If you are someone who is either contemplating taking the plunge as a buy-to-let investor, or you are contemplating expanding your existing portfolio, you may be feeling nervous. At a time when there is a fairly well-publicised exodus of landlords from the private rented sector, is it sensible to consider swimming against the tide?
In short, yes!
The elephant in the room…
The legal framework that governs private residential lettings in England is facing imminent change. Assured shorthold tenancies seem (save perhaps for a few exceptions) destined to be assigned to history. For those who have been landlords for the last 10 years or so, they will have already seen the legalities of letting become more complicated. The forthcoming changes have already been the final straw for many and it is seemingly inevitable that further landlords will leave the sector.
Let’s be honest. Being a landlord in the coming years will be different. There will be an increased focus on ensuring rental properties are in a good condition. Obtaining possession if something goes wrong may well become a longer process. And our prediction is that disrepair claims – and counterclaims in particular (something the accelerated possession process has sheltered private landlords from) - are likely to increase.
And now for the positives…
With a shrinking supply of private rented sector homes, and an ever-growing pool of renters, rental properties are in demand more than ever. Unless there is a rapid development of housing by local authorities and housing associations, or a sudden catastrophic crash in the housing market (both of which are unlikely), private renters are going to continue to need rental properties to live in. Despite what you may read in the press, private landlords are still loved!
The headline for prospective landlords is “forewarned is forearmed.”
· Our mantra has always been that private landlords need to adopt a business-like approach and that is more important than ever. Due your due diligence, understand how the letting world works and how it is due to change.
· Do the financial forecasting carefully, ensure you factor in regular maintenance costs, and possibly the costs of a reputable letting agent to ensure you are kept on track with the day-to-day requirements.
· Also factor in that you may have to take a tenant to court and that will be via a different to the current path many landlords use. Proceedings involve cost and your time. You may be lucky and have brilliant tenants – many landlords do – but having a realistic approach is sensible.
· Think carefully and with a level head about the properties you want to invest in (and this applies as much for existing landlords as for first-timers). The bill for maintenance and energy efficiency works should be relatively low on a modern property. The 1930s terraced house may look like a bargain in terms of the purchase price, but it could become a maintenance money pit in the longer term.
Put simply, yes, things are changing in the sector and that is proving unpopular with many existing landlords. But as long as you do your homework, now could be a really great time for new landlords to enter the market. We are here to help anyone taking the plunge!
How can Tozers help?
For further help or information about anything mentioned in this article, or to talk to one of our dedicated team, please contact us.