Landlords increasingly see their buy-to-let property as a short-term investment instead of a retirement plan, a study by the Association of Residential Letting Agents, has revealed.

The contents of the article are not a surprise but it confirms what I thought. The following is a copy of the article as its only a short one.

http://www.mortgagesolutions.co.uk/mortgage-solutions/news/2284919/arla-half-of-landlords-looking-for-shortterm-exit

Whilst 75% of landlords surveyed saw their property as an investment, over half of new entrants to the buy-to-let market considered it a short-term investment designed to make the most of favourable market conditions.

ARLA president Susan Fitz-Gibbon said it was important landlords had realistic expectations of their returns: ‘The economic downturn has brought new entrants to the buy-to-let market and has also had an impact on the way in which existing players invest. With more landlords entering the industry, less experienced individuals need to ensure they have thoroughly researched and fully understand that there are risks and responsibilities associated with the role.’

The study found reluctant landlords – those forced to rent because they were unable to sell – represented 28% of new landlords in 2012, compared to only 18% in 2008-9.
Parents hoping to offer financial support to their children through a buy-to-let investment accounted for over a quarter of the market.

Short-term is relative. Properties are not liquid assets, and are likely to take 6 months to sell unless the price is attractive to investors, as they can complete much more quickly, and thats assuming there isnt a tenant! If there is it can take several extra months if the owner doesnt understand the legal process that has to be followed.

I do worry about the number of people who are becoming Landlords but who know absolutely nothing about the responsibilities and problems that are involved, let alone the legal and contractual issues, and the financial traps laid by low interest rates, property guru “snake-oil salesmen” and dishonest Agents

I need to get my message out…this is a complicated, time-consuming business with many risks & responsibilities. Many of these “investors” are little more than gamblers. They need help. A navigator through the shark-infested waters. I know a good one…

As a starter, become familiar with the Unfair Terms in Consumer Contracts Regulations 1999. This will sort out many of the clauses and claims for payment by Agents (albeit going to court is time-consuming aggravation).

Osborne says he is closing the loophole & second home buyers wont be able to benefit from the scheme. Not before time, much as I would have liked to benefit from the Gvmts absurd generosity.
They should have spotted this before they announced the policy. If they were aware of it and ignored it, they were stupid. If they hadnt thought of it, they are incompetent.

http://www.mortgageintroducer.com/mortgages/247105/5/Industry_in_depth/Chancellor_moves_to_allay_Help_to_Buy_fears.htm

Doesnt allay my fears though. The scheme is a blatant electioneering bribe. If people cant afford a property whilst interest rates are low, then what happens when interest rates revert to average ie 6-7%? It is irresponsible encouraging people into debt. There is no guarantee that house prices will continue to rise. Once interest rates start rising (& Gvmts have NO CHOICE over this as rates are dictated by the market) then demand for property will fall as people will not be able to pay their mortgages & will need to sell. Bubble bursts.

Carnage. The scale of the fallout will be immense.

Gvmts are debtoholics & unfortunately most of the public are oblivious to the risks and that MARKETS control interest rates. Use the scheme by all means but make sure you will be able to afford a mortgage at 7%, do not assume wages will increase but do assume that inflation will be at least 5%pa so that the cost of living will also be eroding your spending power.

As they used to say on Hill Street Blues…”Lets be careful out there”.

http://news.sky.com/story/1117261/letting-agents-mps-want-to-end-rip-off-fees

Some obvious points, some easy criticisms & publicity for “the usual suspects”. What really gets me though is the hypocrisy of MPs. Rant alert…

The article quotes…”let the Office of Fair Trading (OFT) ban those who indulge in “sharp practice”, the Communities and Local Government Committee said.”
Yeah, right. So what will we do when MPs are yet again caught fiddling expenses or countless other misdemeanors? Oh, they keep their job & staff researchers at their vastly overpaid rates until the next election & retain their magnificent, unfair, unwarranted, inflation-proof pension.

“The Government should also come up with a standard “plain language” tenancy agreement for general use”. What a joke. Have you ever tried reading an OFT document? Impenetrable. Ive passed to Lawyers who cant understand them & it cost me £540 to get a specialist lawyer to clarify how I could put a creative deal together that didnt contravene OFT or FCA’s very unplain language rules.

“Opaque” -never applies to Gvmt or Banks! So what have they done about creating Opaqueness in these 2 creators of the financial mess that the western world is still facing?

Grrrrr

A new consolidated property tribunal came into existence 1/7/13 with a single set of procedural rules aimed at simplifying the process.

The First-tier Tribunal Property Chamber combines the Residential Property and Agricultural Land Tribunals together with the adjudicator to HM Land Registry.

http://www.lawgazette.co.uk/news/property-tribunals-combine-new-first-tier-chamber

Maybe this will make adjudication on short-lease tribunals simpler and quicker for the leaseholder? Hmmmm. We will see.

Its good to see some of these rogues being caught. Its not just about being licensed but about complying with fire, health & safety regulations. I know that the mention of H&S instantly gets some people’s backs up because of its regular interference with business with trivia & is a massive administrative burden. However, especially with HMOs, non-compliance puts peoples lives at risk.

Students, who by their nature on their first experience of living away from home, tolerate lower standards than they need to, and as with this example, landlords are taking advantage by cutting corners in order to reduce their costs. For instance, installing the correct quality fire doors & smoke alarms is expensive, but it has to be done.

