be let. If you have not told an insurer that the property is a rental property, you may be breaking the terms and conditions of the insurance policy. This could invalidate your policy and leave you without adequate protection.  

Unless you own your property outright, it will usually be a condition of the mortgage contract that you have appropriate buildings insurance. Check your mortgage contract to make sure you are meeting any insurance requirements. 

You may also want to see what other types of insurances are available for buy-to-let landlords, and whether they are right for you. For example, some organisations offer insurance products to cover rent lost because a contract-holder has defaulted on their rent payments, or for the costs for eviction.   

Health and safety requirements 

You have a legal duty to ensure that the property you let is fit for human habitation. This means that it needs to be safe and free from issues that could cause your tenant or contract-holder any harm. For more information, take a look at GOV.Wales: Fitness of homes for human habitation: guidance for landlords. 

You must also provide your contract-holder with certain information before the occupation contract starts to show that the property meets particular safety and efficiency standards, such as a gas safety certificate (if required) and an energy performance certificate. There is a useful checklist at GOV.Wales: Renting Homes: checklist for landlords and tenants. 

Get specialist advice if you are not sure about any health and safety requirements. 

Mortgage arrears

If you have fallen behind with payments on your buy-to-let mortgage and want to keep the property, treat the arrears as a priority debt. This is because your lender usually has wide powers to collect the arrears. For more information, see What action can my lender take? later in this guide. 

Make an offer of payment

If you can afford your contractual mortgage payment, but have arrears, it is important to start paying your normal monthly instalment and try to come to an arrangement with your lender to pay off the arrears at an affordable rate.  

Use My budget to work out if you can afford your normal payment, and how much you can offer towards the arrears. My budget takes into account the income and costs associated with your buy-to-let property, as well as any other business and household income and outgoings you may have. It gives you an overview of your current financial situation. Use this to show your mortgage lender how much you can offer to pay towards the arrears. If you have other priority debts, such as income tax arrears, remember that any surplus you have available will need to deal with those debts too. 

Contact your mortgage lender as soon as you can. If you have experienced a temporary change of circumstances that has led to the arrears, for example, a period when the property was unoccupied or when a contract-holder fell behind with their rent payments, tell your lender. Ask them to take this into account. Even though your agreement is unregulated, your lender should still treat you fairly. 

If your mortgage lender asks you to pay more than you can afford towards the arrears, send them your budget again and ask them to reconsider. Start paying the amount you have offered and explain that you are paying all you can.  

Depending on the type of mortgage you have, you could also consider asking your mortgage lender to agree to any of the following changes to help you to deal with the arrears. 

• If you have a repayment mortgage, you could ask your lender to extend the term of the mortgage. This will usually lower your monthly contractual payment and make your mortgage more affordable (although you may pay back more overall). It may also help to increase the amount you have available to pay towards your debts. 
• If you are currently struggling to make your normal contractual payment, but expect your circumstances to improve in the short to medium term, ask your lender if they will agree to any of the following for a set period: 
  • a payment holiday; 
  • allow reduced payments based on what you can currently afford to pay;  
  • reduce the interest rate chargeable under the agreement; or  
  • for a repayment mortgage only, accept payments to cover only the interest part of your mortgage for an agreed period. This will usually reduce your contractual payment during this period (although, you will need to make up the missed capital payments in the future). 
• If your property is worth more that the outstanding mortgage, you could ask your lender to capitalise the arrears. If agreed, the amount you owe in arrears is added to your total mortgage borrowing (as capital). This means that repayment of the arrears is effectively spread over the remainder of your mortgage term. Your monthly contractual payments will go up, so check this is affordable beforehand. 

You may also want to check if a more affordable buy-to-let mortgage product is available from another lender. Although be aware that as well as looking at the expected rental income from your property, potential lenders may also take your financial circumstances and credit rating into account when deciding whether to offer you a product, and the interest rate that will apply.  

