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What this entails..

Plus, learn about what you need to look out for.

Not all landlords make a deliberate choice of becoming a landlord – there may be several reasons why or how they “fall” into letting their property, as the process of finding a tenant is often quicker than the process of selling. If this is you, this article explores the ins and outs of what it means to be an accidental landlord and what you need to take into account.

What is an accidental landlord?

Anyone may find themselves in a position to become a landlord due to unexpected circumstances. Someone may inherit a property, need to relocate for a new job so have a home they need to sell or let, or may have other personal reasons that necessitate a need to let a property.

There are many reasons why homeowners may become accidental landlords.

What changes when you become a landlord?

When you become a landlord, there are some important factors you need to be aware of.

Exploring your mortgage and insurance options

If you have a mortgage on the property that you will be letting, the majority of lenders will require that you switch to a buy-to-let mortgage, and you might want to consider specific landlord insurance.

Landlords and tax

When you become a landlord, you have to pay tax on any rental income you generate, and it’s possible that you could have to pay a higher rate of income tax. Equally, there are certain expenses that are eligible for tax relief. All of which is important to keep in mind when starting out on your journey to becoming a landlord.

This is by no means a complete overview of all aspects that could change when you inherit a property or become a landlord, which is why we would recommend that you speak to a trained tax professional or HMRC to find out how tax may affect you.

Other landlord obligations

You will need to ensure that your rental property is safe and legally compliant. This includes having all the necessary certificates, including a valid Gas Safety Record, Electrical Installation Condition Report and an Energy Performance Certificate. You will also have to conclude a right to rent check (England only) on potential tenants. These are just some of the ‘musts’ when letting out a property.

Additionally, depending on the area and tenant makeup you may be required to obtain a property licence from the local authorities

Speak to the Carrick Johnson team for further insight into all the regulatory requirements you need to follow.

What are some of the benefits of becoming a landlord?

Letting a property offers a landlord a great financial opportunity and may be an additional way for you to fund your retirement plan.

Bricks and mortar have, traditionally, been a reliable path to making money, with UK property values increasing by 1,392% since 1980, when compared to 2023,* and can provide a steady and consistent income. Additionally, you can choose to sell (or move back in) at a later date, when personal and market conditions best suit you.

However, as mentioned above, you also need to consider that you may need to invest money to ensure legal requirements are met or if you have to pay additional taxes on the extra income.

What’s best for you?

Understanding the pros and cons of becoming a landlord is an important part of the process. So if you have any further questions about the process of becoming a landlord, get in touch with us, as our team of experts is here to help