Did you know that 29% of landlords never actually planned to become a landlord? Instead, they end up becoming a landlord unexpectedly, falling into the role without much direction. Unlike professional landlords, who make a living out of renting property, an accidental landlord rents out their property due to circumstance, rather the choice. That might sound a bit odd, but it’s far more common than you think. It can be a daunting process becoming a landlord, especially if it’s not what you had planned to do. But don’t worry, with the right help, you can still be a successful landlord, regardless of how you got there. But how do you become an accidental landlord, and what do you need to know now?
Becoming An Accidental Landlord
It might sound odd saying that people become landlords without meaning to, but it happens all the time. There are lots of reasons you might end up becoming a landlord, but here are some common reasons:
The Inheritance Rental Property: One of the biggest causes of accidental landlords is the inheritance of property from another’s estate (usually a parent). Often, they aren’t willing to sell the property yet, or need the income to cover inheritance costs. We tend to find that this kind of landlord isn’t all that happy about needing to let out the property, and usually only rents it for a short period before selling.
The Moving Landlord: Moving abroad, or even to the other end of the country is a big commitment, and if you own a property it can often be difficult to line up the sale of your property with your move. This is how a lot of accidental landlords are born. Instead of selling the property, they will opt to keep it and rent it out. This gives them an option if they ever want to move back to the country/area, and a residual income as well. But given that they are in another country most of the time, managing the property can be a challenge, which is where a good lettings agent comes in.
The Extra Care Funder: You also see landlords who are using a property as a way to support their family. If a relative is ill or needs care, the bills can run high very quickly. One of the easiest ways to help cover this expense is to rent out the relative’s, or their own home – particularly if they are in a care home or undergoing full-time care elsewhere. The rental income subsidises the expenses of care, while still keeping possession of the house. If the relative then moves back into the property or dies, the landlord will often give it back or sell the property on.
The Legal Bits
If you’re a professional landlord, you’ve probably done your research and know all there is to know about renting out a property. But if you’ve fallen into it accidentally, you might not have that knowledge, which can lead to all sorts of problems. But don’t worry, we’ve put together a list of the basic things you will need to know to get started as a landlord:
Mortgage: Now that you’re a landlord and not living in your home, you will need to adjust your mortgage. Get in touch with your mortgage provider and find out if your current mortgage will allow you to let your property. If, like many accidental landlords you are struggling to sell your house now, but believe that the housing market will improve in the future, you can ask your mortgage provider if they will grant you a ‘consent to let’. This will allow you to rent out your property for a 12-month period – perfect for a short-term solution. If you want to rent your property for longer, you may need to switch to a different kind of mortgage to allow it.
Insurance: Now that you’re not living in your house (and someone else is), the type of insurance you have on that property needs to change. The most vital thing is that you take out landlords insurance, which will give you protection against some of the issues of being a landlord – like tenants not paying rent, damage to property and liability for accidents.
Income Tax: Now that you’re receiving a monthly income from your tenants, you will need to report this as income to HMRC.
Regulations: There are a lot of rules and regulations around being a landlord, and you will need to be aware of most of them before you start. It would take us a while to explain them all, so we’re going to link the most important ones here for you:
And more. It’s your letting agent’s job to help you understand all of these regulations and more, so make sure you ask questions! That brings us onto our next point…
Finding A Letting Agent: You might choose to source your own private tenants and handle the whole process yourself. But more often than not, an accidental landlord will work with a letting agent to help them manage their property. This essentially means the landlord doesn’t have to do too much, and knows that their property is being looked after by an expert. But to do that, you need to know and trust your letting agent. Finding the right letting agent for your property can be the difference between a lot of headaches and smooth sailing. So make sure you take some time to speak to different estate agents and find one that works for you. A great place to start is the review pages on Google or AllAgents (the Trip Advisor of Estate Agency). People will always take the time to write a bad review if they’re upset but not many will spend time writing a good one unless they’ve been particularly impressed.
At Northwood, we help accidental landlords gain the peace of mind they need while they go about their day to day lives. Our experts can handle every element of your property for you, from listing your property and finding tenants to handling maintenance and even carrying out inspections. Plus our guaranteed rent service means that you’re never going to lose out on rent if your property is empty – because we will pay the rent instead! If you’d like to find out more about how Northwood could help you, just get in touch with us today.