The National Landlords Association (NLA), which represents private residential landlords, believes the new breed of ‘reluctant landlords’ pose a major risk to the overall health of the British rental market.
It follows the research published by RICS that shows the number of new landlord instructions to let in quarter three 2008 has grown at the fastest pace since records began. The research also shows that the growth in new instructions was significantly stronger for houses than flats.
This glut of new landlords, letting out their own properties to avoid selling at a loss, enter the lettings business with some reluctance in the hope it will only be for the short-term. However, given the current economic outlook, it is quite possible that these ‘reluctant landlords’ may have to rent their properties for a much longer period in order to see decent capital growth.
The NLA says before taking the plunge, potential landlords need to be well prepared. There a number of serious issues which, if not investigated properly, could leave them in financial difficulties as well as risking the well-being of their tenants.
A landlord’s responsibilities are wide and varied, but for the inexperienced new entrant they need to think about:
- Do I have permission from my bank or building society to let out my property?
- Does my current insurance cover letting out the property?
- Do I need permission from my freeholder?
- Do I use a reputable letting agent or try and manage the tenancy myself?
- Do I need a written tenancy agreement?
- Does my property comply with any gas and fire safety requirements?
- How do I provide an energy performance certificate?
- How do I protect my tenant’s deposit?
Simon Gordon, head of communications at the NLA, said: “Becoming a landlord in this market is not for the faint-hearted. New landlords, especially those who hadn’t planned on starting a lettings business, must make themselves aware of the rules and regulations so they can operate their tenancies successfully.
“The private-rented sector provides accommodation for almost three million households and there is a major risk that inexperienced landlords, although well-meaning, are not fully up-to-speed with their responsibilities and problems can arise.
“The ultimate responsibility for operating the tenancy lies with the landlord and, although a good letting agent is worth their weight in gold, ‘reluctant landlords’ are obliged to be on top of their game.
“If landlords are not properly prepared, the potential long-term wait for prices to come back up may prove to be a Pandora’s Box for the private-rented sector.”
