Look after the Buy-to-Let Landlords

The government seems to have forgotten the importance of buy-to-let landlords. And yet they’re vital to the well being of Britain and its economy.

At long last Premier Brown and Chancellor Darling – the Tweedledum and Tweedledee of British finance - are getting tough with the banks and telling them that they must start honouring their side of the £35 billion bargain that’s been struck with tax payers money.

They are demanding that they start lending again to little businesses – the lifeblood of the nation - and start offering attractive mortgage deals to people whose existing deals are coming to an end or who are first-time buyers and keen to get on the housing ladder.

And it’s about time too. How any government could conduct such a bail out without attaching strings which are in the public’s interest – rather than the bank’s – defies belief.

The City and its cohorts were going bust. They have been saved with our money – taxpayers money. They owe us, the nation, everything.

Investment bankers and hedge funders have shown themselves to be shockingly brazen. In the UK, Europe and America they are now derided as pariahs.

The British government has no choice but to wield the big stick.

As well as small enterprises and first-time mortgagees the third group which needs to be cherished are Britain’s buy-to-let landlords.

The government’s house building programme is way behind schedule. Many big housebuilders and developers are now looking at bankruptcy.

It’s only private landlords who have property to let who can help to get the government out of the accommodation black-hole. Buy- to- let landlords are the ones who going to make up the accommodation shortfall. And as such they deserve proper support.

This should be in the form of very low interest cut price mortgage deals and tax cuts on any margins they might be fortunate enough to make.

Brown et al – in their Whitehall bubbles - don’t seem to realise just how risky a business buy-to-let has become.

First of all a buy-to-let landlord has to find a big deposit for a venture.

Then he will have to fork out a considerable sum of money to convert it if it’s not a purpose built property.

Then he will have to satisfy himself that he doesn’t mind having his capital tied up on a long term basis.

Before all that he will have had to negotiate through the planning minefield. Dealing with recalcitrant and arbitrary planning authorities can be a nightmare.

This is also an area where central government should intervene.

Planners should be instructed by government that they must fast track applications, for instance, for one-bedroom flat conversions, for which there is a tremendous demand.

Too often councils say: ‘ We’ve had a change of thinking. We don’t see this area as a place of bed-sits and one-bedders. We now want to encourage families into the area.’

It’s all well and good. But the truth is that the horse bolted a long time ago.

Urban areas – especially in London - primarily attract singles and young married couples. They like the convenience and buzz of city life. They don’t mind the noise, the dirt and the menace. But older, more mature families, fled for the country aeons ago.

And because some flippety gibbet in a planning department says ‘ We want to revitalise the area with families..’ well, sorry, but it’s time they got real.

Social engineering rarely works. And it certainly doesn’t happen overnight. If it works at all it takes generations. And the planners might not have noticed but we have a really rather serious housing problem right now.

Apart from anything else, three and four bedroom properties are generally more difficult to let than one-bedders. One reason, of course, is that they’re usually more expensive for the tenants to rent and to run. And they’re often more costly for the landlord to build.

So why should a landlord go to the expense and hassle – and risk his capital – in finding and converting a buy-to-let which is difficult to rent out because a council insists that such properties have more bedrooms than most putative tenants want?

In this exceedingly perilous climate such council and planning dictates are verging on the insane. All attempts by local councils and planning departments to impose social engineering or enforce political theories should be scrapped by central government.

After all the heartache and angst and hassle the buy-to-let landlord might just make sufficient return on his capital to cover the cost of his mortgage ( if he’s lucky).

And that’s why cheap, flexible, buy-to-let mortgages are vital. Without them the buy-to-let market could dry up. And if that happens the housing and accommodation situation will be in an unrecognisably worse state than it is now.

Today there is not, even, the incentive of rising property prices to encourage the buy-to-let landlord. The days when a landlord could say ‘Ah well finding tenants is getting sticky so I’ll sell up and make a profit’ are long gone. It would be interesting to know how many buy-to-let landlords are today in negative equity with their properties.

Many people only became buy-to-let landlords because Brown and co wrecked their pension plans and they were effectively forced in to having to make alternative provision for their retirement years. But that, of course, is an entirely different story …