Private Rented Sector Competitors Waiting in the Wings
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.
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.
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