A leading landlord organisation is urging so called “accidental landlords” to ensure they get adequate landlord insurance cover as they start out in their new career.
According to Richard Lambert, Chief Executive of the National Landlords Association, “accidental landlords” (property owners who find themselves renting out their property because they can’t sell it or afford to live in it) often find themselves in financial trouble quickly because they have no experience in the letting business. He specifically pinpointed tenant arrears as a problem they have difficulty solving and said becoming a profitable landlord is more difficult than most people imagine.
He explained: “Letting is not a business to wander into if you don’t know what you are doing. If the worst does happen (tenants fall into arrears) most NLA members try to keep tenancies going as long as they can. On average our members tell us that to end a tenancy and to re-let again is going to cost about £1800, so often it is a very finely balanced commercial decision when arrears start to mount. However, there is a fine line between keeping good tenants on because they have been good in the past and absorbing a high amount of costs, so there is likely to be a difficult decision to be made at some point.”
It is a point that many new landlords must bear in mind, as although many lenders will give landlords a certain amount of leeway if they are having trouble paying their loan because of tenant arrears, they will not be patient forever. When one considers an “accidental landlord” may well have already encountered problems paying a mortgage the situation can become desperate quite quickly. Most landlord insurance policies will allow property owners to purchase extra cover in case of tenant arrears and it is an option accidental landlords should consider seriously.