A relatively new phenomenon is sweeping the UK and that is the fact that homeowners looking to sell their homes have turned into what the Telegraph is calling ‘accidental landlords.’ As recently as one year ago the average time a home was on the market before being sold was approximately 80 days but this year that timeframe has increased by 25 days. Now homes are averaging 105 days before being sold and rather than wait it out, homeowners have simply decided to rent them out.
There are several reasons why home rentals are in greater demand, perhaps greatest of which is the uncertainty surrounding the economy. UK consumers are worried about the job market and as a result, home sales are down. Also, banks are still reticent to write mortgages and the down payment required is creeping higher by the day. Since there is so much uncertainty, homeowners are simply unable to find buyers for their homes.
However, according to David Hollingworth, London & Country mortgage brokers, homeowners are taking on too much debt by becoming landlords and they need to realise that without without tenants, the mortgage will still need to be paid. Within the third quarter of 2011, approximately 47% of members of the Association of Residential Lettings Agents found that there has been a significant rise in unplanned houses to let. This percentage is up from 40% in the beginning of 2011.
Although there is no one predominant reason why these homeowners are choosing to list their homes for sale, the end result is the same. There are fewer buyers, some of which is because of the lack of mortgage loans. Other times homeowners want to get out from under a hefty mortgage and other times they simply want or need to move. Without buyers, many are forced to let out their homes to keep the mortgage paid.
