WHAT WOULD A PLAN FOR THE PRS LOOK LIKE?

by Industry Expertsin Legalon Posted on

In this article I wish to address what a PLAN for the Private Rental Sector ( PRS)  would look like.

It would address 4 key Questions

  1. Should there be a PRS at all
  2. What would an ideal PRS look like
  3. What does the current PRS look like
  4. What steps would be necessary to transition from the current PRS to an ideal PRS

Let us look at each of these points in more detail

  1. One of the biggest problems in the current thinking is no one knows if any political party actually believes there should be a PRS at all. To be clear by PRS I mean the Buy to Let sector.   It is clear that Housing Associations, Build to Rent and Purpose Built Student Accommodation are broadly supported by everyone.  So any PLAN has to make the case for there being a PRS and that has to be supported.
  2. It is vital that any PLAN should make clear what sort of Landlord meets the requirements for them to be supported  In any structure there will always be examples of bad practice. Such bad practice is common in Housing Associations but it never leads to a query over whether there should be Housing Associations or not. That is a given in all parties thinking So a definition of an acceptable Private Landlord has to be agreed in any PLAN
  3. You then have to consider the current market, how many Landlords there are that meet the definition of a perfect Landlord , what issues the current market has and those areas that do and do not work
  4. You then have to put in place measures to  encourage the right type of Landlord to join the market and the wrong type to leave. And that will not be related to their performance but to their structure

Let us now consider a possible PLAN for the PRS. But let me make clear the limits of this PLAN and what it is trying to show.

This is NOT  necessarily la PLAN we would recommend. That would require much more work.

But what we think it is, is a proper PLAN and one that meets the requirements set out above. Whether you agree or disagree with it is a matter for debate but what I think it would be difficult to argue is it is not a coherent PLAN.

I am setting the PLAN out here in very simple terms to make it easy to read an understand.

A POSSIBLE PLAN

BACKGROUND

  1. We do want there to be a PRS
  2. We currently have 2 million plus Landlords owning about 4.5 million Buy to Let Properties
  3. The vast majority have fewer than 5
  4. We believe there are fewer than 250 with more than 100
  5. The biggest Landlord only has 8,000
  6. Only one company has emerged in 30 years with more than 1.000 properties

THE PLAN

  1. What is required is companies with thousands or tens of thousands of properties to emerge and to operate with the same scale as Housing Associations
  2. Currently there are 1,500 Housing Associations with 2.5 million properties.
  3. If there were say 3,000 Private Landlords  that would have the following advantages:
    1. It is much easier to regulate 3,000 large companies than 2 million plus individual Landlords
    2. These Landlords would have the scale and resources to provide a proper service to Tenants
    3. They would be fully committed to this business and not part time Landlords looking for a supplementary passive income as at present
    4. They would have the scale to be able to explain to all stakeholders what they are doing and why.  To explain directly in the way the Build to Rent Landlords do at present and they would be heard by Government as Build to Rent Landlords are at present.
  4. How can you transition to that model?
    1. Most importantly make clear that if larger entities invest in this market they will not find the rules being changed in the future to make their position untenable.
    2. Confirm to them that they are welcome into the market and cease the campaign of abuse many Landlords are currently facing.
    3. Then provide tax breaks and finance opportunities to allow such Landlords to emerge. One of the reasons no large Landlords have emerged is because you cannot build a large portfolio with current buy to let finance
    4. Encourage smaller Landlords to leave perhaps with tax  breaks if they sell especially if they sell with Tenants in situ to avoid the ridiculous situation being set up currently where most Landlords will need to evict Tenants to sell at the right price
    5. Create a fair set of rules that protect both Landlords AND Tenants in this new market
    6. Explain to all stakeholders why this model would benefit all parties

Now I appreciate there are many aspects of this model that require consideration  but can I stress what I think cannot be denied is that it is a coherent model that makes sense on its own terms.

What we at PLAN want to encourage is for other PLANs to emerge and for the Government and Opposition to agree that some sort of PLAN is required and then decide which PLAN they should support.

It is not going to do this before the current changes are made but what is almost certain is that the current changes will fail , things will get much worse and a PLAN will be needed.

That is why we want to start PLANNING  for that now so we are ready to get the support of those in authority to a new PLAN.

I encourage those who think this is a good idea to contact me and let me know how they can help to create such a PLAN

Email me at admin@planlandlords.co.uk

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