Assetz® News - UK buy-to-let investors face growing bureaucracy

UK buy-to-let investors face growing bureaucracy

25th July 2006 |

Potential investors in the UK buy-to-let market - particularly would-be student landlords – are facing growing levels of red tape in their attempts to invest in property, according to a new report.

But despite the bureaucracy clouding the path for potential buy-to-let property investors, consumer information website Moneyfacts.co.uk maintains there are still a number of advantages to be gained through involvement in the sector.

With growing numbers of students attending UK universities, landlords have quickly cottoned on to the sky-high rents they can charge for accommodation. However, it seems a growing number of students' parents are latching on to this idea and are becoming small scale buy-to-let investors in university towns across the UK.

Lee Tillcock, Moneyfacts business editor, explained that while the sector was buoyant there are a number of "red tape" issues, which should be considered fully.

He said: "While a buy-to-let property can seem an attractive option for parents of university children, they must consider the full picture carefully, weigh up the benefits against the costs of legislation, improvements to the property and be fully aware of the future rulings planned.

"Parents entering the buy-to-let market should, like any investor, view this as a long term plan."

For instance, investors who are looking to enter the student buy-to-let market should be aware that all properties with three storeys plus, five or more inhabitants and two or more households are liable to new legislation concerning living standards for Houses of Multiple Occupation (HMOs) – which could cost up to £1,000. Other upcoming legislation includes the heavily publicised Home Information Packs (Hips) – due to come into place on July 1st 2007 – and also the Residency Property Tribunal and Tenancy deposit schemes and the Housing Health and Safety Ratings System (HHSRS).

And it seems many investors are looking at buy-to-let investments in the longer term, with recent research from the Association of Residential Letting Agents (ARLA) showing that the average length of investment is 16.2 years.

Interestingly, further research this week has shown that property buyers spend on average a longer amount of time shopping for food than they do for their homes. The figures from County Homesearch suggest that UK house hunters will spend half an hour searching for that key property – just half the time that we collectively spend doing our weekly shop.

Jonathan Haward, managing director of the firm, said: "Buyers are often easily influenced by first impressions and wow factors and fail to take note of the detail that could prove the property is a costly mistake.

"We believe that the majority of people will spend longer choosing a pair of shoes and pouring over paint samples for their new home than they will in viewing that home. This results in many people wasting time pursuing hundreds of properties that are ultimately exposed as unsuitable for their needs."