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Are you an accidental landlord? Know your obligations

Are you an accidental landlord? Know your obligations

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If the title caught your eye, there are probably two questions that immediately occur if you’re unfamiliar with this general area:

  • what on earth is an “accidental landlord” and
  • what are these obligations / why does this matter anyway?

Read on for the answers!

An accidental landlord

Many people understand a landlord to be someone who owns multiple properties, has lots of tenants and who makes a living from letting out property.

That would of course be correct but it might surprise you to know that the law might take a much broader and more all-embracing view of the definition. For example, under the law you might be considered to be a landlord if you:

  • let out your house while you’re away on holiday or on an extended business trip;
  • let a student rent one of your spare bedrooms during term time;
  • offer your property to holidaymakers during July and August to make a bit of spare cash.

In practice, many people do not understand that casual activities such as those examples above, would in practice mean that they’ve become a landlord as defined by the law. This has given rise to the term “accidental landlord” as the people concerned might not have considered themselves to be falling into this category.

Why this matters

There are a number of reasons why this might prove to be exceptionally important to you:

  • it might seriously and adversely affect your insurance, as you would require in such situations what’s called “landlord insurance”. Comparison between your policy and the occupancy status of a property in the event of a claim is routine, meaning that future claims might be refused if the insurer discovers (as they probably would) that your property was being used to generate even infrequent and modest rental income while you had owner-occupier cover in place;
  • the situation varies between Scotland, Northern Ireland, Wales and England but you might be legally obliged to register your business with the appropriate local authorities and take other minimum steps to comply with the law or local regulations.

Failing to take this seriously could result in prosecution, fines and putting your financial future at risk by prejudicing your insurance policy.

Your obligations as a landlord – accidental or otherwise

Once again, these will vary depending upon which of the home countries you live in and in England, your local authority. Generally though:

  • you will be legally obliged to have some form of acceptable contract in place between you and your tenants;
  • your property will need to meet defined standards for safety and tenant privacy rights (e.g. you may not have a legal right of automatic entry);
  • it may be a requirement for you to have appropriate insurance covering your tenants and their property. See below;
  • if you have a mortgage, your mortgage agreement will legally oblige you to maintain appropriate full cover on the bricks and mortar of the property. In these circumstances. that would typically be landlord insurance rather than owner-occupier cover. There are specialist providers of landlord insurance policies who can offer further expert guidance;
  • typically HMRC will expect any income you obtained to be declared;
  • your tenants will have a number of rights under the law, whatever your tenancy agreement might state. You cannot write-away these rights and your tenants can’t sign them away either. So, you must know what they are and comply with them.

It would be prudent to take these issues seriously and research them further if required.