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EHJ June 2004, pages 171
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Lately it appears that anyone can enter the lucrative
world of the private-rented sector...
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The buy-to-let phenomenon has spawned a new generation of social
landlord. Many financial institutions are eager to provide buy-to-let
mortgage products, allowing landlords to accumulate a property portfolio
with relative ease. According to the Council of Mortgage Lenders
(CML) rental lending in the second half of 2003 rose 75 per cent
from the previous year.
Across Britain, property has become too expensive for first time
buyers. Many local authorities are also not building new homes for
rent. In this climate, a new breed of "part time," entrepreneur
landlords have seized the opportunity to acquire up to four or five
properties as a sideline to their main careers. Indeed, such is
the appeal of property speculation that everyone seems to be talking
of succumbing to the lure of bricks and mortar investment in place
of traditional pension funds. A monthly index, showing property
rental yields and produced by the nation's leading specialist buy-to-let
lender, Paragon Mortgages, shows that rental yields remain high.
CML figures show that arrears on buy-to-let mortgages are half those
of traditional mortgages.
A very rosy picture indeed. However, acquiring a property is probably
the easiest aspect of becoming a landlord with pitfalls for the
novice landlord. These can include dealing with letting agents,
tax and maintenance costs and unwittingly taking on the role of
social housing provider.
My primary concern with this new breed of landlord is their apparent
reliance on information doled out on programmes such as Channel
4's Property Ladder. Although entertaining, they hardly provide
sound professional advice on the type of structural repairs needed
for dilapidated and unfit properties. I have lost count of the number
of rented properties that I have encountered where owners have simply
painted walls magnolia, fitted laminate flooring or neutral carpet
and ignored items such as defective roof coverings, missing guttering
and rising damp.
Often, advice from these programmes to make improvements, such as
installing new kitchens to enhance the value of a property and make
a positive visual impact on prospective tenants, is followed almost
too literally. I have seen many a kitchen cabinet strategically
placed to hide pervasive cases of rising damp. Similarly two layers
of anaglypta wallpaper and MDF shelving will never solve long-term
problems of interstitial condensation.
My experience is that the new breed of landlord is often unaware
that early signs of disrepair could be indicative of more serious
problems and certainly lack knowledge of either the fitness or decent
homes standard. With a real need for affordable homes for key workers
and high numbers of households residing in emergency accommodation,
the entrepreneur landlord can make a vital contribution to the housing
crisis. But, not by flooding the private sector with a stream of
sub-standard and unfit housing.
Clearly novice landlords are in need of professional expertise
and guidance, which is where EHPs could exert their influence. If
television programmes are where would be landlords get advice then
why not from a well-informed EHP giving sound practical and professional
advice alongside the TV presenter?
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