Joint research carried out by Endsleigh Insurance and Trustmark has revealed that a surprisingly high percentage of UK landlords do not consider their lettings business a commercial enterprise – which could go some way towards explaining why so many of them have yet to file a tax return declaring their rental income to HMRC!
Accidental Landlords Booming in the UK
The study found that nearly 85% of the 1500 landlords currently operating in the UK are ‘accidental’ landlords. Many end up letting a property out because they can’t sell. Others start letting a property because they have moved in with a partner, moved abroad, or relocated with work and would like to keep a base to come back to at some point. Only 17% of landlords questioned say they began a buy to let venture with the express aim of making money. Of these, 15% bought a buy to let property as an investment for another family member.
Beware the Risks of becoming an Accidental Landlord
Becoming an accidental landlord is, however, not a risk-free venture. If the property is financed with a mortgage, it is very important that you tell your lender you are letting it to tenants. Although being upfront about it could mean you are switched to a higher interest rate loan, if your lender finds out you have breached your loan contract, they could demand you pay the outstanding balance in full. Don’t assume the lender will never find out – many are checking online to make sure borrowers are actually living at the property. Letting a home without the permission of the mortgage lender will also invalidate your insurance policy.
