To Let or Not to Let?

Is Better Protection for Buy-to-Let Landlords on its way?

Landlord Zone reported in March 2008 that there are currently almost 2.6 million homes in England being rented from over half a million private landlords, and this figure looks set to rise. With the reported shortage of affordable housing in many areas of the UK the private rented sector is predicted to become increasingly important in 2008 as a way of expanding the housing supply. 

For this reason, together with the downturn in the housing market and the “credit crunch” many private property investors in the private rented sector are choosing to hold on to their properties for the foreseeable future.  Nine out of ten landlords surveyed by ARLA (the Association of Residential Letting Agents) in 2007 stated that they had no intention of selling their properties for nearly 17 years, and four out of ten stated that the expected to invest further in the private rented sector in 2008. 

Of course, while there are potential financial advantages to being a buy-to-let landlord there can also be many drawbacks.  A first time buy-to-let landlord should always take advice from local experts as to the type of property, the standard to which it is furnished, and the local market rent in order to maximise the investment potential.

On the management side, the current law does often seem to be weighted in favour of the tenant rather than the landlord.  As a result there are many practical and legal pitfalls into which private landlords can fall in relation to rent arrears, problem tenants, safety issues and possession proceedings. Advice should be sought on those issues promptly as they arise, simply because of the length of time it currently takes to serve notice and then to go through the courts to obtain a possession order.  If no rent is being paid during this period, the landlord is losing out on returns on their investment for a considerable period. 

The government is aware of the importance of buy to let investors in the current housing climate, and conscious that a review of the sector is urgently required in order to bring the provisions up to date.  Yvette Cooper the Housing Minister recently announced that in 2008 the Government is to conduct a comprehensive strategic review of the private rented sector.  The review will examine the issues that affect tenants and landlords, and will look at the quality of homes and the users of the sector.  It will also look at future changes in demand in the sector. 

The review was partly prompted by a 2007 report by Citizens Advice which confirmed what many private landlords will know, that whilst tenants commonly experience problems with their landlords, a large number of landlords suffer loss of rent and anti-social behaviour at the hands of some unscrupulous tenants.  

Most buy-to-let landlords and letting agencies will surely welcome a review which may result in better protection for landlords’ investments.  However, at the same time they are bound to be wary of over regulation which could put off investors at the very time when it looks like they are going to be needed in increasing numbers.

Whether the outcome of the review will be of benefit to buy-to-let investors remains to be seen.  In the meantime, if you are a private landlord that is experiencing difficulties with a tenant, contact Sarah Coates-Madden at

Sandersons Solicitors

17-19 Parliament Street

Hull

HU1 2BH 

Tel:       01482 324662

Fax:      01482 223110

e-mail:  enquiries@sandersonssolicitors.co.uk

 Source: Federation of Small Businesses, March 2008