Archive for the ‘Build to Let’ Category

Institutional Investment in the Private Rented Sector Draws Closer

Tuesday, July 3rd, 2012

More Build to Let and institutional investment in the private rented sector now looks almost a “nailed on” certainty says David Lawrenson of LettingFocus.com. But it could be the biggest threat yet to the profitability of the traditional “buy to let” model.

Many months ago the government appointed Sir Adrian Montague to look at the barriers to institutional investment in the private rented sector and to see what could be done.

The Montague review followed many earlier failed attempts to tempt institutions to invest in the private rented sector on a large scale. The Homes and Communities Agency launched a “private rented sector initiative” in 2009 but it was dropped when little interest materialised.

Background

For many years the city institutions that run our pensions funds and other investments have looked at the private rented sector with a little envy tinged with a touch of bemusement. They will have seen a lot of private “Mom and Pop” landlords generally do rather well and will have mused that they would like a bit of the action too. However, for a variety of reasons which we have analyzed at other blog posts the figures just did not stack up for them.

In recent years the government, bowing to lobbying from the big investors, made the sector a little more attractive still as a result of changes to the way Stamp Duty Land Tax was calculated and to the rules around Real Estate Investment Trusts (REITS). But still there was no flood of city money into the sector and the bulk of any activity continued to be by the British Property Federation and other institution lobbyists asking for more concessions from Westminster.

And so, Sir Adrian was appointed to lead a review.

What Sir Adrian’s Review May Say

Well, as Sir Adrian is busy putting the final touches to his report, the leaks are now beginning to appear and the thinking is as obvious as a hole in a roof in this most soaking of British summers.

According to leaks reported at Inside Housing and in the other specialist housing press, the Review looks set to recommend major changes to planning and funding rules to favour the private rented sector over affordable homes, with Councils having to change their housing strategies to promote new private rented developments – possibly at the expense of affordable housing commitments.

It also looks set to recommend the government offers loans, rather than grants, to support large-scale new build PRS schemes and for the government to set up a specialist housing task force run by a senior figure from the private sector, to bring forward more public land for private rented sector schemes. (I’m waiting for the call but somehow expect the job will be going to someone with a CBE already under his or her belt!)

Of course, the institutional investors have little interest in small scale developments but rather want the large-scale schemes that offer generous economies of scale sufficient to make their investments work.

Low Returns

But when the big investors looked at previous developments, even when they were of sufficient size, the requirement to have a certain amount of “affordable” housing still meant the numbers did not stack up – well, at least this is what the City says. (Other would argue the numbers were fine and the prevarication was all part of the City’s clever plan to wring more concessions, tax breaks and subsidies out of central government).

When I spoke at the Council of Mortgage Lenders Buy to Let Conference three weeks ago, the proponents for institutional investment in the private rented sector argued that there would be room for small scale “buy to let” landlords to co-exist with the institutional investors.

Indeed they might co-exist, but if institutional investment ever takes off in a big way it will surely reduce the returns to the small scale private landords and, as a consequence, the profits to those who supply the sector, including the mortgage lenders who lend to the UK’s smaller scale private landlords.

We are taking a break. The next blog will be published week commencing 23rd July.

ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy expert advice.

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords.

We also write for property portals, speak at property events (send an email to david@LettingFocus.com to find out about our next event) and we are regularly quoted by the media.

Services for Private Landlords

We also help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the right of this page – where, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF THE MAIN SITE

For our main home page click here:  http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press please click: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER and get our latest Newsletter which goes to over 3,000 people (as at December 2011) just send an email to david@LettingFocus.com

We do not spam or sell our mailing list to advertisers, though we occasionally  mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS click here: Landlords Resources

Please note we only allow selected advertisers to market their services.

PERUSE LAST TEN BLOGS BY GETTING THE RSS FEED: Click Here

NEXT SEMINAR EVENT FOR LANDLORDS: Landlord and Property Letting Seminar

Copyright of Blog: David Lawrenson 2012. Please link to us here or quote us.We actively pursue copyright infringements. The blog is updated once a week.

TWITTER PAGE For my thoughts on property, personal finance, plus other random things from sport, to 80s and 90s Indy Music, to tsunamis to musings on boardroom pay, plus my (usually) centre left “take” on politics please see our Twitter page.

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Posted in British Property Federation, Build to Let, Housing Strategy, Housing Strategy and the PRS, Institutional Investment in the Private Rented Sector, PRSI, Private Rented Housing Investment Fund (PRSI), Private Rented Sector Initiative | Comments Off

The Private Rented Sector Landlords and Tax

Wednesday, March 7th, 2012

Private rented sector consultant David Lawrenson of www.LettingFocus.com looks at calls for reform of tax in the private rented sector.

In last weeks’ blog I looked at the housing associations, private landlords and the case for housing associations to get involved in “market renting”.

In the course of that blog I also mused on the government’s increasing willingness to get institutional investors involved in private sector lettings – and how they had already made changes to the stamp duty land tax system and to REITs to try to facilitate this – though thus far there have been few takers.

Making more publicly owned land available at a subsidy for “build to let” or part “build to let” is also on the radar.

I mentioned too that landlords associations representing the UK’s 1 million plus “individual landlords” were also asking for changes to the tax system for private landlords.

