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Governments have not understood the rental sector dilemma for decades – Young

by: Bob Young, chief executive officer of Fleet Mortgages
  • 10/12/2019
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Governments have not understood the rental sector dilemma for decades – Young
We are now just days away from a General Election which with any sort of clear-cut result could fundamentally determine the future of the private rental sector (PRS), landlords’ position within it, the buy-to-let market and all us stakeholders.

 

It may take some time to seep through but, whatever political hue we have in Westminster, one might anticipate that there could be some fundamental legislative changes.

And if Labour were to be able to form a government, then one might predict these could be on the seismic scale.

Landlords have had much to deal with over the course of the past few years, but the sympathy well ran dry a long time ago.

I read recently that landlords could shape the result of the election depending on how they vote.

However, I think it’s clear that most parties believe tenants and Generation Rent will have a much more clear-cut influence, and thus many policies are aimed at helping them, not landlords who are still seen by many as the ‘bad guys’.

 

Catch-all legislation

Certain landlords do not help the cause either.

Mortgage Solutions recently reported on a landlord in Leeds who this year had been fined for the fourth time because of his failure to maintain the property in a satisfactory and habitable state, including no heating or hot water for six months.

Of course, this could be deemed an isolated incident – one rotten apple in the barrel. But I’m afraid we can’t truly argue that.

The fact is that a small number of landlords exist right across the country – as do bad tenants – and the direction of travel at present is to weed out the former through catch-all legislation such as licensing, and the like.

Don’t get me wrong, standards need to be set and met, because no tenant should have to go through what this landlord’s tenants did.

But property upkeep requires money and resources and if we are talking about setting rental controls at the same time, then we might well get to a point where a landlord feels something has to give.

 

Understand the dilemma

And that’s a real dilemma for the future, in terms of policy makers and the government.

How might you maintain the much-needed supply within the PRS while also ensuring the quality of the properties are up to scratch, tenants are not being ripped off, and landlords feel it makes economic sense to continue providing property into the market?

I’m not certain that governments over the last couple of decades have truly understood this dilemma.

Instead, we’ve tended to have piecemeal and reactionary responses which, on the face of it, look like they can work but ultimately impact greatly on the ability of private landlords to maintain their portfolios.

Even, with that said, I think we have reached a point in the PRS and buy-to-let sectors, where those landlords that remain are far more comfortable with their position within it.

Yes, we’ve had changes to mortgage interest tax relief, increases in stamp duty for the purchase of additional property, letting agent fee changes and greater levels of licensing for HMOs across the board, and at a local level.

 

Purchases increasing

However, landlords have adapted, recognised the changes they needed to make, and are now increasingly looking to add properties to portfolios.

Certainly, in the specialist space we’re seeing more purchase activity and expect this to continue. Landlords are more likely to add to portfolios than just a year ago.

What happens next? Well, who knows? We should know more on December 13 but even then, things will have a long way to play out.

Perhaps it’s simply best to control those controllable items, recognise the demand from landlords for advice, make sure you’re aware of the specialist options available and the unique circumstances they might bring. And leave the politics to the politicians.

 

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