Author Mark Fairlie

80,000 extra homes for rent have “flooded” the UK marketplace because their owners can’t sell their properties, according to estate agent Countrywide.

In comparison to traditional buy-to-let investors who hold onto their properties for an average of 17 years, the average accidental landlord keeps theirs for just 15 months, the same research found. 89% of accidental landlords put their properties back onto the market after the first tenant has moved out in preference to looking for another one to replace them.

The picture across the country is mixed. The figures below show the number of homes now listed for rent whose owners had previously tried to sell them.

RegionRental properties previously for
North East9.1%
North West8.8%
South East7.6%
East of England7.4%
South West6.3%
Yorkshire and the Humber6%
West Midlands6%
East Midlands5.9%

Jonny Morris of Countrywide told the Daily Mail,

“While most landlords are in the business by choice, the last three years have seen an increase in the numbers letting out a property they had previously tried to sell.”

The estate agency believes that homeowners are taking this course of action because the current level interest rates are set at means accidental landlords can afford to hold onto their properties in the hope that the market may be more favourable in a year’s time. If it is, they will receive more money when they come to sell.

HMRC paying attention

HMRC tax evasion

Source HMRC

HMRC are paying close attention to the situation as they are currently running a campaign to encourage those who receive an income from let-out residential property to come forward and inform them of any undeclared profits.

The “Let Property” campaign allows taxpayers the chance to

“bring their tax affairs up to date if (they)’re an individual landlord letting our residential property in the UK or abroad and to get the best possible terms to pay the tax (they) owe.”

To take part in the scheme, someone who owes tax on their letting income needs to make a voluntary disclosure to “get the best possible terms” of settlement.

Earlier this year, HMRC published a list of examples of the most common tax errors landlords make. Many of the situations they describe regularly catch out accidental landlords.

Examples include:

  • couples moving in together where both own property
  • renting out an inherited property
  • people relocating who can’t sell their current property.

One of the most frequently occurring mistakes made by amateur landlords is believing that the whole of the mortgage payment is deductible against the rent. If an accidental landlord pays £500 a month on their mortgage and rents their property out at £500, this creates a profit which must be declared because landlords, whether accidental or not, can only claim back the interest part of their mortgage.

Effect of accidental landlords on the rental market

According to Shelter and reported by the Times, nearly one million tenants a year are being forced to move because of the rise of the accidental landlord. Four million people in the UK have rental agreements that have no contract or are rolling contracts which allows the landlord to evict them with four weeks’ notice.

Taking this into consideration, however, the number of properties available for rent is low. The extra supply of homes isn’t expected to push the average rent down, according to Landlord News.