BIG BUSINESS IN BUY TO LET

David Lawrenson, the property investment and buy-to-let expert give his personal perspective on how the Government wants to encourage more direct involvement into the buy-to-let sector by big business.

Politicians keen to get business into buy-to-let
Both government and the opposition have separately announced plans for major reviews of housing provision and investment policy. Housing minister Yvette Cooper announced that Government will conduct a comprehensive strategic review of the private rented sector during 2008, which will be undertaken in conjunction with the Department for Communities and Local Government.

Review of policy
The full terms of reference for the review are to be announced in the New Year, but it looks like it will be similar to the Hills Review of social housing published earlier in the year. The review will be led by Julia Rugg, an academic at York University, who will examine issues such as how renting can be made to help those who currently cannot afford to buy. Rather scarily, the British Property Federation (BPF) said it would welcome the government removing some of the barriers that prohibit growth of commercial investment in the professional rented sector, while increasing the flexibility of affordable housing policy and standardising regulation. The BPF has said that the stability of the market could be made much more certain if we “adopted the blueprint for a professional rented sector along the lines of those currently operating in Germany or the USA”

What does this mean for buy-to-let landlords?
The word on the street is that the government would like to dole out tax breaks to the commercial property firms – think REITS – to get them investing in the private rented sector. Well, private landlords ought to be worried about this because it means the government is keen to get the commercial sector involved in the buy to let market.
Basically, my view is that the state does not like private landlords and would like to see their pals in big business move into the sector to give it “more stability” and I would guess, to develop a long term lettings market.

Private landlords ought to be concerned at the risk of being squeezed out by the big boys_ It’s already happening in many parts of the student market where the likes of Unite have a foothold. This could be a major threat to landlords.

David Lawrenson is the author of Successful Property Letting – How to Make Money in Buy to Let the UK’s top selling buy to let book and runs a property investment seminar and consultancy company at www.lettingfocus.com.