The concept of the accidental landlord isn’t an entirely new one. But the likelihood is that there will be more accidental landlords in the property market over the next few years. So in this post we will look at the main issues around accidental landlords and what agents, tenants and the landlords themselves need to know.
What is an accidental landlord?
In simple terms an accidental landlord is someone who hasn’t bought a property specifically to let out as an income-generating business. Rather, in many cases, they are letting a property they already own purely out of necessity.
A typical accidental landlord scenario is when a homeowner is unable to sell a property they live in. This might be due to a cool sales market or because they are unable to achieve the price they require, possibly even due to a negative equity situation.
Work moves, moving in with a partner, divorces and bereavements can all lead people to become accidental landlords. Some accidental landlords may have inherited a property they cannot or perhaps do not wish to sell.
Cladding issues on new build apartment blocks may have pushed some owners into becoming accidental landlords in recent years.
A report published earlier this year by Rightmove claimed that 11% of landlords are accidental landlords.
However, in recent years the property market has been booming. Anyone who wants or needs to sell a property has generally been able to do so, and at a good price. So there has been less need for anyone to become an accidental landlord. Now that the property market seems to be cooling, however, this could all change and the numbers of accidental landlords could rise again.
Issues around accidental landlords
The business of accidental landlordism – if such a thing exists – creates a few issues which agents, landlords and tenants too should be aware of.
* Accidental landlords may be (in fact probably are) only in letting for the short term. If a sales opportunity presents itself (perhaps if the property market changes) they may look to get out ASAP and sell their property.
* Accidental landlords might not be really interested in letting. They are probably completely unaware of what tenants look for, need or expect. They may lack any interest in providing a good level of service. Their property probably hasn’t been selected with letting in mind, and may not be that lettable in terms of type of property or location either.
* Accidental landlords may not be too good at dealing with tenants. They may be far too lax, which leaves them open to attracting bad tenants or perhaps even scammers. They may be far too strict and make unreasonable demands on tenants.
* Accidental landlords frequently do not know the laws relating to letting property, and may not have the inclination or time to familiarise themselves with them.
The issues landlords may not know about include: Tenancy law, right to rent, EPCs, gas and electrical safety, inventories, landlord insurance, issues with letting mortgaged property, landlord and property licensing and the need to do repairs and maintenance. They may not know about their liability to pay income tax, nor the allowances they can claim.
A lack of a good working knowledge of these matters can not only cause issues for accidental landlords (ie. it can lead to them breaking the law) it can also cause problems for their tenants too.
Accidental landlords – the opportunities for agents
It is difficult to deny that accidental landlords represent an opportunity for letting agents. Some may even say a good opportunity.
Accidental landlords can help boost the supply of property to rent. This is more important than ever in these times of tight supply and high tenant demand, and when some professional landlords have exited the market.
These landlords may not be so yield-centric as professional landlords. They may be willing to let at local market rent – or possibly less – to cover costs.
Accidental landlords are also more likely (although they may not always realise it!) to be in need of professional agency and property management services than other landlords. They are likely to be completely reliant on a good agent to keep them compliant with the law for example.
They may be more willing and able to pay for agency and management services than a professional landlord, who must keep a close eye on their bottom line, is.
In times when the supply of rental property is likely to become tighter, letting agents may want to pay more attention to the market that accidental landlords offer. Indeed they may want to actively target it. They should, however, recognise the particular issues that working with accidental landlords can involve and be willing to tackle them when signing such landlords as clients.
