Have you heard about the rise in accidental landlords? According to research conducted by the property firm Rightmove’s Rental Market Forecast, it is estimated that currently in the UK that 30% of all landlords are accidental landlords. But what exactly are they? We decided to take a further look.
Accidental landlords explained
Lack of a buyer
As suggested by its name, these landlords have not intended to become them originally. But not every landlord is in the property renting business out of the choice to do so. In a large number of cases, homeowners may be struggling to find a buyer for their house, and therefore find themselves with few options but to rent out their home in the meantime.
In recent years, the housing market has been particularly unstable, which has meant that some houses have ended up being on the market for far longer than their owners would have liked, or anticipated. By renting it out instead, they can use the rent in order to keep up with monthly mortgage payments, as well as also getting money to buy another new, better home.
The credit crunch
According to Rightmove, many of these accidental landlords can be seen as the result of the credit crunch. Whilst initially a casualty of the post-credit crunch market, many are starting to reap the benefits now when it comes to rental property. In fact, when questioned as to what their future plans were for their current rental property by Rightmove, over 12% said that they are looking to buy further property in order to rent out. Whilst 69% stated that they would be holding onto the property they were renting out.
Why are a large number of accidental landlords keen to keep their status? There has been considerable growth in rental demand, alongside rising rents. This is in part due to the need to satisfy the demands of ‘Generation Rent’ who are looking to rent a house or flat because they simply cannot afford to buy, nor will be able to in the near future. This is something that accidental landlords have been able to take advantage of.
Interested in becoming an accidental landlord?
Does any of the aforementioned sound familiar to you, but not sure how to become one? As a loft conversion company, we are familiar with the situation as many use our services to then rent their property. Here are our tips:
- Make sure you contact your mortgage lender first to make them aware of your intention. On a short-term basis, the lender may grant you a Consent to Let, in the longer term though, it may be best to switch from a residential mortgage to a buy-to-let one
- Remember you will still need to pay income tax. You will only be able to claim tax relief at the rate of 20% under new legislation
- You will need special insurance in place for a rental property, standard home insurance will not cover it
- Remember the legal obligations that you will have as a landlord. This includes things such as Right to Rent checks, making sure the tenant’s deposit is kept in a government-backed tenancy deposit scheme, and ensure you have carried out, and continue to do so, regular safety checks on the property you are renting
- Landlord licensing may be required, depending on where the property is located