A Tough Year for Buy-to-Let Landlords – but not all bad, says Leading Letting Agent

Online letting agent Thames Valley Lettings discusses the increasing burdens 2017 has brought for buy to let landlords, and what the future holds for the market

The Government announced earlier this year that ‘tackling the high cost of renting’ is essential to fix the UK’s ‘broken’ housing market.   It is harder than ever for first time buyers to get on the property ladder, with the average first time buyer age now being 31, 250,000 homeless people in the UK, and little new social housing being built.  Portfolio and buy-to-let landlords are already filling a huge housing gap.

You would think, therefore, that this would be a good time for landlords to be offered some support.  It seems however that new planned changes banning letting fees in England and placing the burden of estate agent tenant fees onto the landlord will simply swing one more blow in an already uncomfortable year for professional landlords.

If renting is the solution to a housing crisis, and the Government are calling for lower rents, I’d have to ask why the Government appear to be hampering the rentals market by increasing costs for landlords.

Buy to let landlords were dealt another blow last month.  New lending rules came into force from September, with new affordability tests which complicate the lending process for lenders, brokers and borrowers.  Portfolio landlords now have to provide details of mortgages, cash flows, tax records and business models for all of their mortgaged properties — plus details of any other sources of income.  This can make it harder for landlords to switch to more favourable deals with a lower interest rates, or indeed, to buy to let at all.

The FInancial Times reports that some lenders, such as Santander and Platform, the intermediary arm of the Co-operative Bank, have already closed new capital raising to portfolio landlords, defined by the PRA as those with four or more mortgaged properrties.  English Landlords have also faced stamp duty and tax rises, alongside new energy rules – so the Tenant’s Fees Bill promises just one more side swipe at the very people the Government are pinning their hopes on.

It’s true that estate agents don’t have a good perception as far as tenants are concerned.  A recent report from the charity Shelter found that nearly 1 in 4 people in England and Wales feel that they have been charged unfair fees by a letting agent. Fee levels vary considerably and the charity found that 1 in 7 tenants pay more than £500 in fees, but there is another side.  Most private landlords who don’t use an agency to let their home have at least one horror story to share.  The fees, say the agents, are charged for a reason.

However, despite the setbacks of 2017, and more legislation to come, landlords shouldn’t be too downhearted – renting a property is still overall a good investment.

 

Buy to Let returns 5 times the investment

This is Money reports that even after all the hoop-la of 2017, a buy-to-let landlord with a 20 per cent deposit will see five times the returns, provided the rental income covers the costs.  That compares pretty favourably to other forms of investment.

There is still a heathy demand for buy-to-let properties – and big demand from tenants keen to rent them.

 

Web Technology is increasing choice for landlords

Landlords are benefiting from web technology and renting homes more quickly than ever before.  They are no longer limited to using a traditional high street estate agent or taking a risk on a private rental.

New online letting agencies and property portals are enabling a fast, efficient service with healthy competition, more transparency in fees and a straightforward way to ensure compliance with the plethora of new rules.

Even traditional estate agents are moving online and online rental specialists like Thames Valley Lettings make it easy for landlords to find the best agent for them at the best price.  Clear online packages help landlords understand exactly what services they will get for their money.

 

Online Property Portals mean landlords are accessing a much wider market

The web has also brought massive marketing potential, with a whole new generation of property portals.  Landlords can access a much larger tenant pool than ever before if their chosen agent is on the platform.  Property rentals are taking place far more quickly than before, as demand is higher and marketing is better.  This means less vacant time in between rentals.

 

Demand is expected to rise 

Demand is expected to keep rising for rental properties.  Almost one in four households in Britain will be renting privately by the end of 2021.

Despite the tough year for landlords, I think the opportunities and scope for the future still make buy to let a great investment, and as more high-quality tenants continue to join the market, things will only get better.

The Thames Valley Letting team look forward to supporting our landlords and tenants in the Thames Valley area for many years to come.

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