What to do when you become an accidental landlord
Sometimes you can find yourself the manager of a rental property without meaning to do so. You might be helping out an older relative who is struggling to manage their own tenants. Or you might have a relative who wants to let their home to fund care home fees and needs someone to organise the whole thing. Or you may have inherited property, and have decided to let rather than sell.
Whatever route you take to becoming an ‘accidental landlord’, there are both benefits and pitfalls.
Pete Muggleston, Managing Director at Online Mortgage Advisor who connect people with expert mortgage brokers specialising in their case, offers advice on how to get started, and where to go to find out more.
Without experience, the rental property maze can be overwhelming for a new landlord. So what do you do if you unexpectedly become a landlord and where can you turn for advice?
We’ll be taking a look at everything you need to know including:
- Is it better to manage a property yourself or use an agent?
- How to find the right lettings agent
- Helpful tools for landlords
- How to get confidential advice.
How do you become an accidental landlord?
There are a number of ways in which you could become a landlord unexpectedly.
Inherit a property
Royal London estimated that £400bn worth of property will be passed from grandparents to younger generations in the coming decade.
Unexpectedly inheriting a property can have a huge financial impact, especially if the beneficiary or beneficiaries are unable to keep up with the maintenance costs and other bills associated with owning a property.
Many decide to sell, although this can be prove difficult if the property is dated or in need of home improvements.
Renting the property out can provide income to pay for repairs and decorating which can help it sell in the future.
Help an elderly relative
Children or grandchildren of homeowners can find themselves acting as landlord after a relative has become ill or unable to manage tenants.
A property won’t sell
Sometimes local market conditions just don’t offer the expected return that many property investors hope for and so they find themselves in a position of not being able to sell.
Some properties can also stay on the market for a lot longer than the owner hopes for, so rather than have an empty house that could potentially be costing money in council tax and maintenance, the owner rents the property for income.
Relatives need to pay for retirement or care costs
With the daunting prospect of not having enough money to live comfortably during retirement, many homeowners consider renting out their property.
This can provide additional income that can be used to top up a retirement fund or pay for care home costs.
Is it better to manage a property yourself or use an agent?
Managing a rental property can be a huge burden which many landlords, both old and young, find difficult to cope with.
For someone with no prior experience of being a landlord, tasks like finding tenants and arranging end-of-tenancy cleaners can be overwhelming.
Managing a rental property yourself
Managing a property yourself will save you money on agency fees but it does leave the responsibility of finding new tenants down to you.
It can also be time consuming, especially if you’re managing the property from afar and have to make regular inspections or maintenance work.
How to find tenants for a rental property
- Use your own social media or ask a family member to use theirs in order to market the property to local friends
- Create a Facebook business page to promote your property/properties
- Advertise in local newspapers
- Ask local businesses if you can leave flyers in their shop
- Attach flyers to local notice boards
Using a lettings agent
A typical property management agency will charge 15% of your yearly rental income to manage your property. This might include:
- Marketing for your property to find new tenants (on the letting agency website)
- The time of a lettings agent to show potential tenants around the property
- Admin costs involved for any contracts and rental agreements
- A cleaning service in between new tenants
- Costs associated with chasing rental payments
How to find the right lettings agent
First and foremost, you need to decide what you would like your agent to do.
Do you just want an agent to find you a tenant, or do you want them to manage the whole rental agreement from start to end?
You should also think about the type of tenant you would like. For example, a young professional or a family.
Questions to ask your potential agent
- Do they have knowledge about the area your property is in and the current rental market?
- Have they managed rental accommodation before?
- Do they work for a reputable company with good reviews?
- What are their fees?
Check that they are a member of professional organisation
- The Association of Residential Letting Agents
- The National Association of Estate Agents
- The Royal Institution of Chartered Surveyors
Inheriting a property with other beneficiaries
In most cases when a property is inherited, it is sold and any money earned through the sale is divided equally between the beneficiaries.
However, depending on the property’s condition, some beneficiaries decide to keep it and rent it out for income.
Divide the responsibilities
This can cause disagreements so before deciding whether to rent out a property as a joint landlord, it’s important that you carefully consider each responsibility and make a decision about who is responsible for what.
Some joint landlords split the responsibilities based on who has more time or who is most suited to each task.
For example, one sibling may be happy to manage the upkeep of the property whilst another handles tenancy agreements and paperwork.
Helpful tools for landlords
Property Buddy
This is a great app for a new landlord. Property Buddy allows landlords to upload details such as valuations and taxes and then track rental payments in an easy to use dashboard.
Trust a Trader
Being a landlord means having to be prepared for unexpected leaky roofs, broken boilers or appliances.
Finding a tradesman last minute can be time consuming but using an app like Trust a Trader can help you find the right professional in your area within seconds.
Get confidential advice
Becoming a landlord unexpectedly can be stressful, especially if you have never had to manage a property or are dealing with the loss of a loved one.
There are services and groups that offer free advice on what to do if you become an accidental landlord including:
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