The Budget, the Private Rented Sector and Tax

All these requests are to be expected. After all there is a budget just around the corner, so it would be kind of surprising if we didn’t see lots of requests for better tax treatment making their way into the media and, of course, onto the Chancellor’s desk.

The Residential Landlords Association (RLA), quoting a report by housing expert Professor Ball, believes there is a compelling case “for change to sustain a viable and responsive PRS where landlords will continue to invest in and improve property”.

They claim that “the tax system can be used to help stimulate the PRS, without losing the total of the sum of tax taken overall”.

The RLA calls for a number of changes to the tax system including roll–over relief for capital gains when gains are re-invested and / or when a property is sold to a first time buyer and an extension to the Landlords Energy Savings Allowance (LESA).

The RLA argue that tax relief should be targeted on facilitating investment in building improvements, urban regeneration and energy saving in the here and now. They are also absolutely correct to point out that, “Capital expenditure on a dwelling can currently only be offset against capital tax liabilities at a later date which inhibits investment.”

Counter Arguments

Of course, the counter argument runs thus, “If you improve your property, sure, you may not get any tax breaks for doing so right now, but you will get higher rents, which should be more than enough to pay off the investment”.

And of course, the large active anti-private landlord lobby will also point out that landlords can already deduct from their rents, the total cost of loan arrangement fees and interest on borrowed money used for their residential letting activities.

The “anti-landlords” point out that this gives landlords a lower cost of capital and hence an unfair advantage over other house buyers.

And that is also a valid argument too.

Fair and Unfair Taxes

Of course, what one person thinks is a fair tax system is anathema to another person. Just witness the furious debate over Vince Cable’s proposed mansion tax, for example.

Whatever one thinks, the fact is that the private rented sector is now big business and as such, it will inevitably attract ever more calls to tax it differently.

Those involved in the sector must accept this fact and realise that the sector has come of age and will be scrutinized more in the future. Anyone who saw it as a safer, more reliable and flexible haven of investment than the traditional pension may begin to rest less easy in their beds.

Whatever happens, one could hope that institutional investors and the small scale landlords will be allowed to compete on an even and fair taxation basis.

But I don’t think this will happen because the former have the power to build large numbers of properties and the latter doesn’t.

ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy and advice.

Services to Businesses and the Public Sector

We are advisors to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords.

We also write for property websites, speak at property events (send an email to david@LettingFocus.com to find out about our next event) and we are regularly quoted by the media.

Services for Private Landlords

We also help landlords and property investors by showing how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the right of this page – where, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF OUR MAIN SITE

For our main home page click here:  http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press please click: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER and get our latest Newsletter which goes to over 3,000 people (as at December 2011) just send an email to david@LettingFocus.com

We do not spam or sell our mailing list to advertisers, though we occasionally  mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS click here: Landlords Resources

PERUSE LAST TEN BLOGS BY GETTING THE RSS FEED: Click Here

NEXT SEMINAR EVENT FOR LANDLORDS: Landlord and Property Letting Seminar

Copyright of Blog: David Lawrenson 2012. Please link to us here or quote us.We actively pursue copyright infringements. The blog is updated once a week.

TWITTER PAGE For my thoughts on property, personal finance, plus other random things from sport, to 80s and 90s Indy Music, to tsunamis to musings on boardroom pay, plus my (usually) centre left “take” on politics please see our Twitter page.

LINK TO THIS BLOG OR TO OUR WEBSITE

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Posted in Build to Let, Capital Gains Tax, Housing Strategy and the PRS, Institutional Investment in the Private Rented Sector, PRSI, Private Rented Sector Initiative, Property v Pensions, Tax on Let Property | Comments Off

Strategy for Housing and the Private Rented Sector Govt Paper is a Bit of a Let Down

Wednesday, November 30th, 2011

So how is the Private Rented Sector (PRS) affected by the Government’s recently published new Strategy for Housing?

Well, first of all, there will be an independent review of barriers to investment in the PRS. Doubtless this will be looking closely at new build to let models, where homes are built specifically for the private rental market, with funding coming from major investors.

Also, there will be financial incentives for investment in private rent, in which major investors such as pension funds would pay just one percent in stamp duty, plus the ongoing reform of real estate investment trusts.

Our views on this?

Well it’s good that housing is back at the front of debate (but could it be anywhere else given the dire level of new build and pressures caused by the relentless rise in the UK population?)

Groundhog Day Again

But if you are feeling a touch of “Groundhog Day” again, don’t worry you really have actually heard most of this before because the cutting of stamp duty for blocks of housing was first announced back in the spring, as were the changes to REITs

We have reported for a long time that institutional investment, which currently makes up just one percent of the sector, has wanted to get into the PRS for some time (or should I say, their advisers would like them to.)

But so far, most of the big money has sat on the sidelines, because whilst small scale independent landlords have done very well and have grown the sector, thus far it’s not been sufficiently attractive for the big fund managers.

Sure, there has been lots of talk about “fund raisings” and some schemes have actually got off the ground, but there has not been a whole lot – yet.

There are many reasons for this reticence to invest and they have all been examined very well and in much depth already. As I said on the Guardian Housing Network blog – does the government really need to commission yet another review of the PRS (which was another announcement in the Housing Strategy) to tell us what lots of highly eminent consultants have already told us.

I think not.

