The Future of Buy-to-Let

Property Hawk has looked at the report on Buy-to-Let just produced by Dr Julie Rugg and David Rhodes of the University of York for the government on the state of private renting in the UK to see if there is some pointers on future policy.

The review was commissioned by the government in January with the aim of telling Ministers what role the private rented sector could play in the housing market and how it should be policed.

The report has several key recommendations:

• The wholescale national licensing of the private sector under which a landlord would need a licence to let costing £50.
• A penalty system for errant landlords which would mean bad landlords would have their licence removed
• A regulator to police the licensing system paid for out of the licence
• Incentives for good landlords and encouragement to foster a batch of professional career landlords, with the aim of driving up standard for private tenants.
• Change in the stamp duty to allow landlords who buy in bulk not to get caught by the fact that stamp duty is charged on the aggregate purchase costs
• Tax regime reviewed to encourage landlords to improve their buy-to-let properties

Property Hawk Analysis

Chris Horne Editor of Property Hawk, the UK’s largest landlord website with over 25,000 registered users comments:

1. Firstly, there are parts of this report to be welcomed. For a start the report correctly identifies the private rental sector as being a patchwork of micro markets from housing new migrants to luxury corporate lets.

2. Property Hawk also agrees with the reports conclusion that the much vaunted problem of ‘student ghettos’ is not the fault of private landlords. It is more a case of poor policing and lack of a co-ordinated student accommodation policy by the government and universities.

3. Where the two authors fall down in their analysis is to suggest a blanket registration for all landlords. This smacks of pronouncing all landlords as guilty before having a chance to prove otherwise. It is a typical policy makers response that things have to be regulated to be controlled. The reality with any blanket regulation is that the really bad landlords will simply evade the license which means that law abiding landlords bare the cost and the additional paper work. We suggest that it is better to let the market dictate which landlords prosper. Good landlords will continue to attract tenants, bad landlords will suffer voids and eventually be squeezed out. The fact is that where you have choice you have a natural gradation of provision from very good through to bad. Forcing landlords to collect an additional piece of paper will not change this.

4. What is much more positive is the Reports suggestion that tax incentives be provided for landlords to carry out improvement works to their property. Any landlords is aware that an improvement to their property will help let their property and let it for a high rent and a financial incentive to make this happen will benefit both landlord and tenant.

5. Property Hawk notes the suggestion that Government policy should encourage professional landlords, build up their portfolio to become full time landlords. We do not necessarily follow the logic that bigger is better. There are many excellent landlords with a single property, equally one only has to look at some local authorities to say that landlords with large portfolios do not always provide the level of service that tenants deserve.

Overall, the report is a good piece of research into the state of the Private Sector at this time.

Property Hawk however does not agree that much of the suggested regulation will have a discernable impact on the quality of rental accommodation or provision. We think that the Reports’ real purpose is to satisfy the elements in the government that believe that ultimately the private rented sector has to be controlled. This is another step in the slow creep of greater control and more regulation. The result is that landlords will spend more time & money filling out forms. This gives them less time to manage effectively their rental properties resulting in worse conditions for their tenants not better.