It can be easy to forget that not every landlord is in the property sector through choice. It may be, for example, that you have struggled to find a buyer yet need to relocate for work. Or you may be keen to move in with a partner. Or you may have a new baby and desperately need to up sticks. So you may have little choice but to let out your home, paying your mortgage with the resulting rent so you can afford a second place.
Equally, you may have inherited a property and decided to put it up for rent.
In all these scenarios, among others, you have become an ‘accidental’ landlord. And while some statistics indicate numbers for this group are in decline, you’re certainly not alone. In fact, one figure has it that more than 10% of those with properties to let out start out this way – indeed, many go on to spend years letting out in the private rental sectors.
But getting your head round everything involved in becoming a first-time ‘accidental’ landlord can feel overwhelming. Here we offer some key things to start thinking about.
- Mortgage
You will need to contact your mortgage provider to inform them of your changed circumstances. And you have a couple of options:
- Switching your home loan to a Buy to Let There may be an arrangement fee and you may be offered one of these deals at a different interest rate to your regular loan. Equally, the loan-to-value (the sum the provider is willing to lend you compared to the property price) may be lower with this kind of mortgage. However, a buy-to-let mortgage is a long-term solution.
- A shorter-term Consent to Let mortgage is an alternative which will mean you can let out your rental home for up to a year while keeping your existing mortgage. It could be a smart solution if, say, you think the local time will have picked up by the time the product expires.
- A Let to Buy (BTL) mortgage means you remortgage and release some cash to pay the deposit on a new place. When you rent out your existing property, the income will cover its mortgage.
Often, BTL mortgages are subject to stricter lending criteria than other products, and can cost more. So, especially as an ‘accidental’ landlord, it can be a smart move to use broker, who will ensure you get the best deal for your mortgage.
- Home insurance
Don’t forget that regular residential insurance won’t cover you as a landlord. While it’s not a legal requirement, many lenders will insist you take out a policy before tenants can move in.
The kind of insurance you get will depend on your attitude to risk, and what you want cover for. You might want to protect your buildings against damage and compensation claims, plus legal fees, risks of void periods and so on.
Landlords’ insurance offers more specific cover than a regular home insurance policy and provides vital protection if things go wrong.
- Safety checks
Landlords are legally responsible for their tenants as far as gas safety is concerned. So they have an obligation to:
- Repair gas pipework, flues and appliances and ensure these are safe
- Conduct an annual gas safety check on each appliance and flue
- Keep a record of each safety check
That’s according to the Health and Safety Executive – read more about landlords’ responsibility for gas safety here.
As for electrical safety, the rules have changed in recent years. While most landlords have always made sure their rental homes were safe, now it’s the law, and this has been the case since June 2020.
A competent, qualified person must inspect and test electrical installations in rental homes at least every five years. And landlords have to provide a copy of the Electrical Installation Condition Report (EICR) to tenants, and the local council on request. Learn more here.
- Deposits
No landlord is allowed to hang on to a tenant’s deposit. They need to register it with a government-approved scheme within a month of receipt, which ensures tenants get their money back in a reasonable timeframe once they move out, as long as they’ve cared for the place and paid rent on time.
The schemes landlords can use include:
- The Deposit Protection Service
- MyDeposits
- Tenancy Deposit Scheme
We’ve written about this in more detail here
Oakfield says
For many ‘accidental’ landlords, using an agent to manage their property makes perfect sense, since it takes the stress out of the navigation of red tape, repairs management and liaising with tenants. That’s especially the case if the property you’re letting out is not particularly near you.
At Oakfield Estate Agents, we can help manage your rental place whether you’re letting out a single flat or house or a whole block, and whether you’re an ‘accidental’ landlord or not. We have offices across Eastbourne, Bexhill and Hastings, with a strong reputation for providing a great service to tenants and landlords across East Sussex.
Get in touch today to learn more about what we could do for you. Contact Us