You might have set your sights on becoming a successful buy to let investor as your principal livelihood. Alternatively, you might simply have found yourself the owner of a property suitable for letting out to paying tenants. If you fall into this second category, you might describe yourself as an “accidental” landlord.
You might have become an accidental landlord, for example, if you have:
- inherited a property which you decide to let to tenants rather than sell straight away – in the present housing climate, this might make greater economic sense;
- if you have moved home and find it difficult to sell your previous house, similar economic arguments might make it sensible to let the property until you have found the right buyer;
- your work might have taken you abroad on a contract of several years and you have the opportunity to see your home paying its way by letting it out to tenants; or
- you might own more than one home and decide that the time has come to generate an income from your second home by letting it out.
What you need to know
Whatever the reasons, taking on the role of an accidental landlord pay offer a golden opportunity to earn an extra income – but there are a number of things you need to know before setting out on such a course:
- if there is a mortgage on the property, you need to inform the lender about your intention to let;
- if the letting is likely to stretch into a number of years, the lender is likely to insist on a remortgage, converting to a purpose-designed buy to let mortgage;
- not only is any mortgage lender going to insist on adequate building insurance (to protect their interest in the property), but you are also likely to want both building and contents insurance to safeguard the home you are planning to let;
- because it is let property, the standard home buildings and contents insurance which once gave you peace of mind must be replaced by purpose-designed let property insurance, or landlord insurance as it is also known;
- landlord insurance maintains protection of both the structure and the fabric of the building, any contents you own, offers full public liability indemnity in the event of a claim from one of your tenants who is injured on the property and may even provide compensation for any loss of rental income if the home can no longer be occupied following a major insured incident;
Health, safety and legal responsibilities
- the moment you become a landlord – accidental or otherwise – you also take on a number of legal obligations and responsibilities;
- the legislation and local regulations are designed primarily to ensure that your tenants are occupying accommodation that is safe to live in, adequately maintained and poses no risks to their health;
- the focus, therefore, is on the safety of any gas supply and its appliances, electrical installations, and adherence to national and local fire regulations (including recent requirements for the fitting of both carbon monoxide detectors and fire alarms in the property);
- you also have an obligation to ensure the independent safe-keeping of any deposit you received from your tenants and to verify their immigration status to ensure that they have a Right to Rent your property.
Even though you might consider yourself only an accidental landlord, therefore, there are still a number of important steps and measures that need to be taken when preparing the property for letting.