News: A cautionary word for prospective landlords

Recent press coverage and industry research indicates that there has never been a better time to enter the buy-to-let market, but following recent developments, leading finance guide Business Moneyfacts suggests it is not necessarily the case for everyone.

The introduction of radical legislation designed to raise standards in the rented property sector means some houses of multiple occupation (HMOs) will attract additional costs in the form of licences and regulation compliance.

Business Moneyfacts’ editor, Lee Tillcock, comments: "Whilst efforts to improve rented accommodation are welcome, licence costs of up to £1,250 and possibly substantial modernisation expenses mean additional financial burden for investors. Already research from the National Landlords Association (NLA) has suggested that 61% of landlords will be less likely to purchase HMOs."

"This possible hurdle for additional investors comes hot on the heels of the recent A-Day confusion. According to reports, a whole host of prospective new landlords were waiting to enter the market and place their new investment into their personal pension. The U-turn by the Chancellor, blocking residential property investment from being held in a SIPP (Self Invested Personal Pension) has left many potential investors’ plans in ruins."

Obviously whilst demand for houses in the UK remains far in excess of supply, entering the buy-to-let market can still prove to be a sound investment.

Lee Tillcock suggests that: "If anything, all the factors mentioned above could mean a reduction in the number of rental properties available, and subsequently increasing rental yields. However, newcomers will be best advised to study the whole sector very carefully, displaying due diligence in researching properties and areas before committing themselves to what is long term proposition."

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