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Home > News and Reports > ‘Accidental’ landlords coming under fire by lenders
Nov 4, 2018
‘Accidental’ landlords coming under fire by lenders

A Liverpool lettings firm recently revealed a noticeable increase in the number of Liverpool homeowners letting out their homes because they are unable to sell; a common trend occurring across the UK today, despite suffering from an increased lender crackdown.

“In the last year, we’ve seen lots of accidental landlords coming onto the market because they just can’t find a buyer for their home, said Helen Griffin Booth, Managing Director of Bluerow Lettings.

Bluerow’s recent findings fall right in line with national statistics and figures compiled by the National Landlord’s Association, which reveal that the number of UK residents letting their homes because they could not sell has risen from five to seven percent in 2018.

These NLA statistics are also backed up by figures from Co-operative Bank, which indicate that one-fifth of the bank’s recent buy-to-let business has come from accidental landlords.

However, according to Booth, accidental landlords are experiencing pitfalls, and many lenders are becoming increasingly wary of accidental landlords, because their inexperience and lack of financial stability make them a greater risk than typical let investors.

Booth said, “Things have toughened up in the buy-to-let market. Some lenders will force you to change your mortgage if you are letting out your former residence and some will not allow you to do so, meaning you will need to find another deal.”

David Hollingworth, mortgage expert at London & Country, said, “Lenders are becoming more proactive about weeding out borrowers who are letting properties without lender’s agreements.” He continued, “As this would almost certainly be a breach of the mortgage contract, lenders could in theory take action, including demanding the full mortgage to be settled.”

As part of the weeding out process, lenders are identifying more and more accidental landlords and making them convert their owner-occupier mortgages to loans specifically for landlords, which are more expensive due to the added risk.

Although the recent lender crackdowns and red tape is a cause of concern for accidental landlords, Booth maintains that being an accidental landlord is well worth the effort in the long run as many homeowners turned landlords are still experiencing nice financial gains.

She said, “While the banks have got tougher on homeowners letting out former residences, many will still give consent on your existing mortgage or offer a good rate on a buy to let mortgage and the effort will definitely be worth it.”

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