Government Gives Buy To Let To Big Business

Last night at my property club meeting I had an interesting discussion with our speaker Peter Herd.

We were chatting about the future of Buy To Let and where we see it heading in the near an long term.

Both Peter and I agreed that in our opinion we could quite easily view a future where a complete turn around to the way property was done in the past will return. Many of you will know that I was brought up in a building family, so renovations lay at the heart of my investing.

The relatively new phenomena of Buy To Let has never sat that well with me. The ease of finance brought with it waves of folks trying their hand a ‘property landlording’ without knowing the first thing about the laws, regulations or tenants they could get lumbered with. Not to mention how to get out of those deals if it all went sour, or what happened if the market upped and changed on you at the drop of a hat. These last two points are very important too.

I was always taught to invest with a simple formula:-

1. buy cheap

2. fully cost out the project

3. sell for profit

Many investors are no not so enamored with Buy To Let as a pension or profit vehicle anymore. I can see the potential for BTL dying off as folks gradually sell their properties in favour of an easier life with no tenants to deal with and no worries over interest rates going up and down like yo-yo’s. Most of the newer landlords that have sprang up in recent years are heartily fed up with the cash cow with dried up udders that was supposed to supplement their pensions or make them wealthy. In many cases it has had the opposite effect of dropping them in very hot water and trapping them due to the lack of finance and falling market conditions.

The government would like to see big business running the private rental sector too and are in advanced talks with  Aviva Investors, Aegon, Legal & General, and the Wellcome Trust about a £1bn fund launch to finance a private-rented residential property sector managed by big business. This is bad news for existing landlords I think. I can quite easily see a government trying to find ever increasing ways to force landlords out of the market so it can be given over to big business.

Of course the root of all this is money as always. By being directly involved in the sector the government get to a) control it  b) get a larger portion of the pie for themselves. Hence finding yet another way to pay off the huge debt they have landed us with.

This can only lead to more coffers in the govt vaults. Call me cynical if you will, but I feel the only area open to property investors will be to go back to traditional ideals as mentioned above or invest outside the UK. This type of system is done in America already. ( Successful wasn’t it??) Yet again we are heading in a more standardised American way of doing things. Can we not have any of our own ideas anymore? Is our government incapable of thinking for itself?

I’d love to hear your thoughts on this one, please add your comments below.

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