What are the implications of more of us becoming landlords?

by Readers Question

9:31 AM, 21st July 2016
About 2 years ago

What are the implications of more of us becoming landlords?

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What are the implications of more of us becoming landlords?

The headlines have been telling us that the number of landlords in the UK has been increasing in recent years as more people choose to taking their savings out of the banks and reinvest it in property.landlords

Though this could go some way to solving the so-called housing crisis that the country is currently in the midst of, we now find ourselves in a situation where a lot of inexperienced people are becoming landlords for the first time.

Although there are plenty useful resources available to new landlords to educate them before leasing to tenants, will their lack of experience affect tenant experience and satisfaction? Will the inexperienced landlord’s loss be the experienced landlord’s gain?

Or will it have a negative effect on the reputation of landlords as a whole?

I’d be interested to hear the community’s thoughts on this.

Chris



Comments

Neil Patterson

9:38 AM, 21st July 2016
About 2 years ago

Hi Chris,

I have been in the industry a long time and the rate of increase in new landlords has slowed dramatically especially from the high points ten years ago and more so recently with mortgage interest relief changes and stamp duty increases.

I am aware that I probably have more exposure to landlords that take an interest in renting in a professional way, but I would say the average level of knowledge among the majority is much higher than it has ever been.

Mandy Thomson

11:30 AM, 21st July 2016
About 2 years ago

@Chris: It's great that people are still choosing to become landlords, however, I believe a lot of the poor publicity landlords receive comes from amateur landlords just muddling through. You might find this https://www.property118.com/respect-private-landlords/88865/#comment-79218 of interest if you haven't already seen it.

John Gell

12:40 PM, 21st July 2016
About 2 years ago

I agree with Mandy that it is the ill-informed landlords who don't really understand what they need to be doing who give landlords in general a bad name. I'm constantly surprised to discover how many friends and contacts own a rented property or two, and it doesn't take much of a conversation with them to discover that they are blissfully unaware of what the law requires of them, how to secure reliable tenants and how to relate to their tenants in a way which will minimise problems.

What's happening in Scotland is interesting as a new tenancy regime is being introduced. I believe this has real potential to professionalise letting and marginalise poor practice.

Rather then re-run my rationale here, why not take a wee look at my blog on the subject - https://www.linkedin.com/pulse/end-road-scottish-residential-letting-john-gell?trk=prof-post

Luke P

13:17 PM, 21st July 2016
About 2 years ago

I am starting to be of the firm belief that unless you are full time landlord, you're highly unlikely to be up to speed with current legislative changes. There are lots of people -particularly those I manage for, who don't have a clue about what being a landlord entails. It's just about letting someone borrow your house for a bit in exchange for money, innit...?

And if they don't pay or give you grief, you chuck em out. Boosh...job done. Easy.

Mary Latham

19:33 PM, 21st July 2016
About 2 years ago

I am sorry to say that in my experience it makes very little difference whether a landlord is full time or part time - most landlords no very little about their legal obligations. Some try to keep up, join landlords associations, engage on fora like 118, facebook groups, sign up for newsletters.... but the reality is that our business is complicated and becomes more so every time a new piece of legislation or regulation is introduced.

Some people want to get it right and often pay thousands of pounds to be "taught" by property guru but they are not learning about their legal obligations they are learning about making money from investing in property to rent in the UK.

Landlords/property investors usually find me when they are in trouble and it is sometimes very difficult to stop myself from reacting to their lack of knowledge.

Chris you asked "Or will it have a negative effect on the reputation of landlords as a whole?" I am sorry to say that it will and it will bring more regulation and legislation with the associated costs.

