Educate would-be landlords before they enter buy-to-let

Property guru Kate Faulkner OBE wants to see the the property industry and financial advice sectors come together to give would-be landlords the right advice to make sure that they can stay in the sector when situations turn sour.

Speaking to agents while on the Lettings Insight Panel at the Propertymark One conference in Wembley this week Faulkner (main picture), also Chair of the Home Buying Selling Group, warned there was a danger of even more ill-informed landlords leaving the sector as mortgage rates spiral upwards.

JUST TALKING

TV pundit and property guru Russell Quirk was hosting the panel and wanted to know whether landlords were really leaving the sector or just talking about.

“Despite having been kicked around by the current government in regard to Section 21, Capital Gains Tax, thresholds changing, mortgage tax relief and now buy-to-let mortgages being substantially more expensive… my contention is that landlords are still having it okay. So is it really happening or have landlords ‘rarely had it so good’?” Quirk asked.

Faulkner repleid that landlords were definitely leaving the sector and that it had also emerged in the last week that some 450,000 properties would now be in trouble due to new mortgage rates.

She went on to cite one landlord who had five properties that were already losing money every month and that if they were to sell up today would net just £2,000.

“There is a serious business problem if you are highly leveraged. There isn’t a serious problem if you bought properties with cash or you don’t have a massive leverage,” she said.

We have this massive asteroid heading to earth.”

But she warned: “The government is worried about net zero whereas we have this massive asteroid heading to earth which is suddenly going to hit the politicians during the election where we have no homes left in the private sector. It has been decimated.”

UNDERSTANDING THE COMMITMENT

And she added: “Unfortunately, we have encouraged a lot of people into the sector who have not planned for this type of scenario.

“If there is one thing we should take out of this, when people are getting into buy-to-let we really need to make sure that they understand that it’s a 10, 15, 20 year commitment.

“We have to almost become financial advisers because it is their pension. People who aren’t doing well and are selling up are losing their pension and that’s not a good thing.

“I would like to see the financial adviser and property industry come together to give people the right advice.

“If this has taught us one thing, we just need to be a little bit more careful who we let into the sector to make sure that they can stay in it.”