Build to Let – Keep Waiting

At the Guardian Housing Network blog, after many contributors and cheerleaders for Build to Let had said their piece, I commented as follows:

“Re the Build to Let issues, yes institutional money does offer some economies of scale in the PRS, but as was pointed out (in the now sadly much ignored Rugg Review), small scale private landlords deliver efficiently with lots of uncharged-able “sweat capital” which big investors have to pay out as wages. Taking this into account, we are not sure the institutional advantages (of economies of scale) are as great as some here have claimed, which is why perhaps investment so far from this source has been so sluggish.”

I stick to that view but would add that in the course of the next few years I can only see the government shelling out more tax breaks for the City to invest in the PRS, (which will finally bring them in and which be good for aggregate housing supply but not so great for small landlords who will ultimately face extra competition for tenants.)

Other Stuff: More Been There Done That

Also, in the Housing Strategy paper, the Government pledged to work with local authorities to “tackle the worst properties” and called for new fact sheets to be provided to help private landlords “understand the basic requirements of managing a property for rent.”

Well, the local authorities already have a lot of power to deal with the worst of the rogue private landlords (though recent events in Ealing – see the “Sheds for Beds” story reported elsewhere at out blogs) does suggest they could be beefed up still more.

As to “fact sheets for private landlords”, there is much that is already on line – a lot of it at the government’s own websites. So I don’t really see much need for this.

And with over 30,000 copies of our book sold to date, I could always interest the government in a bulk discounted deal if they’d like to give it free to the 1 million odd landlords who don’t as yet have a copy!

Overall Impressions

So what is our overall impression of the bits of the Housing Strategy that impact the PRS?

In summary, it feels as though the government asked a junior at the CLG to chuck something in about the PRS for completeness.

OK, it’s good that the PRS gets a good mention but there’s not much new here and so I cannot give it more than 6 out of 10 – and I feel that is being pretty generous.

Of far more interest is the infrastructure plans – new road and rail/ tube links. Smart house buyers know that these will drive up rental and capital values and they will be poring over the new routes.

ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy and advice.

Services to Businesses and the Public Sector

We are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords.

We also write for property websites, speak at lots of property events (send an email to david@LettingFocus.com to find out about our next event) and we are regularly quoted by the media.

Services for Private Landlords

We also help landlords and property investors by showing how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the right of this page = where, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF OUR MAIN SITE

Click here:  http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press please click: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER which goes to 3,000 people just send an email to david@LettingFocus.com – We do not spam or sell our mailing list to advertisers. Please put us on your “white list” to ensure you receive our emails.

OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS: Landlords Resources

GET THE RSS FEED FOR THIS BLOG: Click Here

Copyright of Blog: David Lawrenson 2011. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

TWITTER PAGE For my thoughts on property, personal finance, plus other random things from sport, to 80s and 90s Indy Music, to tsunamis and my liberal take on politics please see our Twitter page.

LINK TO THIS BLOG OR TO OUR WEBSITE

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Posted in Build to Let, Housing Strategy, Housing Strategy and the PRS, Institutional Investment in the Private Rented Sector, PRSI, Private Rented Sector Initiative | Comments Off

Generation Rent, the Nation of Renters and Landlords Taxes

Monday, June 13th, 2011

A recent survey and press release from the Halifax (the ones with those annoying but oddly impactful adverts of the two girls making a jingle and spilling their coffee) got a lot of column inches. “Suddenly we are becoming nation of private renters” says the Halifax.

Those of you who have followed my work for a while will know that 5 years ago, I made a prediction that half of all residential properties could be let by the year 2026.

Back then, journalists’ favourite Ray Boulger thought it was crazy to make predictions like this, pointing out that government policy could change and easily make the prediction invalid.

Mr. Boulger had a point. We really don’t know what will happen in the future and government policy changes could radically effect what will happen to the private rented sector – its size, scope and ownership profile. Changes to tax policies on housing in particular can also make huge changes to the attractiveness of different parts of the housing sector.

One big potential change, which I have written about here before, will be if big city investors get into the lettings market and start financing the building of large blocks exclusively for the private rented sector (PRS). This looked suddenly more attractive following the last budget’s changes to stamp duty on multiple property units purchased as a block. (Look at the category, “Private Rented Sector Initiative” and “Build to Let” over to the right in our Categories section for more on this.)

The Private Rented Sector Initiative (or PSRI) – which is all about institutional investment in the PRS – is an area of the business that I am watching and already advising on.

Underwriters Staying Underwriters

Speaking of government policy and tax changes and their impact, last week I did a talk to a group of underwriters from a major lender involved in buy to let mortgage lending. This lender is one of an increasing number who have sufficient initiative to see that it might help their staff to find out what landlords do from an actual expert and practioner in the field.

The talk was part of my consultancy for this lender and one bit of the talk covered what successful landlords do (and don’t do.)

Interestingly, only one member of the audience was actually a landlord, (and that was by default, as she had relocated for work.)

At the end of the session, I asked them all, if, as a result of my talk, they any more inclined to become landlords, and was a tad disappointed to find that they were still unprepared to make the leap.

Usually, when I speak, people get a bit inspired to look into landlordism more, though their reticence could be due to them being based in a part of the UK where house prices have been decimated in the past year due to problems in the local economy.

