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Looking at everything you need to know about accidental landlords, the tax implications it can bring, and what you can do about it.

Becoming a landlord is a decision that is undertaken by hundreds of people every day. It's a great way to make extra money and can be a fun business opportunity for those looking to get into the world of property. However, being a landlord is not on the cards for everyone, and finding yourself in the position can be a stressful experience.

A recent survey by the estate agency YouMove found that nearly half of UK landlords were 'pension pot' landlords, 29% were accidental landlords, and only 20% identified as professional landlords.

In this blog post, we will be looking at what an accidental landlord is. the tax implications it can bring with it, and what you can do if you find that you have no choice other than to be an accidental landlord.

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What is an accidental landlord?

Life can change in the blink of an eye, and people may need to sell their houses whether it's for a new job, to move in with a partner, or to downsize. Whilst most people are usually able to sell their house and move on, sometimes circumstances won't allow for everyone to do that.

This leaves homeowners having to turn their home into a rental property and use the rent to pay their monthly mortgage repayments and freeing themselves up to move onto their next property. A landlord who has found themselves in the rental market as a result of not their own choices is referred to as an accidental landlord.

How do you become an accidental landlord?

People can become an accidental landlord for any number of reasons. Below are some of the most common situations where people can find themselves with an empty property to rent:

  • They have inherited a property that they wish to keep.

  • Economic circumstances such as bad market conditions or being unable to pay the mortgage.

  • They have moved in with a partner.

  • They are having to relocate for a job.

Will I need to make changes to my mortgage in order to rent out my home?

If you are renting out your property to tenants, then you will need to contact your mortgage lender and inform them that you are planning on renting out a property. Your lender may decide to grant you a Consent to Let as a short-term solution. This means you will be allowed to let out your property for a maximum of 12 months whilst maintaining your current mortgage rate.

If you believe that the local market will have improved again in a year's time, then this could be a good solution for you to take advantage of, however, your lender does not have to offer you this deal.

A different approach you may want to consider is switching your residential mortgage with a Buy to Let mortgage. This process is pretty straightforward; however, you end up being offered a lower loan to value. You also run the risk of facing an arrangement fee and the rate of the mortgage may differ from your current rate.

If you have enough equity in your property, then you may be able to get a Let to Buy mortgage. When you use a Let to Buy mortgage, you remortgage your current property and put down a deposit on your new home. You can then let out your home and use the rental income to cover your new mortgage.

Buy to let mortgages

When it comes to mortgages, buy to let mortgages are very similar to residential. However, there are a few key differences which we have highlighted below:

  • As a rule of thumb, you can expect a minimum of 20-25% loan to value for a buy to let mortgage.

  • The amount that your lender will allow you to borrow is based on how much rent you can generate against the cost of the mortgage. Usually, lenders will want the expected rental income from your property to meet at least 125% of the monthly interest payments on the loan.

  • As a result of the greater risk involved with a buy-to-let mortgage, you can expect to pay higher interest rates than you would find with a standard mortgage.

  • You should also expect to have a minimum salary of around £20,000-£25,000 in order to take out a buy-to-let mortgage.

  • Buy-to-let mortgages also bring with them higher arrangement fees than conventional mortgages. These are often calculated as a percentage of the amount you borrow rather than a flat fee.

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Landlord obligations

As a landlord, will I need to pay income tax?

When you are a landlord, you are required by law to pay income tax on the rental income that you receive. Previously landlords were only required to pay tax on the rental income they made and would be able to claim tax relief on the mortgage interest they pay on their mortgage repayments.

The laws around this have now changed and landlords pay tax on their entire rental income now, instead of just the profit. Landlords are also only able to claim tax relief on mortgage payments at a rate of 20% - disregarding the tax band they are in. This means that if a landlord is in a higher tax band, they will be required to pay tax on rental income at 40% or 45% but will only be able to claim 20% back as tax relief.

The first £1,000 of your income from the property rental will be tax-free. This is referred to as 'property allowance' and if your property rental is between £1,000 and £2,500 a year you will need to contact HMRC.

After this, you will be required to report and file your figures on a Self-Assessment tax return if it is £2,500 to £9,999 after allowable expenses or £10,000 or more before allowable expenses.

Stamp duty

A cost that you may have to get familiar with as a landlord is stamp duty tax. Stamp duty tax is a tax that is paid when you buy property over a certain price in England or Wales.

