Budget Reaction 2015: Attack on Buy-to-let Landlords

Budget 2015

Listening to the budget, one would have thought for once property owners had been left alone but hidden away on page 51 of the Budget document, we learn that the government intends to legislate to enable tenants in privately rented accomodation to sub-let!  

Why anyone would think this is a sensible idea is beyond me.  The landlord takes the risk and has to deal with the consequences of more people and more  wear and tear whilst the tenant pockets the profit!  I am not sure on what planet the government thinks this is fair.

According to the government, they want to support the sharing economy: shame they aren't suggesting the tenant share the profit with the landlord and shoulder the risk, which would be the fair thing to do.   But the oversight will merely reduce the amount of accomodation available to long term tenants.  We will certainly not be suggesting to landlords that they allow tenants to short let however we have been recommending short let options to landlords for almost ten years because of the increased yields they can bring.  And the London short let market continues to boom.

If this does become law, then landlords need to move into short lets themselves and there are various ways to do so.  

The least hassle option is to sign a long term contract with a short let company, whereby they guarantee a set rent for a specific number of years - frequently 5 - 10 with a break clause.  This will be similar or slightly below the usual market rent.  The company will arrange everything, taking bookings, cleaning, maintenance etc, similar to a commercial tenant and pays the rent agreed whether or not the property is let.
 
Alternatively landlords can register with a holiday let company such as One Fine Stay who take your keys, supposedly lock away your valuables, take bookings, clean, assess damage etc.  Rents are typically 50% - 100% higher than a long term rent but the company charges circa 20% plus VAT plus cleaning and perhaps other management charges.  But there are horror stories, such as the University Professor who returned  to find his study open and bank details and other sensitive documents strewn around his home!
 
Thirdly there is the diy option made popular by AirBNB.  This is what most tenants would use to sublet.  Users list their own properties,  handle their own bookings, organise or do the cleaning , check in , check out and damage assessment.  It works on an ebay style feedback basis.  We have used this service before and whilst we had no problems, we know of people who have such as the first timers, who had a call from a neighbour in the middle of the night to discover their beloved city loft was being used for a facebook style party.  It took them 2.5 hours to travel to London from Kent, but had to be there before the police would close down the party and send everyone packing.
 
David Cameron has previously criticised central London councils such as Kensington and Chelsea and Westminster which explixitly prohibit residents from entertaining short lets and in blocks of flats and in most cases it isn't a problem but certain blocks are blighted by short lets, which are typically people on holiday after all, who want to party all night and don't want to keep the noise down.  Pity the residents who live there permanently.
 
It is a long time since I have heard such a ridiculous and poorly thought out idea from the government.  Presumably it was dreamt up by a  young wannabe.  If it comes in it will be a big smack in the face for all buy to let landlords, the majority of which are middle class middle earners, just wanting a nest egg for their retirement. 

Manse & Garret Blog

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