Landlords and Tax

A key thing I highlighted in my speech to them was how I thought the tax system was relatively kind to private landlords. (Yes, I know the landlords reading this won’t all agree.)

In particular, the fact you can offset interest on loans against rent before declaring profits is very attractive (and contentious for some).

Of course, all businesses can do this, but some pressure groups think landlords should not be able to. “It’s not a proper business and it sets landlords at an unfair advantage over first time buyers when it comes to buying property” they say.

I won’t go into that debate, here, except to note that a few years ago on Radio 4’s MoneyBox programme, where I was on with someone from Pricedout.org.uk, an organisation which has this view; I suggested that the lack of social housing was a far more significant factor in the growth of the PRS than landlords’ tax breaks.

Of course, there are other tax breaks too – especially the little understood, “Private Letting Relief” which, whenever I explain it, always has landlords saying, “Are you sure HMRC really gives us all that!”

Yes it does, and it is just one of the things that explain why buy to let remains attractive.

But the tax system could all change and the changes may not all be to landlords liking. It’s a risk to our business but it’s just a risk of doing our business.

And those who don’t like risk are condemned to not become wealthy and to moan about those who have.

Link to the article from 2006:

http://www.mortgagestrategy.co.uk/brokers-ridicule-buy-to-let-predictions/128457.article

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Expertise and advice.

Services to Businesses and the Public Sector

Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord, private rented sector and buy to let product strategies, marketing and services.

We also write for property websites, speak at property shows and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus a host of other random things that interest me from football, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011. We pursue copyright infringements.

LINK TO THIS BLOG OR TO OUR WEBSITE

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Posted in Build to Let, Buy to Let Mortgages, Capital Gains Tax, Generation Rent, Institutional Investment in the Private Rented Sector, PRSI, Private Letting Relief, Private Rented Sector Initiative, Tax on Let Property | Comments Off

Landlord Rating My Trip Advisor Style Websites Plus Institutional Investment in the Private Rented Sector Gets a Lot Closer

Tuesday, March 29th, 2011

I have written quite a bit at this blog about the power of the internet and the importance of customer service in dealing with landlords and with the private rented sector (PRS) in general. Of course, the same thing applies to all businesses.

As the author of a quite successful book I am interested in Tim Waterstone’s attempt to buy the Waterstones chain from HMV. But will his strategies, focussed on “bricks and mortar based customer service”, work as well now in the current online era?

I’m not so sure because in book retail there is one good reason why Amazon cleans up and that’s because it’s so good at internet retail. The fact is that all the other book chains are much less savvy about the net and e marketing, and for me, this explains why Border / Books Etc is no longer with us and why, my own publisher apparently lacks the motivation to get my own successful book into WH Smith (even though WHS have expressed a strong interest.)

MyTripAdvisor and Landlords

Speaking of Customer Service and the Internet, I was somewhat surprised to see the landlords associations being so unwelcoming to Consumer Focus’s idea for a “trip advisor style” website where tenant-punters could rate their landlords.

Why ever not? After all, landlords are more than happy to use sites like MyHammer to find decent tradesmen. I say, “Bring it on.”  Indeed I always provide prospective tenants with a list of my past tenants who are more than happy to tell them what a fair landlord I was.

This topic of a landlord rating website came up quite a bit last week at a Property Week conference where I was speaking at an event focussed on the private rented sector and held in an up market city location.  The audience came from a more professional end of the market – big property management firms who typically are more used to managing commercial properties than residential, but who are beginning to see the benefits of being in the “smelly socks” private rented sector and managing units of private rented stock for the big pension funds and other investors.

So, the audience and speakers were far more “professional” than you tend to get in the small-landlord-investor focussed conferences where I’m more usually found speaking. But though the accents were more refined, the challenges they face are much the same as face the smaller landlord – managing tenants, managing the property, keeping down voids etc.

In other words, all the boring type of stuff which the “Get Rich Quick in Property Investment Gurus” ignore but which good landlords in the PRS churn out each day – in other words the stuff which makes them rich over time.

PRS and the Big Investor

The conference happened to come the day after the Osborne budget cut the stamp duty land tax rate that block buyers of properties will pay. (They will now pay the SDLT rate based on the average price per unit not the total sum bought.)

This has meant that the private rented sector just got a whole lot more interesting for the big investors interested in building large blocks specifically to let out – great news for the big commercial landlords and the institutions in their Saville Row suits but a bit of a threat to the small private landlord, who could probably do without the extra competition.

My local authority clients who are trying to engage with the private rented sector are very interested in this new development. They certainly have lots of tenant-clients who need accommodating in the private rented sector and their rent can often be paid direct – and usually (if they are on Housing Benefit / LHA) courtesy of the taxpayer.

But does this bottom end of the private rented sector seem just too “low end” for the big commercial players who have, up to now, been more used to managing shopping centres and office blocks?

If that’s so, they are missing a trick, I think.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy and expertise and I’m David Lawrenson, a landlord and property investor myself for over 25 years and best known as the author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 26,000 copies sold (up to Feb 2011).

Services to Businesses and the Public Sector

Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord facing or buy to let product strategies, marketing and services.

