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

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 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 broadcast 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 either a one-to-one mentoring / coaching basis or through our occasional group seminars. With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog

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

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

ONE TO ONE PRIVATE CONSULTANCY 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 a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords

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

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy 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: http://twitter.com/LettingFocus

Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.

Private Rented Sector Access Schemes - Landlords Should Take a New Look At Letting to Tenants on Local Housing Allowance

I have to admit, I’m the original landlord who preferred my tenants NOT to be on Local Housing Allowance (the now not so new version of Housing Benefit.)
Many years ago I had a tenant hailing from Guadeloupe who was getting housing benefit. (Guadeloupe as a department of France, presumably qualified him for getting this! Not sure I would get my rent paid in Guadeloupe or even France for that matter, but let’s leave that one to the “Daily Mail” for now.)
His rent was paid in the end, but it was always late and altogether it was quite a bit of hassle.
The tenant also had an odd habit of going out and leaving the front door open, which, as you might imagine, was a bit annoying to people in the neighbouring flats.
After that experience, in future, I only let to tenants who are working and had incomes.
And that’s why many landlords shy clear of letting to Benefit Tenants - it’s the fear of non payment of rent, administrative delays at the Town Hall combined perhaps with other prejudices regarding how their property might be looked after by such tenants.
Now, some of these prejudices are unfair – there are many good Benefit Tenants who pay their rent dutifully on time every time.
And on average “Benefit Tenants” stay longer too.
But, the prejudices exist all the same.

LHA – Using Landlords as Guinea Pigs
But what really got landlords cross was the decision by the current Government to replace Housing Benefit with the new system of Local Housing Allowance (or LHA as it is sometimes called) for landlords.
This was rolled out nationally in 2008.
LHA brought in a different way of calculating what was paid out - which we have looked at in other blog posts - but the key difference as far as private landlords were concerned, was that unless the tenant was deemed vulnerable, or was in 8 weeks arrears, the LHA would always be paid to the tenant.
This was a big change from the Housing Benefit system where it could be paid to the landlord if the tenant preferred it that way (and many did).
Now this change only affected private landlords. The lucky old councils and housing associations would still be paid direct under the old system of Housing Benefit!
In other words, as my friend Tom Entwistle of LandlordZone eloquently put it, “the private rented sector was being used as a guinea pig.”
The idea behind the change was to give tenants more financial responsibility: “Let them manage their own budgets” said the Government, loftily (possibly in the style of the ill fated Marie Antoinette - when she was discussing bread and its availability.)

Result – Chaos and Arrears for Some Landlords…….
Well, what’s happened as a result?
Well, many tenants spent the money they got from LHA on something other than the rent.
The result was arrears have risen, landlords have exited this part of the market in droves and both landlords groups and the likes of Shelter and Crisis are calling for a change whereby those tenants who don’t trust their own budgeting skills can once again opt to have the money paid direct to the landlord.
I think this policy reversal could happen eventually even under the current government who brought the original change in. (The Conservatives have already said they would reinstate the right for tenants to elect that payments of their LHA can be made direct to landlords.)
In the meantime, is LHA really that bad?
I’m not so sure.

. …An Opportunity for Other Landlords
I have always known that some landlords specialise in letting to tenants on LHA, and that’s not always because they are letting in areas where the entire population is on benefits either.
So why do they do it?
What do they know that other landlords don’t?
Over the past year, through the consultancy work I do with the public sector with local authorities and housing associations, helping them to understand and attract private landlords though things called “Private Rented Sector Access Schemes”, “Local Letting Agency Models” and the like, I have been surprised by the extent and level of help on offer to private landlords who choose to let to tenant on LHA.
I knew help was there, I just hadn't grasped the extent of it.
It varies by local authority but in many areas there is money to pay you rent in advance, to pay and safeguard deposits and occasionally even landlords finders’ fees.
Plus there is lots of help and advice from the local authority too.

New Rules
Recently, new rules have cut the actual time a tenant can be in arrears before the authorities can pay landlords direct.
And the definition of “Vulnerability” which also triggers direct payments has been eased.
Landlords should look at this sector again, but to make it work for you, you do need to be like the landlords who already let in this sector - very, very clued up on how the LHA system works.
Oh, and you need to be in a place where the local authority is landlord friendly and efficient at processing those LHA claims.

DON'T MISS OUR NEXT LANDLORD SEMINAR, MEETING AND NETWORKING EVENT for Landlords and Property Investors: Next Property Investment Seminar and Networking Event

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.
I help private landlord investors (see more on this below) but these days I’m mainly a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.
I also write for property websites and am regularly quoted by the media.
I have written articles, guides and documents on letting property and property investing for numerous publications including The Independent, The Telegraph and for quality landlord and property websites.

Services for Private Landlords
For private landlords and other investors in the private rented sector, we do two London seminars each year.
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 either a one to one mentoring / coaching basis or through our occasional group seminars.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
For general info on our CONSULTING click here: Consultancy and Seminars
ONE TO ONE PRIVATE CONSULTANCY 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 a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy 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: http://twitter.com/LettingFocus

Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.

Private Rented Sector Access Schemes, Local letting Agencies & Choice Based Lettings - A Criticism by LettingFocus

In our consultancy work for housing associations and local authorities, looking at Private Rented Sector Access Schemes and so called "Local Letting Agency Models," we have seen that the public sector provides lots of different incentives such as Rent in Advance Schemes, Deposit Bonds, Finders fees and the like to get landlords to let to people on low income who are dependent on Local Housing Allowance.

The incentives have been assiduously studied and evaluated on cost grounds by the providers. There has been some especially good work by Crisis and Shelter on this.

However, we have not yet seen any piece of really good research which looks in detail at the value to landlords of the different incentive offers that are used by RSLs and local authorities. (Only the National Landlords Association touched on it as part of a wider research piece but it barely scratched the surface of this question.)
The charity Crisis rightly highlighted the danger of "incentive inflation" as RSLs and local authorities compete to get landlords to give them their properties.
This was a step in the right direction but what's the payoff in terms of benefits to the public purse?

In the absence of more research on this, we at the LettingFocus consultancy say that local authorities are in danger of providing offers that may be OK for the the landlord, but which may not be the best option from the taxpayers point of view.

We thought the Rugg Review was super, but even that review missed this important point.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.
Hello, I’m David Lawrenson.
I have been a landlord and property investor myself for over 25 years and am author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.
Primarily, I work as a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing and buy to let product strategies and services.

I also write for property websites and am regularly quoted by the media.
I have written articles, guides and documents on letting property and property investing for numerous publications including The Independent, The Telegraph and for quality landlord and property websites.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
For general info on our CONSULTING click here: Consultancy and Seminars
ONE TO ONE PRIVATE CONSULTANCY 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 a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
BUY THE BOOK “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy 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!

See our TWITTER PAGE: http://twitter.com/LettingFocus

Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.