The age of the accidental landlord is definitely not over yet (and maybe it never will be). There are many reasons why people might want to hold on to a property, at least in the short term, and let it out to cover costs and, hopefully, turn in a profit. Accidental, however, should not mean unprepared, uninformed and/or unprofessional, so here are four points you need to know.
You will need to switch to a landlord’s mortgage and insurance
Residential mortgages and buy-to-let mortgages are very different products. The former are based on your income (taking into account affordability criteria), the latter are based on the amount of rental income you can reasonably expect to earn from the property. This means you are going to have to do proper calculations of what sort of rent you can realistically charge and what sort of expenses you will have. Insurance is based on risk and so you may find your premiums go up to reflect the fact that you will have strangers living in your home.
You will need to stay on the right side of the law
Admittedly this holds true in residential property as well, but as a rule of thumb, when it comes to residential property, the law basically does its best to ensure fair dealings between neighbours and a pleasant and safe environment for all. When it comes to rented property, landlords have a duty of care towards their tenants as well as wider obligations such as the need to check the tenant’s immigration status. Landlords operating houses in multiple occupations will have even more rules with which they may need to comply. The legalities of letting out property these days may come as something of a shock to new landlords, but a good letting agent will be able to give a lot of help here.
NB: Laws can and do change on a regular basis and this is particularly true of laws relating to property. As the old saying goes “ignorance is no excuse”, but it can be onerous keeping track of legislative changes, especially if you have other demands on your time. This is why it can be useful to pay a professional to keep you on the legal straight and narrow.
You will need to remember your tax obligations
Unless you really enjoy maths, you may want to engage an accountant to handle your tax returns for you.
You will need to market your property effectively
Properties don’t just let themselves, not even well-presented, reasonably-priced properties located in a good area. To begin with, people have to know that the property is available for rent before they can even take a decision as to whether or not it is worth their while to go and view it. Remember that many of the comments which apply to presenting a home for sale also apply to presenting a home to a prospective tenant and ideally should be put in place before the photographs are taken for the listing.