It may be the start of a new year but the same issues and arguments continue to plague the buy-to-let sector. Just days into 2015, conversations in the industry returned to the question of whether rental controls need to be put in place in the private rented sector.
Think-tank Civitas is the latest to wade in to the debate, calling for indefinite leases to be the norm and the restriction of in-tenancy rent increases. Civitas says rent increases between tenancies would not be restricted and therefore this would not herald a return to the rent controls that were in place during the first and second world wars.
There is a noticeable problem here. If rent increases are available only between tenancies but tenancies are offered on an indefinite basis, there will be little opportunity to increase rents when necessary – at least, not in the short term. Meanwhile, landlords face increasing costs, particularly once rates begin to rise again. If mortgage rates rise even slightly, landlords could find themselves struggling to cope. And if a landlord cannot pay their mortgage, the tenant could end up with no home at all.
What always concerns me about these calls for more controls within buy-to-let is that very few consider the landlord’s part in all this. It is much easier to think of landlords as money-grabbing businessmen who would see their clients in debt and despair in order to make a fast buck.
This is, of course, ridiculous and it would not take much research or, indeed, foresight to see that while landlords may look rich on paper thanks to their properties, many are not far from falling into trouble. One missed payment from a tenant or one small mortgage increase could push them over the edge.
Good landlords work hard to maintain their properties and manage their portfolios to keep everything running smoothly. Rent controls that are greatly in favour of the tenant and give little consideration to the investor could be very dangerous.
Do not get me wrong. The rights and needs of the tenant are very important and any decent landlord will already know this and do what he can to protect them. But implementing any sort of controls or regulations without giving enough thought to how they will affect the sector as a whole is not the right idea.
On the mortgage front, congratulations to Fleet Mortgages, which has produced its first mortgage offer just 10 days after receipt of the application from our very own The Buy to Let Business. If it can keep up this speed of service and maintain its attractive rates and proposition, we will no doubt have another lender making good traction in the market in 2015.