ARLA slams abuses of Buy to Let; HOMES: RENTAL NEWS.
The ARLA panel of lenders, Birmingham Midshires, GMAC Residential Funding, NatWest Mortgage Services, Paragon Mortgages and The Mortgage Business, represent some 40 per cent of all Buy to Let mortgage lending. ARLA represents 1,500 lettings and residential management offices.
Robert Jordan, president of ARLA said that true Buy to Let is an example of private enterprise fulfilling a social need for choice in housing while also providing a fair return for the landlord. "It is about fair returns and quality accommodation, not get rich quick schemes.
"True Buy to Let has provided a choice and quality of accommodation that is better than ever before, a fact recognised by the Office of the Deputy Prime Minister," he added.
"With the aid of Buy to Let, the Private Rented Sector provides flexible housing for a mobile workforce, accommodation for the ever expanding number of students in higher education and a partnership with registered social landlords.
"All of this is about mature investors supporting the sector for the long term."
Although repeated surveys allow the ARLA Panel to be confident that most investors in residential property invest for the long term, using long-term tenancies, they are seeking to remind the public that many areas of property dealing are being improperly linked to Buy to Let and are abuses of the brand.
These include speculative buying off plan, buying in foreign markets and in holiday homes in the UK and abroad.
Robert Jordan said: "Super house inflation has brought about a secondary market that purports to be Buy to Let and probably uses mortgages from some lenders to fund these activities.
"These include off-plan buying where the purchaser is speculating on the increase in house prices. Sometimes these propositions include a guaranteed rent but the public should be aware that these guarantees are no more than a delayed discount and no real guarantee of the rent that can be achieved, or that the property can be let at all."
The phrase Buy to Let has also being used to sell holiday homes. Robert Jordan pointed out that the Dalmation and Black Sea coasts are a forest of cranes and new building. "Letting these properties is, at best, a way of subsidising holidays. You may get a let or two but the competition is fierce, so don't bank on it. Holiday homes in the UK are not Buy to Let either, nor are rooms for sale in an hotel," he added.
John Heron, chairman of the ARLA Buy to Let Panel and managing director of Paragon Mortgages, said that new Buy to Let lending looks impressive but it still accounts for only a small proportion of the total Private Rented Sector.
He explained that, according to government, the Private Rented Sector has some two and a half million homes and by the end of 2003 the Council of Mortgage lenders had reported that there were just 400,000 Buy to Let mortgages in place. "This is in a market that is polarised between small scale private investors and professionals. 53 per cent of the investors in the Private Rented Sector own just three per cent of the rented housing stock."
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|Publication:||Coventry Evening Telegraph (England)|
|Date:||Nov 17, 2004|
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