The Emergence of Accidental Lewisham Landlords in a Slowing Housing Market?
A Lewisham landlord remarked to me the other day that he felt that there were more 'posher' up-market properties coming up for rent in the last six months compared to a couple of years ago.
A Lewisham landlord remarked to me the other day that he felt that there were more 'posher' up-market properties coming up for rent in the last six months compared to a couple of years ago.
I stated that this was the case, and it wasn't all down to the recent rental growth – it was the growth of the upmarket 'accidental landlord'.
With the Lewisham housing market showing signs of a slowdown and predictions of further house price declines, I am starting to see the return of the ‘accidental landlord’, but in a somewhat different form to what they were in 2008/9.
An ‘accidental landlord’ becomes a landlord unexpectedly or unintentionally. This often occurs when homeowners rent out their property instead of selling it due to a slowing housing market, a change in personal circumstances, or other unforeseen reasons.
While the sales market in Lewisham has experienced a period of strength in recent years, activity has started to slow down from the levels seen in 2021/2. In contrast, there has been soaring demand for Lewisham rental properties.
To give you an idea of the growth of rents.
The average rent for homes coming on the market in the Lewisham area in 2021 was £1,361 per month, whilst in 2023, it has been £1,696 per month.
Some Lewisham homeowners, fearing not achieving their desired selling price, might opt to retain ownership of their properties and instead rent them out until market conditions improve.
Back in 2008/9, this trend was particularly evident in the middle market segment.
However, in 2023, many property commentators are suggesting if ‘accidental landlords’ do start to emerge, it will be in the upper quartile property segment (i.e. the top 25% of properties by value), where many homeowners bought in the post Lockdown race for space of 2021/2.
Looking at the figures, they could be correct.
The upper quartile rental market starts in just under the £2,000 per month range in Lewisham.
• In the first seven months of 2021 (Jan to Jul) in the Lewisham area – an average of 13 properties a month came onto the market for rent at £2,000 per month or more.
• In the first seven months of 2022 (Jan to Jul) in the Lewisham area - an average of 21 properties a month came onto the market for rent at £2,000 per month or more.
• In the first seven months of 2023 (Jan to Jul) in the Lewisham area - an average of 36 properties a month came onto the market for rent at £2,000 per month or more.
(Lewisham area being SE13).
Many of these could afford to be patient in pursuit of optimal selling conditions. The rise of ‘accidental landlords’ can be attributed to various factors, such as limited property appreciation, increasing mortgage costs, and robust demand for Lewisham rentals, making renting out properties an attractive alternative.
‘Accidental landlords’ are also created through other diverse circumstances.
Even though you know the tenant, it still could be wise to employ the services of a letting agent to establish clear terms in writing at the outset of a tenancy to avoid potential conflicts and protect the rights of both landlords and tenants. This becomes particularly relevant as the Renters Reform Bill, set to introduce significant changes to the private rental sector, including tenancy length and the process of regaining possession, is awaiting approval.
My overriding message to every Lewisham ‘accidental landlord’ is that they must be aware of the tax implications, consider incorporation a potential strategy, invest in property maintenance, protect tenants' deposits, and establish clear terms to avoid disputes. Additionally, there are over 170 pieces of regulations regarding renting your property out. Also, it's essential to stay informed about forthcoming changes in renters' rights introduced by the Renters Reform Bill.
In conclusion, with the Lewisham housing market experiencing a slowdown, I suspect an increasing number of Lewisham homeowners are considering becoming ‘accidental landlords’ by opting to rent out their properties instead of selling.
You must weigh the risks of renting your Lewisham home and the potential rewards.
I know of many stories of Lewisham homeowners who waited five or six years after the Credit Crunch to hit their ‘target price’ for their existing home, only to realise it cost them tens of thousands of pounds in costs and the price they had to pay for their new home. On the other side of the coin, I know plenty of ‘accidental landlords’ in Lewisham who used the fact that they became an ‘accidental landlord’ as an opportunity to build an impressive rental portfolio over the last 15 years.
If you are uncertain or do not possess all the facts, don't hesitate to contact me to discuss your plans. Then I can give you appropriate level-headed advice to make the right decision. By taking proactive steps and understanding the risk and rewards of being an ‘accidental landlord’ in Lewisham, you can navigate the Lewisham property market successfully, even during uncertain times in the housing market.
Written By Neil Raja
Neil Raja ANAEA, MARLA
Director
M: 07930501099
P: 02088524441
E: neil@charles-knight.com
250 Lewisham High Street, London, SE13 6JU
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