Gearing up for change
Andrew Strange talks to a sale and rent back landlord who is pleased that the Financial Services Authority is planning to regulate the sector
Andrew Strange
“Asking an expert to stress test your portfolio to see how it might survive the downturn could help you decide what action to take.”
The Financial Services Authority’s plan to regulate the sale and rent back sector has been welcomed by landlord Richard Caplan, who owns dozens of such properties in Scotland.
Richard has a portfolio of 70 properties and purchased 85% of them on a sale and rent back basis. He aims to provide an alternative option for his tenants, which allows them to stay in their homes if they find that they are unable to meet mortgage payments in the difficult economy.
However, there have been some rogues in the sector that have created bad publicity and made it very difficult for good landlords to secure finance. He believes that more regulation will help rather than hinder his business.
Looking after tenants
He says: “It will get rid of the opportunists and the landlords that will remain will be those with a long term approach to the business and with tenants’ needs at heart as well as their own.”
Richard began building his portfolio seven years ago and believes that sale and rent back can offer big advantages to some people. He purchases the properties at a lower price but commits to long leases.
He says: “The most important thing I look for is whether I can work with the tenant. I’m very careful about who I get involved with and if sale and rent back is not in their best interests as well as my own I don’t go ahead with it.
“However, if the tenant is up to their neck in monthly payments and I could reduce it significantly for them I would do the deal.”
The efforts of good landlords like Richard have been hampered by rogues and the Office of Fair Trading recently identified a range of bad practices. These include deals that are not in the best interests of the consumer, misleading people about the security they have as tenants, and even substantial rent increases or eviction after a short tenancy.
Getting support
Despite the resilience of the sale and rent back sector, Richard was worried about his fixed rate deals. However, after arranging a meeting with his local Mortgage Express Area Portfolio Relationship Manager Alistair Johnston, he now feels much more confident.
He says: “Twelve months ago I was extremely worried about what would happen to my fixed rate deals. Having met Alistair, I felt we were on the same team and we could get over any problems.”
Invite Mortgage Express for a visit
As a responsible lender, Mortgage Express is working with portfolio landlords to ensure their business plans are robust. That’s why our Portfolio Relationship Managers are offering to work directly with landlords who have six or more Mortgage Express mortgages, to provide support and advice.
They can share best practice with you and carry out a stress test on your portfolio to help you, and us, understand how well prepared it is to survive the recession. We will also talk to you about how you are finding the market, what your plans are for the future and make you aware of the services we can now offer following nationalisation. Our Portfolio Relationship Managers can come and visit you or your property anywhere in the UK, or we can provide dedicated support from our Head Office team.
If you have six or more Mortgage Express mortgages and would like to speak with a Portfolio Relationship Manager, call 0800 591193. (Calls may be monitored and recorded. 0800 numbers are free from landlines but may be charged from mobile numbers. Check with your provider.)
