Rush to rent out in the event of a double dip

This would potentially affect almost half of the nation's homeowners as they seek a financially viable means to hold onto their homes, says the company.

According to the research, 10% of British homeowners - equivalent to 1.75 million properties - say that in the event of another housing market slump, they would have no other choice but to let their property and downsize. A further 34% say it is something they would be forced to consider.

The threat is most real in London, where 14% of homeowners say they would have no choice but to let their property and downsize. Another 42% say it is something they would consider.

The primary reasons that would-be reluctant landlords cite are to hold onto their property until the market recovers (44%), long-term financial security (33%), to pay off existing debts (27%) and to escape negative equity (20%).

In addition to showing a potential transformation in the landscape of the UK's housing market, the research also reveals just how unprepared reluctant landlords are for the challenges and responsibilities they face.

Of all UK homeowners 78% say they do not have sufficient knowledge about the legal responsibilities of a landlord and 74% do not understand landlord insurance. A further 48% said they would be fearful about being caught out by red tape or the small print of tenancy laws.

Of the existing reluctant landlords who have already been through the process, just 15% felt it had been completely successful, with the following problems experienced:

• Unprepared for rules, regulations and red tape 46%
• Failed to secure anticipated rent for property 23%
• Property damaged by tenants 22%

Mike Bowman, head of MORE TH>N BUSINESS commented: "With three-quarters of homeowners not having adequate knowledge of the legal responsibilities involved in being a landlord, we would urge people to carefully plan their actions and not to make any rushed decisions.

“There are numerous potential pitfalls when it comes to letting a property - it's not as simple as finding a tenant and sitting back waiting for the rent to come in.

“A sudden upsurge in rental properties on the market would actually force down rental yields so you may not get the income you anticipated

“In addition, first-time landlords must be prepared for every eventuality regarding their liabilities and responsibilities. That includes making sure your property is safe - from having smoke alarms fitted to compulsory annual checks on gas appliances.

“One of the key things is to look at your insurance and if it will cover your needs as a landlord. Remember, if a tenant burns down your house, it's your problem, not theirs."