Hopefully the media coverage will encourage more landlords to comply, and help educate more tenants. However, rogues in any business will continue to dodge the rules.

http://www.northamptonchron.co.uk/news/crime/exclusive-landlord-handed-38-000-court-bill-after-illegally-letting-rooms-to-northampton-students-1-5270503

To help educate tenants I am myself working on something at the moment, but more about that when I am nearer completion.

Much as I believe that Rightmove & Zoopla have too much influence on the market, and we need additional entrants in order to provide competition, choice and contain costs, the new portal, Agents’ Mutual are trying to implement a clause restricting their clients to only use one other portal.

Whilst they do need to get a quick foothold, restricting the marketing of a property is patently not in consumers’ interests. I for one wouldnt agree to this. It may reduce my costs but their portal hasnt established itself, and not using either Rightmove or Zoopla would be a big mistake in the current marketplace as consumers and investors rely on them to search for properties.

http://www.estateagenttoday.co.uk/news_features/Agents-Mutual-exclusivity-clause-not-in-public-interest-says-Zoopla-boss

Irresponsible landlords need to be identified and ultimately face legal action. This relates to a HMO (House in Multiple Occupation) where there are, quite rightly, much stricter rules & regulations. Running an HMO is a professional business and there is no excuse for not complying with fire & safety regulations.

http://www.hemeltoday.co.uk/news/business/business-news/hefty-fine-warning-to-rogue-home-landlords-1-5264269

In my opinion its an area that more tenants & esp students need to be aware of before they enter into a rental agreement. When you are sharing with other people, esp on your first venture away from your parental cocoon, then you are not likely to be aware of general house safety & the risks posed by carelessness. Your co-tenants are likely to make mistakes or overlook things, and your landlord needs to make sure that you are correctly protected. Landlords who do not comply with fire & safety are putting lives at risk.

Where landlords have a normal residential home (non-HMO) that they have previously lived in & are now renting out, then they are likely to be amateur landlords, who in many cases havent realised that they need to comply with a number of rules & regulations. In fact during a recent conversation with a Students Union I was informed that a number of such landlords dont even have a proper Assured Shorthold Tenancy Agreement.

Protect yourself & your house mates – do some research & make sure your landlord is neither ignorant nor a rogue.

See my Top 15 Tips for Students as a starter.

This is actually a good article. The headline looks bullish but the article includes statistics and some warnings, notably about the economic outlook and the ratio of earnings to house prices will be likely to keep a lid on prices.

http://www.mortgageintroducer.com/mortgages/247002/5/Industry_in_depth/Housing_market_set_to_overtake_2007_peak.htm

Private landlords blamed for property price boom that prevents social mobility… http://www.thisismoney.co.uk/money/mortgageshome/article-2356132/Private-landlords-blamed-property-price-boom-prevents-social-mobility-stops-time-buyers-buying-property.html

Disgracefully inept conclusions about the housing market and the Private Rented Sector by a “Think Tank” The Strategic Society Centre. Thankfully the response from the National Landlords Association is spot on, but who gets the headlines & publicity?

First time buyers being prevented from buying new builds by landlords? Supply & demand! Builders wont build unless there is sufficient profit & lenders take a bigger risk with first time buyers so they wont be so keen to lend.

A barrier to social mobility? Nonsense. A lack of rental accommodation would be a barrier to mobility. If you are on a relocation package it is essential to have a rental property whilst you look for a suitable town or village, never mind the right home to live in. If you want to look for a job, you dont want to have to pay hotel & eating out bills either.

Radical measures needed to transfer more households out of the PRS and into home ownership? Why is home ownership seen as a right? Look at the levels of home ownership across Europe and especially Germany – they are much lower than ours. Doesnt seem to cause them any problems.

Landlords in a privileged position? In many cases as the report states, landlords only own 1 property that they rent out. What alternative investment would they recommend when banks offer 1% returns and inflation is over 3% (and probably more like 6%)

Transfer of income & wealth from tenants? A landlord has a mortgage with an average gross yield of 6% across the country. After operational costs, void periods etc it can be marginal profit & the landlord relies on capital growth to make money.

PRS increases inequality in society? No, it provides people with homes that they can live in.

Give tenants 5 years in a property during which time they could not be evicted? Have they any idea of the damage many tenants inflict upon properties and neighbours, and how many do not pay their rent? You just need to network with landlords who operate in the housing benefit arena to understand many of the problems already being encountered in legally trying to evict non-paying, system-scamming tenants.

Reduce the rights of a landlord to end a tenancy if they sell the property? That will result in sitting tenants & therefore the property only being sold to another landlord, thus reducing home ownership and reducing the value of the property.

Restricting landlords to increase rents only by CPI? I can understand this issue, but CPI is a manipulated statistic, and it wont take into account all the additional legislation and inherent compliance & registration costs that will be incurred by landlords.

They are called a “Think Tank”. They should be disbanded immediately to save the taxpayer money. Who are these morons?

landlord_immigration_graphic_v2

I guess the Government has no confidence in the UK Border Agency?

Yet again private businesses are being asked to do the job that Governments are paid to do. It is ludicrous dumping the problem like this. It will substantially increase administration, swell the ranks of Government document checkers, swell the pockets of lawyers and end up forcing good landlords out of the Private Rented Sector, or having to increase rental prices. Law of Unintended Consequences. Well actually, the Law of Political Numbness.

They really need to think again! I do get so frustrated with all shades of Government & their inability to understand market forces, or how business works. It should be an imperative that Ministers must spend at least 5 years in business life before they are considered sufficiently experienced to be considered as a political candidate let alone be a Minister who will make decisions that will affect us all.

https://www.gov.uk/government/news/proposals-for-landlord-checks-to-tackle-illegal-migrants-renting