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Homeowners becoming unwilling landlords

Tuesday, 15 July 2008 12:00 AM

British homeowners are being forced into the rental market, becoming unwilling landlords as ride out the property slump.

However, such landlords are usually dilettantes in the field, and are consequently miss the opportunities afforded to more experienced investors.

"Many of our new landlords are not entering the lettings market by choice and they have a great deal to learn about the business," said Lynn Hilton, partner at Cluttons estate agents responsible for letting.

"A number of them are missing out on opportunities to let their property by refusing to budge at all on the asking rent."

It is feared such landlords will settle for void periods, rather than accept a lower rent; a decision which can prove extremely negative to overall yields in the long run.

Professional landlords tend to view their buy-to-let property as a long term investment, and are prepared to subsidise the mortgage if necessary in the short term.

Many reluctant landlords, however, expect their rental income to cover all their costs from day one, which is not always realistic.

The drip-feed of costs from a rental property can come as a shock to many homeowners, who are not used to being forced to upkeep their property to high standards as part of a contract.

They are also often unprepared for administrative costs arising from contracts and inventories.

Earlier this month buy-to-let mortgage specialist Paragon warned over half of landlords are unaware of their energy performance certificate requirements.

Furthermore, HM Revenue & Customs has this month launched a crackdown on landlords who fail to declare all income - placing further pressure on investors.

Chris O'Toole

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