The Growth of the Accidental Landlords

Approximately 30% of landlords in the UK are classed as ‘accidental landlords’, but what actually is an accidental landlord?

An accidental landlord is exactly what it says on the tin, a landlord who never originally planned on becoming one. Many different circumstances can lead to someone becoming an accidental landlord such as inheriting a property, upsizing or downsizing, or relocating to another place.

Becoming a landlord can be a lucrative business but it is also a huge responsibility and it’s easy for unprepared first-time landlords to make mistakes as they navigate the rules and regulations associated with being a landlord.

Having unintentionally entered the realm of real estate rental, accidental landlords can find themselves receiving a “baptism by fire”. They have no previous experience or formal training to help assist them in this new role. For a better understanding of what needs to be considered, and actioned, before becoming a landlord, read our article on how to become a landlord.

Some things that may present a challenge for landlord include knowing about:

• Legal obligations – There are certain legal obligations which landlords must adhere to including

  • Right to rent check as per the Immigration Act 2014 – All landlords must check if the tenant has the legal right to live in the UK before allowing them to have a viewing or sign a contract.

  • Tenancy Deposit Scheme – All deposits must be held in a government-backed deposit protection (TFD) scheme. Should the tenant fall short of the agreement, or damage the property, then the landlord can alert the scheme and receive access to recuperate the cost of the damage.

  • Certifications – There are certifications you need to obtain in order to let out your property. These include safety checks for electricals, gas and fire as well as energy performance and Legionella Risk Assessment. You can read in more detail about these mandatory documents here.

  • Licensing Schemes – You may need to speak to your local council to confirm if there are any special licenses that they impose for landlords. These can vary largely depending on the area and council.

• Financial obligations – Becoming a landlord, even by accident, means that there are financial obligations that must also be adhered to including:

  • Mortgage – If you have a mortgage on the property that you intend to rent out you must inform your lender about your intention to let. They will then give you three options to allow you to progress: ‘Consent to Let’, ‘Buy to Let Mortgage’ and a ‘Let to Buy Mortgage’. If you do not contact your lender to get permission to let, you will be liable for “mortgage fraud” and could face considerable fines.

  • Taxes – Becoming a landlord means you will be taxed differently, and you need to declare to HMRC that you are looking to become a landlord. The percentage of tax you will pay will depend on the tax band you fall into when adding your rental income and your employment status. You can learn all about the taxes landlords must pay, alongside information on allowable expenses with our helpful guide here.

Landlord insurance is not a legal obligation however most standard home insurance policies will not provide cover for properties which are being rented out. There are many kinds of landlords insurance available ranging from single-property landlords - which may be the more common for accidental landlords - to multi-property landlords. You can read all about the different types of landlord insurance and the benefits of having it, as well as the risks of not having it in our guide.

Landlord insurance provides cover specifically for renting out properties, including loss of rent cover and property portfolios. For more information visit our dedicated landlord insurance page or call us on 0344 892 1664.