15th June 2004

It will be difficult for the rumoured bursting of the Buy to Let Bubble to happen. This is due to the constantly evolving and increasing segmentation of the market and the consumer approach to protection for tenants, delegates to the ARLA Seminar will learn at Property Investor North in Manchester this week.

Robert Jordan, FRICS and President of ARLA, will remind Buy to Let investors that one of the signs of a mature investment market is in its appeal and application to many different types of investor. He will also point out the benefits to landlords and tenants of Law Commission proposals and the new ARLA backed Tenancy Deposit Scheme with its independent dispute resolution.

"When ARLA launched Buy to Let we started with what has become traditional Buy to Let. This is where a long term investor looks to both maximise rental income and enjoy a capital gain," Robert Jordan explained.

"Now there is a new phenomena in the market, 'Nest-Egging'. This is when Buy to Let investors put down a fairly high deposit to acquire a residential investment property. Their expectation is to cover costs or even to live from time to time with a negative return. This is not a concern as the objective is to save with the help of rental income and make a long term capital gain."

"There is the traditional Buy to Let property bought for letting to a Private Rented Sector tenant. Now, local authorities are looking to the Buy to Let investor to help them satisfy their stock requirements. Already, there is a new breed of investor landlords using ARLA member firms who work with local authorities to supply housing stock on long term tenancy agreements."

Robert Jordan also pointed out that when the Chancellor finally followed ARLA advice and introduced Property Investment Funds, the entire psychology of vacant possession had changed. There is a growing market in ready-tenanted Buy to Let properties.

"As a result," said Mr. Jordan, "I believe that investment funds for residential property will have a minimal impact. The Private Rented Sector and probably local authorities too, can manage very well without them and it is important to recognise that many investors no longer have faith in any form of managed funds."

Mr. Jordan said that ARLA looks forward to the proposals of the Law Commissioner Professor Partington becoming law. These are to sort out the anomalies between the still wide variety of tenures. "We will then have a relationship between landlord and tenant guided by the principles of consumer law, giving the value for money and the same legal protection we all expect and accept in every other marketplace.

"This new relationship between landlord and tenant has already been enhanced by the Tenancy Deposit Scheme for Regulated Agents, TDSRA. This came into being last month and we hope and expect that the other professional bodies, the RICS and the NAEA, will join ARLA in the scheme. It will greatly simplify the task of both agent and landlord and reassure tenants that they will get a fair deal through independent arbitration should it prove necessary. We look forward to learning the detail of the government's proposals for their compulsory scheme," he added.

ARLA believes that it is likely that government will introduce legislation for statutory deposit protection in the current Housing Bill going through Parliament. However, it is expected that the professional bodies, ARLA, RICS and NAEA will operate schemes that meet - and probably exceed - the criteria required by the new legislation.

For details of ARLA and Buy to Let and to find ARLA member letting agents and members of the ARLA panel of Mortgage lenders visit www.arla.co.uk or call 0845 345 5752. Full details of the new Tenancy Deposit Scheme are available on www.tds.gb.com.

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