A good example of this is the huge increase in the number of HMO and this is the result: https://www.gov.uk/government/consultations/extending-mandatory-licensing-of-houses-in-multiple-occupation-and-related-reforms

Mary Latham Landlord

Gary Nock

9:17 AM, 22nd July 2016
About 2 years ago

I aliken being a good landlord to being a good manager. It's hard work to be a good manager as they try and treat people with respect, fairness, and dignity. A good manager invests in his staff as an asset. And they keep themselves up to date with continuous professional development. The job they do is more of a vocation and the money is secondary. They worry about making unpopular decisions and explain why. Sometimes they have respect, dignity and fairness thrown back in your face and have to adapt your approach to that individual.

The other side of the coin is the bad manager. They show none of their staff respect, dignity and fairness and don't give a toss about what they think as long as the pay cheque comes in. They fail to invest in their staff and wonder why things go wrong.

Its really easy to be a bad manager.

As a landlord you are a manager - of assets and people. Perhaps landlords should get management training as part of their accreditation process. The property and technical legislative knowledge is the hardware in the system. The people management of the property and the tenant is the software. Without the two it just doesn't work.

Mandy Thomson

9:30 AM, 22nd July 2016
About 2 years ago

Reply to the comment left by "John Gell" at "21/07/2016 - 12:40":

Hi John

I've read your blog on LinkedIn. It's a good well written piece, however, I believe the measures proposed by the Scottish government are going to cause much more damage than they will resolve. I left the below comment to on your blog:

"I agree that the PRS needs reforming because as it stands (certainly in England) any old Tom, Dick or Harry can set themselves up as a landlord, or heaven help us, a letting agent. There is no legal requirement for letting agents to belong to a professional body, far less for landlords.

However, the kind of heavy handed approach proposed by the Scottish government will not work; it will simply deter landlords. For example, in other countries where rent capping has been used, instead of ensuring a supply of housing at reasonable rents, it has ensured a shortage of housing.

Before Margaret Thatcher's government brought in the reforms that made letting property much easier, there was a shortage of housing to rent, and what there was was often of a low standard because landlords either couldn't afford to maintain their properties, or the properties were let by criminals - it was the strict rent controls at the time that made it easy for people like Peter Rachman to operate as people were desperate for housing.

When I was a child, my parents rented a flat privately for a time from a large portfolio landlord. The flat on the whole wasn't badly presented and maintained by the standards of the day, but it was extremely damp - no doubt the landlord was unable to do much about it. When later I was looking for my first home, before assured shorthold tenancies that guaranteed the landlord to right to repossession came in, I didn't qualify for a high enough mortgage, so I sought a place to rent. It was only after 6 months that a large corporate landlord offered me a one bed flat, which nowadays I would have found immediately.

If heavy handed legislation that depresses the housing market is brought in, it won't just be landlords exiting the market. Most landlords need finance, so even if landlords don't want to exit the market, they may have no choice as their business becomes unviable through lack of choice of product when they need to remortgage...."

Mandy Thomson

10:27 AM, 22nd July 2016
About 2 years ago

Talking of draconian measures against the PRS, the Treasury department has just published its leaflet to forewarn landlords of the pending tax changes under Clause 24 of the Finance Act 2015.

No one seems to know if this was simply a pre-planned release under George Osborne that the current administration hasn't had time to review, or whether the new chancellor is intentionally implementing his predecessor's policy...

Sharon Betton

11:39 AM, 27th July 2016
About 2 years ago

Reply to the comment left by "Gary Nock" at "22/07/2016 - 09:17":

I agree with the Manager analogy, Gary. I offer advice and training sessions to our members and have found that the charges made (very low and to cover the cost of paperwork) are not putting people off.
I would advise any landlord to join a landlord association or accreditation scheme, don't be afraid of asking for advice and keep the aim - that you will be a good landlord.

Adam Davies

22:59 PM, 27th July 2016
About 2 years ago

I have a full time job and I also own 2 BTL's, so I guess you can say I am a 'part-time landlord'. I am not a member of any associations but always keep up to date with sites like this, property tribes, etc. I am very confident in my responsibilities as a landlord and am aware of all the new regulations coming into play.

Being self-sufficient and having an interest in whatever you do will get you very far.

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