Due to the rapid growth in the private rental sector, there has been an ongoing battle between landlords, local councils and housing associations. Many people believe that landlords are unscrupulous as they take advantage of the booming private rental market, leaving those in need struggling to afford properties. However, as most of you already know, not all landlords are the same, so how can landlords fight the stigma against them?
The Reasons behind current Landlord Stereotypes
There are numerous reasons why current landlord stereotypes came into fruition; firstly, many people are upset with the fact that the property and private rental markets are so expensive. Before the recession, renting was seen as a cheaper option to buying a property as it doesn’t require a mortgage deposit of tens of thousands of pounds. However, with less people being able to afford buying a property, many started privately renting them instead, leading to rent prices rising in-line with demand. The issue with this is that many people think it is ‘greedy’ for landlords to increase their rent prices in order to take advantage of market demand, however what they don’t realise is that with increasing demand for private rental property the value of said properties increase, meaning they cost more to maintain.
Another issue that many people have with landlords is that they believe they receive preferential treatment, which when you look at the rates that banks offer for buy-to-let mortgages compared to private ones, can be considered true. In general, the interest rate for a private mortgage is between four and five per cent, however for landlords it can be as little as three per cent. This is not the fault of landlords however, it is each bank’s decision, and the reason why many of them offer such preferential rates is because buy-to-let mortgages are less risky than private ones and are therefore a more secure investment.
Are Landlords really better off?
Even though landlords are able to benefit from preferential mortgage interest rates and a considerable income from their properties, things aren’t actually as good for them as everyone believes. In fact, in order to secure their income they have to work extremely hard to keep all their properties well maintained and in-line with their local authority’s regulations. Many local authorities are also bringing in new taxes and fees for landlords, as well as mandatory registration which can cost hundreds or thousands of pounds. Furthermore, landlords no longer have a grace period for council tax if their properties go through a void period, meaning that even if they aren’t making any money on a property they still have to pay out each month.
How can these Negative Stereotypes be changed?
One of the best ways to change negative landlord stereotypes is to educate local councils, the public and even tenants on what being a landlord truly entails. Even though the market is currently booming, landlords still have to pay for maintenance, repairs, marketing, landlord insurance, letting fees, registration and a myriad of other things before they see any profit. Add to this the fact that local councils are starting to bring in mandatory registration and extra fees for landlords, and you can see why many aren’t as well off as the public believes. In fact, by forcing landlords to spend more time and money on their property portfolios many may even have to increase their rent prices to cover the costs. A number of landlord groups are starting to make plans to dispel negative stereotypes surrounding landlords, not only so they can run their businesses without prejudice, but also so that local councils work with them instead of against them.
With the recession hitting so many people so hard, it is understandable that many may be upset to hear that others are doing well because of it. As a landlord, you should understand this feeling, and keep it in mind whenever you are making any business decisions.