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Single property landlords take UK private rented sector by storm
April 22, 2014Article by Ray Withers
I’ve long been a believer in the value of involvement in the UK private rented sector as part of a balanced portfolio of investments. It’s why Property Frontiers works so hard to source prime buy-to-let opportunities in the UK’s leading cities. Now, the latest research from Countrywide has shown just how important the role of single property landlords – like many Property Frontiers investors – are to the UK’s private rented sector.
With the Confederation of British Industry estimating that the private rented sector will account for 20% of the UK population by 2018, and Census data released in December 2012 highlighting the sector’s dramatic growth – of almost 50% in the decade to 2011, while owner occupation dropped from 69% to 64% over the same period – it’s clear that the private rented sector is here to stay.
Countrywide’s research has taken a deeper look at just who makes up the sector, based on the 65,000 properties it has on its database, and has found that single property landlords account for 81% of all private rental stock, with 93% of landlords owning just one property. Only 0.7% of landlords own more than five properties (providing 6.7% of the UK’s overall private rented stock), making single property landlords by far the most important group in the sector.
The number of landlords in the UK leapt during 2013, with one month alone (June to July) resulting in a staggering 24% increase in buy-to-let re-mortgage lending according to the Council of Mortgage Lenders. As many of these borrowers are purchasing their first buy-to-let property, here we provide some helpful tips to first-time landlords on how to keep their tenants happy and thus ensure maximum occupancy (and income) levels from their new property.
How to be a good landlord
Becoming a landlord means accepting certain responsibilities and legal obligations.
A key decision for new buy-to-let landlords is how hands on or hands off they want to be. If the latter, then using an agency to manage the property and the rental process is an excellent way forward, though there are of course cost implications to doing so.
Using a reputable agency can take the hassle out of being a buy-to-let landlord – they will have standardised tenancy agreements, know how best to advertise the property as available for rent and deal with any maintenance issues or repairs that arise. An agency will also look to minimise any periods for which the property is vacant between tenants, as a void property means no income for the agency, as well as for the landlord.
A good agency will be able to advise the landlords on behalf of whom it rents properties of the latest requirements with regard to their legal obligations. In brief, according to the UK government’s information and advice service, landlords are required to:
• Maintain their property to safe standards and ensure it is in a good state of repair
• Protect and return a tenant’s deposit when the tenancy ends
• Let the tenant know who they are
• Let the tenant live in the property undisturbed
• Provide an Energy Performance Certificate
• Provide a written tenancy agreement for any fixed term tenancy of more than three years
• Ensure gas equipment is safely installed, correctly maintained and inspected annually, and provide the tenant with a copy of the gas safety check record
• Ensure the electrical system and any appliances supplied with the property are safe
• Follow fire safety regulations, provide fire alarms and extinguishers and ensure that all furniture and fittings supplied with the property are fire safe
• Repair certain parts of the property in the event of a problem, along with any common areas
All buy-to-let landlords need to comply with the government’s requirements when renting out UK property, so investors in that market should be sure to understand the latest legislation in full. Non-compliance with legislation can result in hefty fines – Inside Housing reported on a landlord in the UK private rented sector being fined over £24,000 for tenant safety breaches in October 2013.
Becoming a landlord also has tax implications, so buy-to-let property investors need to understand what they are taking on before purchasing a property. Landlords of UK buy-to-let properties usually have to pay tax upon purchasing the property (Stamp Duty Land Tax), tax on income earned through renting out the property (income tax) and tax at the time the property is sold (capital gains tax).
The law has changed recently regarding landlords of UK properties who are based overseas, so foreign investors acting as buy-to-let landlords should ensure that they comply with the latest regulations. Expenses incurred in relation to the property can be offset against some of these taxes.
A positive outlook
With average monthly rents in the UK increasing 3% to the end of March 2014, according to Countrywide, it seems that the private rented sector will continue to attract new and single property landlords for many years to come. I believe that doing so can be a gratifying and financially rewarding investment and invited those interested in knowing more to explore Property Frontiers’ excellent buy-to-let opportunities in Birmingham, Bradford and Liverpool, which are available from as little as £50,000 (1 bedroom prime apartment in Bradford).
Investors looking to know more about buy-to-let opportunities in the UK’s leading cities are invited to contact Property Frontiers or call +44 1865 202 700 for further details.