Over the last two years or so, the number of ‘accidental landlords’ joining the lettings market has grown considerably. This increase has been caused by a number of political and economic factors which have affected the residential sales market.
Firstly, the changes to stamp duty have meant that many would-be sellers would have to adjust their pricing expectations to be more aligned with the stamp duty bill for the buyer. Similarly, changes to mortgage regulation have also made buyers more cautious and properties might not be snapped up as quickly as they may have been previously. This is all underpinned by a general feeling of uncertainty surrounding Brexit negotiations which has persuaded many sellers to hold on to their homes for the time being.
This may sound as though it’s all bad news for homeowners who need to move but are unable to sell. However, being an accidental landlord can be incredibly advantageous in the market. Most importantly, a property will often let quicker than it will sell so getting a tenant in reduces void periods. For those who have already found their next home this is a major advantage.
Additionally, the quality of these homes tends to be higher, as owner-occupiers traditionally invest more in their properties than rental investors. This makes these houses look very appealing to tenants when compared to existing lettings stock.
Properties brought to the market by accidental landlords also benefit tenants. As mentioned, they tend to be of a higher quality and can sometimes be more flexible in terms of tenancy length and there have been a number of examples of ‘trying before you buy’, when a tenant has rented the property for a year or so to trial the area and has fallen in love with the home and bought it. Again, this is advantageous both for the landlord and the tenant.
For seasoned landlords this increase in high-quality competition should encourage a rental refresh. So if you are an existing landlord, it would be advisable to revisit your property and give it a health check to ensure it is able to keep up with the competition.