We also write for property websites and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Advice on a one to one basis.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

THE HOME PAGE OF OUR MAIN SITE click here: http://www.LettingFocus.com

For general info on our CONSULTING SERVICES and also to find a small sample of links to articles where our comments have been featured in the National Press please click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Advice

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

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Posted in Build to Let, Institutional Investment in the Private Rented Sector, Landlord Rating Site, Marketing to the Private Rented Sector, My Trip Advisor, Private Rented Housing Investment Fund (PRSI), Private Rented Sector Initiative | Comments Off

Will the Private Rented Sector Initiative PRSI and Build to Let Ever Take Off

Tuesday, December 14th, 2010

If you asked a group of private landlords what they understood about the term “private rented sector initiative” (or PRSI) you would get a blank look from most. And yet, this could be one of the biggest threats that the UK’s private landlords currently faces.

In summary, the PRSI is about getting city investors such as pension funds to invest in large scale developments which will be entirely rented out to private tenants. It has sometimes been dubbed “build to let” to distinguish it from “buy to let.”

The attraction for investors at this time is obvious. Not much new housing is being built, it’s a risky time for investments generally and there has always been an investor appetite for low risk and high and reliable income over a longer term horizon.

In the past, though, residential property investment has offered investors capital growth rather than income – which wasn’t attractive for institutional investors like pension funds who need to try to match investment returns against liabilities such as pension payments, and hence prefer a steady and reliable income stream. This meant that most fund managers steered clear and if they had any money allocated for real estate, they stuck to what they knew about – commercial property.

Also, big investors always struggled to get hold of residential portfolios of a size that would make investing worth their while. And even if they could get the scale, the labour intensive nature of assured shorthold tenancies made management too much like hard work compared with longer commercial property leases.

But in the current market, it’s thought that sufficiently high net yields could just possibly be achieved from rental streams without too much reliance on capital growth.

The attractions for the government are clear. House builders are not building enough private homes and housing associations are not developing enough social housing. So, the PRSI, by using “big city money” could potentially restart stalled housing schemes – thus increasing the number of homes for rent and relieving pressure on the housing market.

Rugg Review

The HCA’s initiative to kick off build to let actually formed one of the previous government’s set of responses to the Rugg Review of the private rented sector.  But Dr Rugg’s report found that the small scale private landlords did a better job than bigger company landlords at meeting tenant’s needs. This could be because the typical private landlords (overwhelmingly individuals or couples) don’t charge for the time they spent on their lettings (whereas a company employee would.)

Of the big institutions, ING, Terrace Hill, Aegon, Aviva and a consortium led by Bespoke Property Group all declared some interest in taking schemes forward. Grainger is involved too. Legal & General, interested initially, later decided against investing for now.

And who will manage the rentals? Registered social landlords such as Notting Hill Housing Group already manage their own social housing stock and landlords familiar with private leasing schemes may be aware of Orchard & Shipman, which works for landlords and some local authorities – matching homes with people on council waiting lists. These and others are obvious candidates to do the management. (At LettingFocus we have also advised on this issue in our consultancy role.)

But despite the outlook for this type of investment looking rosier, the promoters still needed to look to government for help via tax breaks to really make these schemes take off.  But in late September, a statement from the Treasury finally appeared to rule out future financial support for initiatives claiming that any institutional investment would always be no more than a “niche” in the sector. This came as a disappointment to “build to let’s” supporters.

How Does PRSI Affect Private Landlords?

Whilst the UK clearly needs more of the right type of housing stock, from the  private landlord perspective, the Private Rented Sector Initiative must be cause for concern because large numbers of new properties built specifically to be rented out can only have a negative impact on local rental rates. We’ve already seen how the large numbers of new build inner city flats that were built between 1998 and 2006 often had a very negative impact on rents (and ultimately capital values) in some towns. The same negative impact on local rents is also often visible when student accommodation providers open new dedicated student halls.

In the last few days it seems that Birmingham Council is about to approve a private rented sector initiative that aims to deliver up to 1,500 new private and intermediate rented homes over the next five years. Under the proposals the city authority will invest land in a joint venture company in exchange for an equity stake. Other members of the joint venture are understood to be contractor Willmott Dixon, consultancy Savills and housing association WM Housing Group.  But for now, the lack of special tax breaks may keep a break on any other new schemes.

All the same, the Birmingham initiative shows someone believes there is money to be made here and private landlords should keep a very close eye on developments as it’s clear that the entry of big commercial players building huge swathes of property to let out will directly compete with their business.

The most attractive locations for the Private Rented Sector Initiative will be London and other major cities, where large scale developments near tube and train stations will be the preferred locations that can bring in a strong rental income. “Build to Let” is one to watch.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector expertise and  Information for Landlords.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 25,000 copies sold.

Services to Businesses and the Public Sector

Primarily I am a consultant to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors in the PRSI and insurers – helping them with their landlord facing or buy to let product strategies, marketing and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing associations / local authorities find private landlords (private rented access schemes, local letting agency models etc.)

I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Advice

AT OUR WEBSITE LETTINGFOCUS.COM:

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Posted in Build to Let, Institutional Investment in the Private Rented Sector, Private Rented Housing Investment Fund (PRSI), Private Rented Sector Initiative, Private Renting Schemes | Comments Off

Housing Benefit Frauds How Widespread Are They Plus Institutional Investment in the PRS May Be Near

Monday, June 14th, 2010

A few weeks ago, a landlord I advise told me how some tenants of his had contacted him with a request to help them make a fraudulent housing benefit claim.

