According to the National Landlords Association (NLA), the number of so called “accidental landlords” is on the rise.
Research by the associations has shown that 43% of its members did not buy the first property they let out with the intention of becoming a landlord.
according to Auction Finance Limited, there are five reasons for people becoming an accidental landlord:
1. Inheritance. Families who inherit a property often decide to rent it out before they agree on what to do with it long term.
2. Divorce. Since the recession, and the drop in house prices, family homes often cannot be sold for the price that it wanted. Following divorce, renting a jointly owned home can bring in cashflow and enables couples to go their separate ways.
3. Children. Unplanned pregnancy or multiple births can often require home owners to move quickly. Renting out an existing home is often quicker than selling.
4. Student property. Many parents purchase homes as accommodation for their children whilst studying. Keeping hold of a highly profitable student property is a common reason why people begin a life as a landlords.
5. Economy. The property market is in a situation whereby people may be in negative equity and don’t wish to sell their home, preferring instead to rent it out.
Scott Hendry of Auction Finance Limited, said: “There has been a huge increase in the number of accidental landlords during the past five years and these landlords often expand their portfolio when they realise that letting a property can be profitable and hassle-free. It even causes a career change for many people. If you can leverage a mortgage on an unexpected property you can quickly build a portfolio. High rental yields are currently achievable even though house prices are falling in some areas.”