There’s been no shortage of change in the UK over recent years and private landlords may well be wishing for a break from it all. At the same time, the fact that the UK continues to have a severe lack of housing supply, coupled with strong demand means that there is still a case for buy-to-let investment. Here are three key issues, which could determine whether or not this investment area performs well over the forthcoming years.
Recognition that there are generational differences in attitudes to housing
Some aspirations are pretty much timeless, for example the desire to find a life partner and to have children. Many aspirations, however, change between generations, often in line with changes in technology, which lead to changes in lifestyle. Up until relatively recently, most people born in the UK would typically spend most, if not all of their lives here, certainly their working lives.
Over recent years however, it has become much easier for people to travel and work abroad, particularly within the EU and to move from place to place within the UK. Buying a home is a long-term commitment, which is at odds with modern, flexible lifestyles, particularly for young adults looking to get ahead in their professions. Of course, people with children, especially school-age children, often still want a long-term base, and for some of them, buying may be the most appropriate option, but others may prefer homes with long leases to strike a balance between permanence and flexibility.
If the rental sector is to flourish, there needs to be broad understanding and appreciation of the fact that affordability is only one of the reasons why people might rent rather than buy, for some people it is very much a lifestyle choice.
Incentives for landlords to develop rental housing
The government has recently announced support for the concept of build-to-rent, presumably as a means of expanding the supply of buy-to-let properties for sale for landlords and investors, which in turn, creates more choice in the rental market. This idea could be extended to providing incentives for landlords to take on properties which are proving hard to sell (potentially defined by having been on the market for a certain length of time without selling) or which are unfit for human habitation. The landlords could then renovate these and turn them into rental units, thus solving at least two problems at once. Governments could also look at allowing more flexibility to convert commercial properties into residential ones, particularly rental ones.
Better education for landlords
It’s easy to paint landlords as exploiters of the vulnerable and, if truth be told, there is an element of truth in the comment, some landlords most certainly do take advantage of vulnerable tenants, but suggesting that all landlords treat their tenants badly is like suggesting that all lenders operate in the same way as pay-day loan companies.
What is far more likely to be true overall is that the UK’s many small-scale landlords may be inexperienced and hence unprofessional in their approach, purely because they have never learned good practice. Hence, encouraging them to educate themselves, both in terms of managing a property (either directly or via an agent) and in terms of understanding the financial/business aspect of it, is likely to be fundamental to ensuring the long-term success of this part of the rental sector.