The landlord lets out a property to three people who are all on a single assured shorthold tenancy. The tenants are related to each other. There is a young woman, Miss X (income £38K) and who is a distant relation of the other tenants, who are an older couple each of about 55 year of age.

The older man, Mr. Y is self employed on a low income and his wife, Mrs. Y is a housewife. The older man had suffered an injury and could not work so the landlord got a request which said:

“Dear Mr. Landlord, Mr. Y has had a leg injury and there is a chance that he will receive housing benefit for a couple months. We would be very grateful if you could rewrite the tenancy agreement in Mr. and Mrs. Y’s name.”
The landlord rightly refused, pointing out that 1) It would make him a party to a potential fraud which, if found out, would have very serious consequences for him and his lettings business 2) It is unfair on the tax payer and 3) The tenancy was granted with them all on it and references were taken on their combined income of which the principal earner’s income was a big factor.

Housing Benefit Fraud

What they were proposing is housing benefit fraud, of course, which I suspect  is pretty widespread. But how could it be stopped?

One solution is to simplify the tax and benefit system.

Now, I have to say, I’m something of a fan of simplification of the tax system.

Many moons ago, back when I was at University, I recall studying the tax system proposed by the economist, JE Meade.

Meade’s idea was that every person would get a “credit”, an amount of money sufficient for the necessities of life. This might be £15K or it might be £20K, but it would be an amount on which they would pay no tax at all. Exactly how much it would be would be up to society and for MPs to decide.

Along with that – and here is the smart thing – if the amount was set at the right level, most of the means tested benefits system could then be dismantled along with all the huge cost of administering the whole edifice.

These days this policy is probably most associated (in the UK) with the Liberal Democrats.

Downsides

It sounds simple and it is – but the downside is that it would require a big increase in the starting rate of tax – which would definitely be higher than the current 20%.

And of course, whatever the benefits in terms of a simpler and less costly system, to many people, the high starting rate of tax does make it a bit of a “hard sell.”

But I like it. I especially like the way a whole bureaucracy of administrating a complex means tested benefits system gets swept away.

And I really worry that within the current system there is a lot of fraud where people are cheating the system.

Equally, there are people who aren’t claiming for what is rightfully theirs because they cannot be bothered to work through the 100 odd page claim forms – and often these will be the old or infirm.

Housing Benefit Fraud

As part of my consulting business helping local authorities and RSLs with their private rented sector access schemes, I am all too aware of the terrible complexity of the Local Housing Allowance system – which, of course, puts lots of landlords off letting to people in receipt of this benefit.

Armies of people are employed at the town halls administering this maddeningly complex system – helping tenants with the forms and offering assistance to landlords to help them understand it all too.

A simpler tax system that provides a decent safety net standard of living to all should be able to wipe out this particular part of the ludicrous means tested system we have in the UK.

No Money Left

“There’s no money left” the last government said in a note one minister left.

And, of course, there won’t be much for housing.

This is why I feel pretty sure that the current government will soon announce big tax breaks to get institutions investing in the private rented sector.

In the meantime, the Town Halls hardly seem to be busting a gut to deliver private rented sector access schemes. (These are where the private rented sector is used as an option for people coming out of social housing.)

In most local authorities within the housing strategy document and at most of the very many housing conferences, it gets barely a mention.

Perhaps they are already waiting for the institutional investors to come in like the seventh cavalry. Perhaps only then they will get serious about using the private rented sector as an option for people coming out of social housing. Perhaps, dealing with pesky individual small scale private landlords is too much hassle for some of them at the moment.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Landlord Information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers, insurers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased Buy to Let Advice on a one-to-one mentoring / coaching basis or through our occasional group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can also use the tags and categories to read blog posts on related posts. (To find relevant posts from before 30 April 2010 you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you and click to read all the posts we have written under that Category / Topic.)

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page

For general info on our CONSULTING SERVICES click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Mentoring

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event

We have OFFERS on services and products here: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – from both commercial organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE? IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME.

PLEASE GET IN TOUCH!

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Copyright of Blog: David Lawrenson 2010. This blog is updated roughly once a week usually on a Monday or Tuesday.

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Posted in Build to Let, Institutional Investment in the Private Rented Sector, Local Housing Allowance, Private Rented Housing Investment Fund (PRSI), Private Rented Sector Access Schemes, Private Rented Sector Initiative | 1 Comment »

Buy to Let Mortgage Rates, Institutions and the PRS and a Word On CGT

Tuesday, June 1st, 2010

A few months ago there was a ray of hope that the historically high margins that mortgage companies want to charge buy to let mortgage borrowers could be coming down.

Readers of this column will know that back in November last year, for a 75% loan to value buy to let mortgage, you could get a reversionary (or “go to” rate) of 2% over Bank of England Base rate.

But the best you could have got any time in 2010 (on 75% LTV deals) was about 4% over base, which made me question whether these resolutely high buy to let mortgage rates were perhaps a product of less than competitive conditions in this sub market (i.e. too few competitors running a cosy oligopoly).

So we were encouraged to see that in early May, talk of renewed competition from money market dependent lenders like Paragon was perhaps a signal that the high margins and high fees lenders were demanding were about to come down.

Alas, in recent weeks, inter bank lending rates have hardened again, (blame the Eurozone crisis and North Korea) and so more competitive buy to let mortgage rates are as far off as ever.

