Being an accidental landlord – Not every landlord wants to be a landlord. According to figures from Rightmove, around 30% of landlords are so-called ‘accidental landlords’.
These are people who have been forced into letting out a property they bought to live in. Usually, they need to move, but find they can’t sell. They may be in negative equity, or simply finding it difficult to achieve a decent price for their home in a slow market. House prices are recovering from the 2008 crash, but the market is still struggling in much of the country. London and the South East are starting to see significant rises, but prices are still flat in Wales, Yorkshire, the North East and North West.
Should you let?
If you can’t sell your property, the obvious solution is to let it. This works really well for some, but can be a real headache for others. By their nature, accidental landlords haven’t planned for letting. That can mean that they lack relevant knowledge and skills. It can also mean that they struggle to achieve a rental income that covers their costs.
We’ve written many times on this blog about the importance of making sure that landlords take into account all their costs when calculating their likely profit. If your rental income is only just covering your mortgage, you are likely to end up losing money on your property. Accidental landlords can easily end up in that position. Costs such as landlords insurance and void periods often add up quickly.
So what can accidental landlords do to make sure they don’t lose money?
Costs and benefits
Accidental landlords need to apply the same financial analysis to letting their property as deliberate landlords do. Before you make the decision to let, find out what similar properties let for. Research your target market and talk to local agents: they will know whether you are likely to be able to find tenants easily. Act like a professional, even if you aren’t. You’ll stand the best chance of letting successfully if you think like a landlord.
If you don’t think you will be able to cover your costs, think carefully about whether you should let. You might have no choice: a new job or new school for the kids might be forcing you to move. But if you are likely to be losing some money on letting out your property, you’ll need to tighten your belt elsewhere to avoid debt.
Of course, you could be lucky. As the rental market continues to rise, more and more accidental landlords are finding they are making money. One in eight is now looking to buy another property to rent out. Only one in six wants to sell. The rest are holding tight to see where the market goes.