Right-to-buy and under-investment by central government have both taken their toll on the social rented sector (SRS). Whilst local authorities retain the obligation to house those in need, there are far too few homes available in the SRS to meet demand. Many housing associations and local authorities are looking to the private rented sector to fill the gap, offering private landlords long leases, a secure rental stream and professional property management to back this up. There is a hitch for buy-to-let landlords though: few lenders allow BTL borrowers to let property to local authorities or housing associations eschewing this valuable opportunity and frustrating attempts to expand property choice for social renters.
Borrowers will now be able to let their investment properties to social landlords for up to 5 years, provided that the property is subsequently sub-let to a private individual.
The move is in line with recent government initiatives which aim to utilise the private rental sector in order to help supplement the provision of social housing, and ease the ever increasing pressure on the social rented sector.
Austin Jelfs, Head of Sales & Marketing at Mortgage Trust says, “The pressure of immigration, the growing proportion of single person households, an ageing population and ambitious higher education targets will all add to the pressure on an already contracting social rented sector. The government has been looking increasingly to private landlords to help plug the gap. ‘Private sector leasing’ initiatives, which encourage private landlords to let their properties to local authorities for a guaranteed rental income over a number of years, provide investors with an extremely viable letting opportunity.”
Jelfs continues, “By extending our criteria to include local authority and housing association letting, our customers are able to diversify their property portfolios, utilise a healthy rental stream, and give something back to the community. “
