Almost half of UK property owners would consider becoming reluctant landlords in the face of a double dip recession, research shows.
Such a scenario would result in a tidal wave of reluctant landlords, potentially affecting almost half of the nation’s homeowners, as they seek a financially viable means to hold onto their home, a report from MORE TH>N BUSINESS shows.
It reveals that 10% of British home owners, accounting for some 1.75 million properties, say that in the event of another housing market slump, they would have no other choice but to let their property and downsize. A further 34% say it is something they would be forced to consider.
The threat is most real in London, where 14% of homeowners say they would have no choice but to let their property and downsize. Another 42% say it is something they would consider.
The main reason behind their thinking includes 44% wanting to hold onto their property until the market recovers, 33% seeking long term financial security, 27% wanting to pay off existing debts and 20% trying to escape negative equity (20%).
In addition to showing a potential transformation in the landscape of the UK’s housing market, the research also reveals just how unprepared reluctant landlords are for the challenges and responsibilities they face.
Of all UK homeowners 78% say they do not have sufficient knowledge about the legal responsibilities of a landlord and 74% do not understand landlord insurance. A further 48% said they would be fearful about being caught out by red tape or the small print of tenancy laws.
Of the existing reluctant landlords who have already been through the process, just 15% felt it had been completely successful, with 46% saying they were unprepared for rules, regulations and red tape 46%, some 23% failing to secure anticipated rent for their property, and 22% dealing with damage by tenants.
‘With three quarters of homeowners not having adequate knowledge of the legal responsibilities involved in being a landlord, we would urge people to carefully plan their actions and not to make any rushed decisions. There are numerous potential pitfalls when it comes to letting a property. It is not as simple as finding a tenant and sitting back waiting for the rent to come in,’ said Mike Bowman, Head of MORE TH>N BUSINESS.
‘A sudden upsurge in rental properties on the market would actually force down rental yields so you may not get the income you anticipated. In addition, first time landlords must be prepared for every eventuality regarding their liabilities and responsibilities,’ he explained. This includes making sure your property is safe such as having smoke alarms fitted and compulsory annual checks on gas appliances.
‘One of the key things is to look at your insurance and if it will cover your needs as a landlord. Remember, if a tenant burns down your house, it’s your problem, not theirs,’ he added.
Other areas that need to be covered include safety of electrical installations, annual checks on gas appliances, providing Energy Performance Certificates (EPCs), fire regulations, insurance, credit and character checks on tenants and deposits being put in a tenancy deposit protection scheme.