Member Article

From credit crunch casualties to inadvertent entrepreneurs

A leading North East letting agent has welcomed research showcasing the successes of so-called accidental landlords – families struggling to move house due to the economic downturn who have rented their homes out instead.

A recently-released Rental Market Forecast by Estate Agents Rightmove reported as many as 30% of landlords are now renting out former family homes, suggesting they have moved from credit crunch casualties to inadvertent entrepreneurs.

The research also reveals that one in eight accidental landlords are looking to invest in further buy-to-let properties this year – a clear sign of the unexpected success many are enjoying.

As buy-to-let mortgage rates continue to fall, a survey from Zoopla also hinted that property prices could rise by at least 3% this year– highlighting the potential benefits of home-owners looking to move house but unable to sell maximising the potential of current properties instead of selling at a loss.

The research also comes after statistics released by the Halifaxlast year showed the value of North East property rising at a faster rate than London – with the value of property in the region rising to £109bn last year, £62bn up from ten years earlier.

Ajay Jagota, managing director of KIS Lettings, who manage properties for some 700 landlords across the North East from branches in Sunderland, North Tyneside and South Tyneside, has welcomed the findings but also warned accidental landlords to be careful of over-extending themselves.

He said: “These figures show that contrary to popular belief, things are far from grim up north when it comes to the rental sector.

“Families unable to move up the property ladder as their circumstances change remain some of the forgotten victims of the downturn and it’s really heartening to hear of so many of them are not just making the best of a bad situation but even making a profit.

“For all the negative stories you see in the press this is the real face of UK landlords - hard-working individuals managing family assets as best they can, who often never-intended to become landlords at all and who treat their tenants’ properties with the care and commitment they would their own homes –not least because they so often are.

“For all their successes through, I’d advise DIY landlords to beware getting carried away and over-extending themselves.

“Renting a property can throw a lot of challenges at you – everything from cannabis farms to complex and ever-changing regulations. Every additional property you add to your portfolio means more work on top of family life and professional commitments and more chance something will go wrong.

“Accidental landlords need to ask themselves a tough question –do they have the time to cope when things go wrong, let alone the resources and the expertise? Could they cope with eviction notices, health and safety law, regular inspections and routine maintenance of top of work and kids?

“There’s also the rising spectre of coming benefit changes. With pilot schemes suggesting that as many as 10% of housing benefits claimants may begin to default on rent when benefits are paid to them instead of directly to landlords from April, it’s small time who will come off worst.

“For a modest investment a good lettings agent won’t just find you the tenants to fill your properties, they could save you a fortune in legal and maintenance costs as well as giving you the back-up you need to when times are tough.”

This was posted in Bdaily's Members' News section by Ajay Jagota .