There are things we make a conscious effort to engage in, and then there are others we just seem to fall into doing almost by sheer chance. In the private rented sector of the housing market, it is this difference which might separate the professional landlord from the so-called accidental landlord.
So, putting aside for the moment the individual who consciously acquires property as part of a long-term business strategy to make a livelihood, how does a different type of property owner become such an accidental landlord?
It might be helpful to look at a few examples, and offer a few tips on what might lie in store if you become a landlord “accidentally”.
How does someone become an accidental landlord?
Here are some common ways someone might become an accidental landlord:
- Inheritance – a person may inherit a property, often from a relative, and decide to rent it out instead of selling it. This could be due to market conditions, sentimental reasons, or the desire to generate an income from the property;
- Relocation for work – if you need to move to a different part of the country (or abroad) for work, you might choose to rent out your home rather than sell it, especially if you plan to return;
- Relationship changes – a change in personal circumstances, such as a divorce or separation, might lead to one partner moving out and renting the property. Alternatively, a couple might choose to rent out one of their properties if they move in together;
- Property market condition – if the property market is slow or prices are lower than expected, you might decide to rent the property temporarily until the market improves, rather than selling it at a loss;
- Difficulty selling a property – you are struggling to sell your property so you might rent it out to cover mortgage payments or avoid leaving the property empty for an extended period;
- Financial necessity – sometimes, financial difficulties might prompt a homeowner to rent out their property to generate additional income, especially if they cannot afford the mortgage payments – such as renting out an unused bedroom in your own home (see below).
What is the Rent a Room Scheme?
The government has put its weight behind greater use of spare room in private homes by introducing the Rent a Room Scheme – essentially, this grants a tax-free allowance of £7,500 a year (as at 2024) on what you earn from rents.
If this is your route to becoming an accidental landlord, you might want to give extra consideration to the insurance that safeguards your home:
- in the first instance, this means letting your standard home building and contents insurer know what you are planning to do;
- depending on your insurer, the response might be acceptance, an increase in the premiums you pay, or a flat refusal to continue insurance cover – especially with respect to cover for your contents;
- in the interests of caution and prudence – and for the avoidance of any doubt – you might therefore want to consider the more general benefits of comprehensive landlord insurance.
A landlord’s obligations
If you do become an accidental landlord, then you need to make sure that you:
- understand the tax implications – rental income is taxable, and accidental landlords must report this income to HMRC. They can also deduct certain expenses, such as repairs, letting agent fees, and mortgage interest, from their taxable income;
- have the correct type of property insurance – standard home insurance policies typically do not cover rental properties. Accidental landlords should obtain landlord insurance to cover risks associated with renting out the property;
- inform your mortgage provider – if the property has a residential mortgage, the lender must be informed of the rental arrangement. Some lenders may require switching to a buy-to-let mortgage;
- adhere to the legislation relating to being a landlord. As a landlord, even if accidental, you must comply with UK laws and regulations, such as ensuring the property meets safety standards, protecting tenants’ deposits in a government-approved scheme, and providing an Energy Performance Certificate (EPC). Please refer to our Landlord Legislation Guide here for more information;
- are aware of, and comply with, health and safety issues – you can read our Landlords Guide to Health & Safety.
There may be any number of reasons why your circumstances change, and you find yourself making the most of a valuable housing resource – or part of that resource – in order to make a little more income. In this way, and as the owner of that valuable piece of property you may consider it to have been an especially happy accident to have become a landlord.
Finally, for more information, you may find our guide – The Accidental Landlord Guide – useful.
