Growing number of accidental landlords

12 July 2012

A North West Letting Firms Bluerow has revealed that a number of homeowners letting out their properties continues to rise because they can’t sell.

“In the last year we’ve seen lots of accidental landlords coming onto the market because they just can’t find a buyer for their home as per Bluerow Lettings' Managing Director, Helen Griffin Booth.

The letting firms' conclusions are supported by national statistics, with figures from the National Landlords Association (NLA).  These figures reveal that members who had been compelled into letting because they could not sell a property had gone up from 5% to 7%.

The NLA statistics are backed up by figures from the Co-operative Bank a week ago, which indicated that a 5th of its recent buy-to-let business was from accidental landlords.

Helen explained:

"Stricter lending, economic uncertainties and high house prices is continuing to dampen the demand to buy houses.  As a result, we have many homeowners who are buying new homes looking to let out their current property and wait until the market improves.  This makes sounds business sense.  In the current market, homeowners often have to slash house prices to sell them on, but if they don’t need the funds tied up in the home it makes much more sense to let the property out.  The rental market is booming at the moment, profits can be made, and houses can become excellent long-term investments.”

There are risks with renting out, Helen advises.  Lenders are becoming more cautious with accidental landlords, who represent a higher risk than ordinary buy to let investors. 

Helen stated:

“Things have toughened up in the buy to let market.  Some lenders will force you to change your mortgage if you are letting out your former residence and some will not allow you to do so, meaning that you will need to find another deal.”

However regardless of the red tape, Helen advises that it’s worth the effort for the reason that financial gain will be worth it.

She stated:

“While the banks have got tougher on homeowners letting out former residences, many will still give consent on your existing mortgage or offer a good rate on a buy to let mortgage and the effort will definitely be worth it.  Homeowners are not struggling to let out property, demand is high, rental values are strong and homeowners can find they have an excellent long-term investment which they are making a profit out of every month and could be worth a lot more in a few years.” 

She added:

“Obviously the downside of letting out is managing and finding the tenants, but homeowners can use a firm like ourselves, which deal with all those issues and take much of the risk and hassle out of being a landlord.  So for a small a