This all means that lots of potential property investments that landlords will be eyeing still do not stack up in the short or medium term.

Build to Let

I love the National Landlords Association (and I think they love me too) but I recently reminded an exec at the NLA that when I joined, many moons ago, it was known as the Small Landlords Association – the accent being on the word SMALL.

This is relevant in the context of institutional investment in the private rented sector (a thing that all governments seem to want to encourage).

The point was that landlord’s representatives at the NLA and the Residential Landlords Association (RLA) will have to tread carefully on this topic because I guess most of their members will be small landlords.

Perhaps it is time they checked their constitutions and decided if they want big landlords to me members at all, if indeed they are not already precluded?

Institutions Have Clout

Sure the big boys have clout – and I know this because I work as a consultant with some funds who want to invest in the PRS – but the landlords associations could easily be compromised by the big investors because they don’t share the objectives of the small landlords and indeed, will compete against them in the hunt for tenants.

The problem that the landlords associations have, of course, is that they cannot be seen by government to be against the expansion of the private rented sector. After all, they must join in with the message that we need more housing – whether rented or social.

But they must ensure that the tax system is not so stacked in favour of the institutional investors that the small landlord is crowded out.

That would not be right.

I’m pleased to see a statement to that effect in the latest journal of the NLA.

PPR Relief

Speaking about tax, I think one likely casualty of the changes to capital gain tax (CGT) relief could be the existing system whereby second home owners and buy to let investors can nominate a property as their main residence for a short time and claim the last 3 years of ownership as their principle private residence.

This 3 year rule was one attribute of MPs expenses fiddles. If this was to be stopped, landlords will have the activities of our “Flipping MPs” to thank for the change.

Bit of Politics – Time to Cut Off Old Friends?

Sometimes the actions of friends go too far and you have to cut off your support for the good of everyone else around.

So, I suggest it is time China cuts off North Korea, the US reviews its support for Israel and maybe the EU takes a good look at Greece. (It may be for Greece’s own good that they go outside the Euro.)

All these changes would make the world a better, more prosperous and more peaceful place.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Landlord Information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers, insurers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased Buy to Let Advice on a one-to-one mentoring / coaching basis or through our occasional group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can also use the tags and categories to read blog posts on related posts. (To find relevant posts from before 30 April 2010 you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you and click to read all the posts we have written under that Category / Topic.)

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page

For general info on our CONSULTING SERVICES click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Mentoring

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event

We have OFFERS on services and products here: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – from both commercial organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE? IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME.

PLEASE GET IN TOUCH!

See our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010. This blog is updated roughly once a week usually on a Monday or Tuesday.

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Posted in Build to Let, Buy to Let Mortgages, Buy to Let and Landlord Tips, Capital Gains Tax, Institutional Investment in the Private Rented Sector, Private Rented Housing Investment Fund (PRSI), Private Rented Sector Initiative | 2 Comments »

Private Rented Sector Competitors Waiting in the Wings

Monday, May 10th, 2010

I have always said that the biggest threat to private landlords comes from external sources and especially from new competitors. Unfortunately, these new competitors are rarely on most small landlords radars, which is not surprising really, because so far these new competitors have not really been all that active.

Most landlords tend to prefer to worry and huff and puff about daft, fiddly and pesky new government initiatives and red tape (think energy performance certificates, landlord registration proposals etc) or semi-transitory financing issues like expensive and rationed buy to let mortgage lending.

But by ignoring new competitors, small landlords are missing the bigger threats.

Unite

For example, I read recently that Unite, the lettings company which specialises in building, letting and managing student accommodation, is attacking the market share of private landlords by offering big discounts in several major cities according to a story on the www.studenthousing.co.uk website.

I am not surprised. I have always warned small landlords embarking in the student letting area (especially in smaller cities in the UK) to be very careful and make sure they are fully aware of what the likes of Unite have got planned for the student city they are investing in.

Even if the swanky new Unite apartment being built nearby is at a rental well above what you are offering in your student let property, the very fact and presence of the new stock on the block WILL drive rents down, so it WILL end up affecting the small landlord.

Piece of the Action for the BPF

As I have mentioned on this blog too, the likes of the British Property Federation (BPF), the big institutional guns in the City of London and the bigger property firms like Grainger would love to have a bigger presence in the private rented residential sector and they keep badgering the government to give them special tax breaks (the only way they can compete with the efficiency of the small scale private landlords.)

All landlords and their representatives in the NLA and RLA should be aware of these competitors. With the private rented sector growing all the time, the attention of the big boys is not going to go away in a hurry.

And both Labour and Tory administrations like big business because it can get things done fast – like build lots of houses. Small pesky landlords, whilst they have grown fast, will take just too long to do the same. This is no good to a government that is facing a housing crisis.

Getting the big boys in is seen by the Government as a good bet. Like Tesco in food retailing, the big property companies can deliver. Small scale landlords should watch out.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Landlord Information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers, insurers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased Buy to Let Advice on a one-to-one mentoring / coaching basis or through our occasional group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can also use the tags and categories to read blog posts on related posts. (To find relevant posts from before 30 April 2010 you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you and click to read all the posts we have written under that Category / Topic.)

