Landlords link with councils in win-win housing scheme
Evidence emerged this week that the credit crunch could be starting to affect buy-to-let landlords.
The Royal Institution of Charted Surveyors (Rics) said instructions to let residential properties in the UK fell in the fourth quarter of 2007 – the first decline since its 1998 survey.
The fall is thought to be partly a result of less competitive buy-to-let mortgages being available as lenders tighten their criteria.
Given this uncertain environment, landlords are looking for as much security as possible when it comes to letting out their properties.
They can find this security through an innovative scheme allowing councils – in partnership with the private sector – to provide quality accommodation to people who have lost their homes.
It should also provide landlords with long-term tenants as the scheme guarantees rental income for up to five years.
Known as private-sector leasing (PSL), the scheme is run by Orchard & Shipman, a private-sector manager of leased social housing in Scotland and England.
PSL means that those who have been made homeless, perhaps because their relationship has broken down or they have been made unemployed, can rent a property at an affordable cost, rather than being forced into expensive temporary housing, such as guest houses.
PSL now operates in Edinburgh, Midlothian, East Lothian and the Scottish Borders. In Edinburgh, the aim was to provide 1,500 properties by 2010. As it already has 1,200, it is way ahead of schedule.
Landlords are attracted to the scheme as they receive a guaranteed rental income, with no voids, for three to five years with no agency fees.
Father-of-two Kevin Whyte, who bought a two-bedroom flat in Newtongrange after hearing about PSL, was the first landlord to get on board the scheme in Midlothian.
Whyte, 36, who owns a cleaning company, said: “I heard of so many people investing in property but the risk had put me off in the past. I view this as a long-term investment, one which will help when I retire. There is always an element of risk being self-employed. Investing in property is a safeguard. It is also nice to know I have that investment for my two children. Midlothian is a great place to invest as I have found property prices to be lower than other areas. PSL is a great scheme for investors here.”
There are currently 3,600 people on Midlothian Council’s housing waiting list, with about 800 homeless cases being presented every year.
The proportion of private rented property in the district’s entire housing stock is just 5 per cent, which highlights the difficulties the council has in finding available properties to house people in housing need.
A Midlothian Council spokesman said: “The council is very aware of increased numbers of those seeking housing and the waiting times involved. We are confident that PSL will have a major impact in alleviating these issues.”
Angela McLachlan, head of social housing Scotland for Orchard & Shipman, said: “Signing up our first batch of landlords and tenants so soon is a major landmark for PSL in Midlothian.
“The scheme works because it benefits the council, the people desperate for quality accommodation and private landlords, who see the benefits of long-term income.”
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