Will the Rental Focus in Labour's Housing Manifesto Help or Hinder Buy to Let Landlords?

publication date: Apr 30, 2010
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Will the Rental Focus in Labour's Housing Manifesto Help or Hinder Buy to Let Landlords? 

The Labour manifesto says the government “would like to see more larger and professional organisations providing rented accommodation, alongside the many individual landlords” adding that it especially wants to “encourage more investment in new build rented accommodation”.

However, this policy is quite contradictory, as meanwhile in the PRS sector, the average law abiding landlord and letting agent is being hit by a raft of legislation which is strangling their business. For example, paying Local Housing Allowance (LHA) directly to tenants which, according to the Landlord Association has created, on average £4,000 rent arrears for landlords since its introduction in 2007. Although ministers claim it is good to pay LHA direct to tenants to give them choice, it’s interesting that neither institutional investors or council tenants are typically trusted with the money upfront!

The second nightmare and unenforceable legislation that has been ‘slid’ through the system is anyone letting (from 6th April) a property to three sharers will now have to get planning permission. For some reason, rather than use ‘additional licensing’ laws to manage areas where lots of landlords rent to students, the government decided to affect every area. The result being few if any of the local authorities know how to interpret the legislation even though it’s now law and worse still, many are interpreting the rules completely differently leading to a massive confusion in the market.

However, the BPF, which represents small landlords groups around the country as well as major developers such as Land Securities, Tesco, Legal & General and Grainger, the UK’s largest private landlord, does appreciate and back the idea of increased institutional investors due to the system working well in the US where institutions forward-fund new rental developments.

And the plans have been backed by the Conservative Mayor of London Boris Johnson who has gone as far as working up plans for a number of sites to come forward across the capital.

Liz Peace, chief executive of the BPF, said: “However much we would like to all be a nation of homeowners, the simple reality is that this will not happen, not now or at any time soon. Affordability is driven by how well people can access finance and no matter what political rhetoric we’re fed about stamp duty cuts or shared equity schemes, ultimately, there are millions who cannot get on the housing ladder".

Kate Faulkner, Managing Director of Designs on Property comments:-

“Although we do desperately need more homes not just to own but rent too, it’s essential that any workable government policy aimed at the private rental sector works with the whole, not part of the supply chain.”

Kate concludes “Institutional investors, buy to let landlords, the professional lettings industry and local authorities need to work together to help house tenants, not favour one supplier versus another. Otherwise there is a real danger the rental market will end up with a lack of choice for tenants and possibly a lack of supply too, all of which will inevitably increase the rental costs!”

Read on for Kate's full analysis of the rental and investment property markets.

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