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page

For general info on our CONSULTING SERVICES click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Mentoring

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event

We have OFFERS on services and products here: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – from both commercial organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE? IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME.

PLEASE GET IN TOUCH!

See our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010. This blog is updated roughly once a week usually on a Monday or Tuesday.

Tags: , , , , , , , , , ,
Posted in Build to Let, Institutional Investment in the Private Rented Sector, Private Rented Housing Investment Fund (PRSI), Private Rented Sector Initiative, Student Lettings | Comments Off

PRS Access Schemes, Build to Let and the Rugg Review. LettingFocus Surveys the Wreckage

Friday, April 30th, 2010

Reading the housing section of the Labour party manifesto, one can see that the PR campaign that the British Property Federation (BPF) and their members waged on Labour Grandees has paid off in terms of Labour support for “Build to Let,” which for the uninitiated, is where the Government tries to open up the private rented sector (PRS) to big property firms and institutions.

Curious Move – And What Would Julie Rugg Say?

As I have said before, this is all very curious because Labour has decided to ignore Julie Rugg and the finding of the report they themselves commissioned.

Just to remind you, the Rugg Report said that those small pesky private landlords do a better job of being a landlord than the big boys. To quote her: “Bigger doesn’t necessarily mean better – as can be seen when you look at banks and utility companies. Small landlords are more flexible: they don’t necessarily feel that they have to put up rents year after year. I also think larger investors aren’t impressed by the private rented sector because they simply don’t understand it. Indeed, there is a complete dearth of management skills in the corporate sector” (Julie Rugg quoted in “Residential Property Investor” the RLA magazine March/April 09 edition.)

Fast Growing PRS

And with the private rented sector growing from 8% of all housing stock to 14% plus over the last 20 odd years, you could add that the individuals who make up the bulk of the UK’s army of private landlords is doing quite well on their own and is also coping rather well with the current level of reduced mortgage availability. Read this piece for more on how well they are doing right now: http://bit.ly/dkoFz0

So, like me, you may be wondering, why does the Government need the big property firms to come in and join the private rented sector party? (And, no the answer is not to do with payback for donations to political parties.)

More Stock Needed in the PRS

Well, I guess one answer is that we need even more stock in the private rented sector. (Everyone now accepts that the Thatcher claim that most of us could be homeowners was always utter nonsense.)

The Government will certainly understand this need for more stock as it faces an ever mounting bill for Local Housing Allowance as more tenants – who would in times long gone, be housed in council houses – must now be housed by landlords. And so the Government clearly thinks: More stock in the PRS equals lower rents equals a lower local housing allowance (housing benefit) bill for us to have to foot.

And that’s all true. We do need more houses in the private rented sector. But what I’m not sure about is whether the big property companies and the institutions are the best people to provide it.

Tax, the PRS and Build to Let

It seems that the institutions and big property firms worry greatly about trying to get the Government to give them suitable tax breaks so they can make investing in the private residential sector or “build to let” work for them.

Now, we know the money is there to be made in the private rented sector. (At www.LettingFocus.com we show both corporates and private individuals how to do this.)

But the institutions that wish to join the party and invest, first need to understand how to maximise the “tenant asset” – and that is all about getting the right tenant in the first place and then providing a high level of service focused on their needs. If they can understand that part of the work and learn to get it right (doable but not easy), they can make money in the PRS without recourse to special tax breaks or other unique treatments doled out by Government. (Indeed we argue that these tax breaks are unfair on the UK’s small scale landlords.)

Who Will Help the Big Property Firms Get It Right?

Who can help these big institutions and property firms, who are much more used to commercial property, get the knowledge to allow them to be good in the private rented sector?

Well, managers of public housing assets (such as housing associations) could be candidates for this role, but I would suggest that managing tenants in the private rented sector is a tad different and calls for a slightly different approach and treatment.

At LettingFocus we work as consultant in the area around Private Rented Sector Access Schemes for the local authorities and housing associations. We know these bodies do a lot of good work in this area but we have found that they lack a really close understanding of the needs of landlords and are often inefficient in recruiting them. Indeed, the way many private rented access schemes are currently set up are a long way from being the optimum method of recruiting landlords and in some cases are incredibly wasteful of taxpayers’ cash.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Landlord Information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers, insurers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the media.

Services for Private Landlords

We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased Buy to Let Advice on a one-to-one mentoring / coaching basis or through our occasional group seminars.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

You can also use the tags and categories to read blog posts on related posts. (To find relevant posts from before 30 April 2010 you can also click on LettingFocus’s Old Blog  - Categories, then search from the list for a topic that interests you and click to read all the posts we have written under that Category / Topic.)

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page

For general info on our CONSULTING SERVICES click here: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS click here: Property Mentoring

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event

We have OFFERS on services and products here: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – from both commercial organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR TO OUR WEBSITE? IF YOU SELL SERVICES TO LANDLORDS, YOU COULD BE A PARTNER ON OUR AFFILIATE PROGRAMME.

PLEASE GET IN TOUCH!

See our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2010. This blog is updated roughly once a week usually on a Monday or Tuesday.

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Posted in Build to Let, Institutional Investment in the Private Rented Sector, Private Rented Housing Investment Fund (PRSI), Private Rented Sector Access Schemes, Private Rented Sector Initiative, Private Rented Sector Management, Rugg Review, Social Letting Agency | Comments Off