Being an accidental landlord means you find yourself in the position of owning a property that you can let out – but because of unexpected circumstances, rather than because you set out to become a landlord.
And this article explains the main reasons for becoming an accidental landlord, what you’ll need to do about your mortgage, the tax implications and more. Read on to find out everything you need to know.
The Main Reasons Why People Become an Accidental Landlord
There are several main reasons why you might become an accidental landlord, which include:
- Being unable to sell your current home so you choose to rent it out when you buy a new one.
- Needing to relocate for your job for a period of time and deciding to rent your home out so you can live in it when you return
- Inheriting a property you either can’t sell or you wish to keep ownership of for your children so you decide to rent it out
Accidental Landlords and Mortgages
If you’re about to become an accidental landlord and you currently have a mortgage on the property, it’s essential you speak to an expert mortgage adviser who can talk you through your options for your mortgage. This is because you’ll need to tell your current mortgage lender about your changing circumstances in order to get approval from them so you can rent out your property.
There are two different ways to go about renting your property:
- Obtaining ‘Consent to Let’: When your mortgage lender gives you Consent to Let, this allows you to rent out your property without needing to change your mortgage. You may find your lender is more likely to agree if you’re planning to rent out the property in the short term while you try to sell or. Or if you’re moving away for six months or a year then planning to move back.
- Switching to a Buy to Let mortgage: Your other option is to change your current mortgage to a Buy to Let mortgage.
When it comes to choosing the right option for you, it’s a good idea to speak to an expert adviser. Not only can our expert team answer your questions, if you decide switching to a Buy to Let mortgage is right for you, they’ll help you find the right mortgage for your needs.
Regardless of whether you’re an accidental landlord or set out to become a landlord, you will have the same legal obligations you’ll need to adhere to. These include:
- You’ll be responsible for making sure the rental property is safe. For example, you’ll need to get a registered engineer to complete a gas safety check on each gas appliance. And you’ll also need to follow fire safety regulations
- You must by law check your tenants have a legal right to rent in this country.
- And you’ll need to obtain any relevant licences and permits
Becoming a Landlord and Tax
When you rent out a property you must declare it to HMRC. So when you’re going through your figures and working out how much money you’re hoping to make from renting out your property, don’t forget to factor in the tax you’ll need to pay.
Accidental Landlords and Stamp Duty
Another consequence of keeping hold of a property when you buy another home is that you’ll be liable to pay the higher rate of Stamp Duty on your new property. Again, factor this additional cost into your calculations.
What’s Best For You? Talk it Through
It might seem like there’s a lot to consider. But whenever it comes to making any major decision the key is to be fully informed. That way, you’ll be certain you’re making the right decision for you. And this is where our team of expert advisers can help you because they're here to answer all your questions. Also, if you’re planning to take out a Buy to Let mortgage, they can help you choose the right mortgage for you too. So phone us today on 01603 405070 or click here to arrange a call back.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage