The Rise of the Private Landlord
Over the last 10 years the U.K has seen a boom in the rise of buy-to-lets properties. There are many contributory factors including; the lack of housing stock, giving rise to increased house prices - pricing many out of the market, especially first time buyers. According to RICs (2016), London is set to become the first city in the U.K where there will be more renters than buyers. This trend will follow suit in major cities across the nation as house prices continue to rise whilst wages increase at a snails' pace.
With an increase in buy-to-let properties comes and increase in private landlords. According to the latest National Statistics, English Housing Survey (headline report, 2016), the private rented sector remained larger than the social rented sector. In 2014-15, 19% (4.3 million) of households were renting privately, while 17% (3.9 million) of households lived in the social rented sector. There was no change in the size of either sector between 2013-14 and 2014-15.
More recently, there has been uncertainty in the future growth of the sector, instrumental factors include the introduction of the 3% tax on buy-to-let properties, more stringent checks in the form of ‘Right to Rent’, as well as an increase in local authorities introducing mandatory landlord schemes.
Here are some tips to be on top of your game:
- Know the laws/best practice and be compliant. No doubt, there is a focus to weed out rogue landlords. Join a recognised body such as the NLA to ensure you are in the know. Recent obligations include conducting ‘Right to Rent’ checks and providing all new tenants who are on Assured Shorthold Tenancies (from Oct 2015) with a ‘How to Rent’ guide. Click to view the How to Rent guide.
- If you are at the beginning of your buy-to-let journey, do your research on the best areas to gain the greatest yields/returns on your investment. A quick Google search could make the difference between a 5% yield and 15% yield. Bricks and mortar is still one of the most favourable forms of investment, with many choosing buy-to-let as a means to invest for the future.
- Look at your margins - is there a way to reduce your costs and time? Time = money, especially when you are managing your own portfolio. There are some great cost effective solutions out there to help you manage your tenancy, including our interactive cloud based solution called brightLET
Although many recent publications and industry experts recognise it is a tough time for private landlords, nevertheless, private landlords still have a firm place as major players in helping bridge the shortfall in housing. What that looks like moving forwards, time will tell - weathering the storm may bring great reward.