Accidental landlords could be sitting on a £812,733 property goldmine, as house prices soar – and many don’t even know how much potential profit they could be pocketing.
As the average house price has risen by 17.72% over the past ten years, StudentTenant.com has researched how much accidental landlords’ properties are now worth, and how much they could be worth in another five years’ time.
One in four UK landlords can be described as accidental landlords. This is broadly understood as individuals who have become a landlord without having made the conscious decision to invest in the buy-to-let sector.
Landlords may have inherited a rental property, acquired an additional property when moving in with a partner, intended to sell a property but experienced difficulties, or may have purchased for a relative, typically children.
With as many as 360,000 accidental landlords across the UK, it is no wonder that many property owners are unaware of how much property wealth they could be sitting on.
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The most valuable property advertised on StudentTenant.com, a student-only advertising site, is now worth a staggering £812,733.
Located in Kensington, west London, the Georgian property boasts a newly refurbished, contemporary interior, complete with two luxurious rooms, a modern bathroom and private balcony.
In the last ten years, the landlord could have earned a healthy £412,744 on house price inflation alone. Over the next five years, the property is forecast to be worth £902,133 – a solid return over a 15-year period.
The Managing Director of StudentTenant.com, Danielle Cullen, says: “We often deal with accidental landlords who are parents who have purchased a property for their child to live in, and have kept hold of it after they’ve graduated.
“I’m really not surprised that properties are increasing in value in key university areas, given the current climate of the property market. The interesting thing is that many accidental landlords are unaware of how much their rental property is actually worth now. I’m not sure if this is a good or a bad thing…”
She explains: “Purchasing a property to rent to your children is a great investment for these so-called accidental landlords. However, it’s not such a great thing for those graduating, moving into the professional sector and trying to get onto the property ladder. The market is just going crazy as demand continues to outstrip supply.
“It’s a tough one, as there does remain student areas where there is a shortage of properties, so we wouldn’t want to encourage these landlords to move away from the student property market. But, on the flip side, those sitting on investment properties could potentially sell up and generate more capital to purchase multiple properties and alleviate some of these issues. Still, this doesn’t assist those at the start of the property buying cycle (if anything, it makes it worse, as more investor owners flood the market.)”
She adds: “Parents are getting a great deal; they’re providing for their children and helping them save rental money, whilst also generating a healthy rental income from the property. When they do then decide to sell, they’re potentially sitting on a goldmine.”
Other notable properties on the portal include:
A newly refurbished, four-bedroom flat in Hackney, north London, is now worth £406,315 – a healthy 57% increase in value since 2007. In the next five years, this property could be worth £451,099, leaving the landlord with a further profit of £44,694.
In Waltham Forest, east London, a six-bedroom Victorian house with a garden, two bathrooms and just three minutes from the Underground station is now worth £383,768 – an increase in value of 34% over the past ten years. With predicted house price growth of 11% over the next five years, this property could be worth £425,982.
Property owners in Manchester, however, have benefitted the most, with properties doubling in value over the past ten years. A six-bedroom, semi-detached property with a garden, fitted kitchen and parking is now worth £340,000 – it was previously worth £172,000 in 2007. Over the next five years, this property could be worth £380,000.
Property owners in the South West have earned a healthy 29% over the last ten years. A five-bedroom property near the centre of Plymouth is now worth £295,805 – £85,000 more than ten years ago. Properties in the South West are expected to increase in value by 14% over the next five years, taking this price towards the £330,000 mark.