If the property’s in good condition, Covell sees no reason why tenants can’t have dogs
“I have always picked property instead of a pension,” says Yorkshire landlord Gordon Covell. “I know there is a tax benefit for a pension, but I like to drive by my pension and touch it on a weekend. My strategy is to build a property portfolio that will support me in my dotage.”
Few could match Covell’s knowledge of the buy-to-let business. He runs a tenant referencing service, Certifi. In addition, he owns Active Mortgage Services, a mortgage broker run by his daughter. “I am currently developing five apartments with my developer hat on,” he adds.
Covell says he got into property “by default” thirty years ago, after he moved his business and decided to rent out the original offices. Today, the 12 properties in his portfolio range from commercial to holiday lets, and span locations from Yorkshire to Italy.
Covell likes to invest in property close to his Guisborough home
He channels profits from his rental business back into property: “When they have tasted a little bit of success most landlords want to extend and grow their portfolio. It is a very entrepreneurial business.”
Still, he insists he is not a very large landlord. “You have got very modest individuals who might work in what you might consider a mediocre job,” he points out. “And they have 100 properties.”
As Covell acknowledges, the scarcity of high loan-to-value mortgages has helped to make the last few years a “boom time” for landlords.
However, he argues the rise of the private rental sector also reflects changing lifestyles and ambitions: “Because young people over the last decade have been encouraged to go to university, they have moved away from the family area.
“Young people these days are highly mobile. They could be working in Hong Kong one month and the next in Australia.”
Landlords should focus on smarter apartments targeted at young professionals, he says: “Certainly the properties I am developing are aimed at that market.”
Covell’s stake in Active Mortgage Services gives him a broad view of the buy-to-let market – and how it fits into the larger mortgage market.
“The up-take in buy-to-let mortgages is extensive to say the least,” he says. “In terms of mortgages generally, the Help to Buy scheme is going to kick-start the first-time buyer market, and that will have a knock-on effect. I think 2014 will see a marked increase in mortgage completions.
“If there are more first-time buyers in the market, the private rental market will cool down a little. But that is a natural part of the cycle and a good thing.”
When it comes to buy-to-let products, Covell reckons most landlords do their research and know what they want.
Nevertheless, he welcomes the appearance of more tailored products, such as Precise’s Bridge to Let deal, which allows borrowers to switch to a buy-to-let mortgage. “Take a property that needs a little bit of TLC,” he says. “It would be perfect to have a short-term loan alongside the mortgage.”
He would also like lenders to assess the tenant as part of a mortgage application, and whether the landlord has protected their income using a rent guarantee scheme: “Lenders are interested quite rightly in the landlord, because the mortgage is taken out by the landlord. But they don’t take enough notice of the tenant.”
Covell is a hands-on landlord when it comes to his own tenants. He invests in commercial and residential property close to his home in order to make management easier. “Residential buy-to-let takes the most time,” he says. “If you get a bad tenant it sucks the life out of you.”
Still, the man who likes to touch his pension at the weekend clearly has strong feelings for his more distant properties as well. He describes in loving detail one of his holiday lets – a 400-year-old rustica stone house by Lake Como, Italy.
“I wanted something with character,” he explains. “It is very charismatic and extremely laid-back. And, thankfully, prices haven’t been going down.”
A view of Lake Como from Covell’s holiday let