If you have inherited the property or have previously lived in it then you will not have to pay stamp duty on it. If you purchase a separate property to live in then this will be classed as a second property and you will have to pay buy-to-let stamp duty rates on it. There will also be an additional 3% surcharge on what you will have to pay as a homeowner.

Landlord insurance

When it comes to insurance when you are a landlord it's important to note that regular home insurance won't cut it. You will need to contact your insurance company or your financial advisor and alert them to your situation.

You will need to take out landlord's insurance when you're planning to rent a property out. This insurance should cover you in the event of damage to the property, malicious damage, and loss of rent, depending on the policy that you take out.

The main types of landlord insurance you can take out are:

  • Landlord building insurance - covers structural damage (fire and floods)

  • Landlord contents insurance - if the property is furnished, this type of insurance will cover the cost of replacing furniture, carpets, kitchenware, or electrical items.

  • Landlord liability insurance - if a tenant or visitor is injured in the property this insurance will cover you.

Landlord obligations

As a landlord, it is important to understand that you will have legal obligations that you will need to adhere to. Every landlord will need to stick to the following regulations:

Tenancy deposit

Any deposits that you take from your tenants must be kept in one of three government-backed tenancy deposit schemes. The ones you can use are Tenancy Deposit Scheme, MyDeposits, and the Deposit Protection Scheme.

Safety checks

When you let out your home, it is your duty to make sure the property is safe for your tenants to inhabit. This means you will need to ensure that a registered engineer comes out to the property to carry out a gas safety check on all gas appliances present and supply you with a copy of the safety check record.

You should also have a professional come out to the property to make sure that all of the wiring is safe, as well as have an official fire safety check performed and to make sure that anything the property is furnished with is fire resistant.

Right to rent

It is a landlord's legal duty under the Immigration Act 2014 to check that their tenants have a legal right to rent in the UK. This means you will need to check they have the necessary documents to prove their eligibility to live in the UK. If you fail to make these checks and your tenant does not have the right to rent, you can face time in jail or a fine.


Whether or not you will need to get your property licensed depends upon the whereabouts it is located. Landlord licensing schemes are in operation across the UK. Having a license proves that the property meets standards however they cost to own. Exactly how much it will cost you to have your property licensed will vary from location to location.

EPC rating

An EPC rating is a type of rating put on properties that rate their energy efficiency from a scale from A to G, with A being the most energy efficient and G being the least. If you are planning on renting out your property, then you will need to make sure that it meets a minimum band of E.

If your property is less than E (unless it has special exemptions), then you will need to make improvements to the property in order to reach band E. Energy efficient improvements can cost up to £3,500 to install. After the improvements have been made you will be able to register the property as having 'all improvements made'.

However, you'll need to bear in mind that this may not always be the case and more improvements may need to be made.

The Minimum Energy Performance of Buildings Bill that the government wants to pass will increase the minimum rating to C for new tenancies from 2025, and for all rental properties come 2028. If the new proposal goes ahead, then the minimum amount the landlords will have to spend on improvements will be raised to £10,000.

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How we can help

Life as a landlord is not for everyone, so it is important to weigh up the pros and the cons of becoming a landlord. Are you prepared to pay for the various safety checks, the furnishings, and the extra charges and stresses that being a landlord brings?

If not, then we are here to help. Selling on the open market can be difficult at the best of times, but especially when you find yourself in the position of becoming an accidental landlord. Here at The Property Buying Company, we are a cash buyer of houses who will buy any house in any condition, in a time scale that suits you! Plus, we cover all the fees for you – even the legal ones!

We will only require one quick viewing to make sure that our cash offer is accurate and as we are a genuine cash buyer, once you’ve accepted our offer that is the amount you get in FULL in your bank.

We are also a member of The National Association of Property Buyers and The Property Ombudsman, as well as being rated excellent on Trustpilot, with over 1000 reviews, allowing you to feel safe in our hands.

So, if you have a studio apartment that you are ready to sell, give us a call or fill in our online form for a free, no-obligation CASH offer which we could have in your bank as soon as you choose…

Tom Condon

Tom Condon, one of our content writers, has fascinating expertise in sustainability in the property industry. Tom thoroughly understands the market and has experience in both residential and commercial property. He enjoys attending conferences and staying current with the most recent property trends.