If you no longer want to keep the buy-to-let property, but want to protect any equity available, consider asking your lender for time to sell. Where possible, show your lender that the expected sale price will cover the debt owed to them (including any arrears and charges). Make an offer to pay your normal contractual payment plus something towards the arrears if you can afford to while the property is being sold. Otherwise, ask your lender to allow reduced payments during this period (see the previous list of options).        

What if my property is currently empty? 

It is common for a buy-to-let property to have times when it is empty, for example, between periods where one occupation contract ends and a new one is yet to start. Take this into account when assessing how profitable your property is over a set period. If possible, try to prepare for this situation by setting aside an amount of profit each month to cover the property’s running costs during the empty periods. Remember to take into account any liability for council tax. 

It can be a worrying time if you are already struggling to meet your mortgage payments and your property is empty. If this is the case, contact us for advice.   

What action can my lender take?

If you fall behind with the contractual payments under your buy-to-let mortgage agreement, your lender may be able to do the following. 

• Appoint receivers to deal with the property  
• Ask the court for possession of the property  

Appointing receivers  

If you fall behind with payments and your mortgage agreement includes provisions that allow them to do so, your lender can: 

• appoint Law of Property (LPA) receivers to manage the property under the Law of Property Act 1925; and  
• delegate its contractual powers under the mortgage agreement, such as to sell the property, to fixed charge receivers.  

In practice, lenders usually appoint receivers that are able to act as both LPA receivers and fixed charge receivers. In this section, we refer to both as LPA receivers.   

Your lender does not need to get a court order to appoint LPA receivers.  Also, although it is your lender that appoints the LPA receivers, once appointed, the LPA receivers are seen as acting as your agents. This allows them to take over the running of your buy-to-let property and to receive rent payments directly from your contract-holder. As part of their duties, the LPA receivers may also need to check that the property is appropriately insured or arrange for necessary repairs. LPA receivers charge fees for their services, which will also affect how much you owe. 

Your lender or LPA receivers may also have the power to sell the property without needing to get a court possession order. For example, this may be the case if you have fallen behind with interest due under the mortgage and it has been unpaid for at least two months.  

It is important to engage with both your lender and any receivers they appoint.  Ask how they plan to manage the property in the short and medium term.   

If LPA receivers are collecting rent payments, also ask for a regular statement listing the rental payments received from your contract-holder and details of how the payments have been distributed. This will keep you up to date with what is happening regarding the rent and mortgage payments as well as any other costs that are being taken.  

You may be able to negotiate terms to get control of the property returned to you once any outstanding arrears and costs have been cleared. As part of the negotiations, you will need to discuss how the arrears can be cleared, and provide evidence (where possible) to show the buy-to-let property is viable, for example, by demonstrating that the rental income is sufficient to cover the ongoing mortgage costs. Some lenders may also ask for a lump sum of money to guarantee future payments upfront.  

If you plan to pay off the arrears as part of an agreement to have the property returned to your control, always ask for confirmation of the terms in writing. Ideally, also ask a solicitor to check the agreement.  

How are contract-holders affected by LPA receivers?

The appointment of LPA receivers does not affect a contract-holder’s rights under their existing occupation contract. However, as the receivers are acting as your agents, they can apply to end the occupation contract through the usual lawful processes. If you are concerned about the impact of LPA receivers on your contract-holder, contact us for further advice.    

Possession action in the County Court  

If your lender asks the court to formally grant possession of the property to them, you will receive a possession claim pack through the post. The pack will tell you which County Court is dealing with the case and the date and time for your possession hearing. You will need to reply to the forms within a set timeframe if you want to defend the possession claim.  

If you receive a possession claim pack, contact us for advice straightaway.  

Your tenant should also seek independent advice about their situation. Contact details for Shelter Cymru are included in the Useful contacts section below.  

Useful contact

Shelter Cymru For expert housing advice if you live in Wales. Phone: 0800 049 5495 www.sheltercymru.org.uk 

TaxAid Support people who have a personal tax problem, who cannot afford paid tax help. Phone: 0345 120 3779 www.taxaid.org.uk 

Other guides that may help you

Credit reference agencies guide 

Income tax debt guide