Spring Property Survey: Landlords Get Wise to a Gap in the Market
Lawson, David, The Independent (London, England)
THERE seemed to be a mistake in the auction details. The beaming couple, still shaking with excitement at winning the bidding battle for a modest suburban house, appeared to have bought their own home.
The flustered clerk quickly realised, however, that the address of the purchase was slightly different from that of the buyers. He was seeing the birth of a new landlord.
"There is at least one buyer taking a nearby property, often in the same street, in almost every sale we hold," said Alan Collett of the auctioneer Allsop& Co. "Usually this indicates they are ordinary home owners buying another property to rent out."
They will have passed the For Sale sign often, commenting that it would be a nice place to live - if they were not perfectly happy with their own home. Then one day - perhaps on the morning savings rates were slashed - an idea strikes. Why not switch their money into property?
A few years ago the thought would have died at birth. Hardly anyone except students and a few transitory business people rented from private landlords. Getting a reasonable profit - or a foot back in the door when you wanted the house back - were also a constant worry because of laws which seemed to favour tenants over landlords.
Today, however, renting is fashionable again. The number of private tenants rose by more than 200,000 to 2.2m between 1988 and 1992 - the first increase this century. Many of those are between homes. They may have had to move for work or personal reasons but cannot buy a new home because the existing one will not sell.
That number is gradually falling again as the market recovers but Mr Collett believes renting will not fade back to obscurity, and the private landlord will be dragged back from the brink of extinction.
New kinds of tenancy introduced in 1988 give them a better chance of profitable rents and the assurance that they can reclaim the property when needed. Just as important, however, is the fact that people will be more inclined to rent because prices are unlikely to rise as fast or far as in the past
"This will erode the fear that you must buy at any cost today because you might not be able to afford it tomorrow," he says. There will be a ready supply of tenants you can trust with your property.
The flip side of low inflation is rock-bottom returns for savers. This fear of falling returns stirred Brian and Pam Johnson into action. They looked at PEPs ("too expensive") and unit trusts ("too risky") before spending pounds 60,000 on a modest west London terraced house.
"As a freelance, I have very little in the way of pension or insurance cover, so this is our nest-egg for old age," says Brian. …