© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
During the past five years, while buy-to-let has been the new gold, and property programmes have bashed on about how it only takes some faux-wood laminate and a bevvy of brushed steel door handles to turn a dump into a desirable rental for ‘young professionals’, I’ve heard a different message coming back from flat owners who see their property as a home, not an investment.
Complaints about absentee leaseholders, unruly subtenants and fractured communities have been a steady, although muffled, accompaniment to the get-rich-quick razzmatazz. So, now that buy-to-letters, along with bankers and hedge fund managers, have become the new bogeymen, responsible for economic meltdown and the plummeting value of our flats, it’s hard to feel unalloyed grief at their woes.
Of course not all BTL landlords are speculators - there’s still a hard core of professionals out there, in it for the long haul, investing and letting responsibly. Nor is the BTL market dead. Rents have risen eight per cent in the past year. And, with mortgage famine and fear of negative equity driving more people to rent, there’s actually a shortage of good properties, particularly in London.
But the bubble that turned anyone with a few thousand to spare into a Sunday landlord has definitely burst. Research guru Richard Donnell, of Hometrack, identifies 2003 as the tipping-point. Mortgage rates and yields converged, so that investors had to rely on increased equity to keep investing. By 2004, according to Donnell, speculation on rising prices became the driving factor. With easy mortgages and builders’ discounts, canny speculators could enjoy a quick bang for small bucks by forgetting the ‘let’ part of the BTL equation, by selling flats on or even keeping them empty.
Meanwhile, thousands of ordinary people had jumped on the bandwagon.Many, distrusting the stock market, hoped to create rock-solid pensions. Some were greedy and dreamed of being overnight millionaires. Others were na¯ve, believing the promises of cowboy property clubs (now mercifully defunct) that a flat they had never seen, in a town they had never visited, would not only bring them unremitting capital growth, but would provide a steady income without voids, downturns in yield or defaulting tenants. According to Richard Donnell, it’s impossible to put an exact figure on BTL debt, and it will take until next year for the full extent of the problem to reveal itself, when over 50,000 apartments, still being built and around 70pc sold to BTL investors, come up for completion.
This is a dark cloud on the horizon for developers and for the housing market in general. But for flat-dwellers, the contraction of the BTL sector does provide a few rays of light amongst the gloom.
Back to those complaints from live-in leaseholders. It’s ironic that, as BTL has mushroomed, the government, which, when it considers flats at all, sees blocks through an idealistic haze as cosy little communities, has been busy producing legislation - enfranchisement, right to manage - that requires leaseholders to take concerted action. Hard to do when 70pc of your leaseholders live anywhere from Hong Kong to Moscow.
Problematic to find the statutory two leaseholders to sit on your board.
Difficult to shake off apathy and get stuck into community action, when your neighbours change every six months and couldn’t care about the gardens or the state of the bin room. While heavy service charge arrears may become a problem as surviving BTLers struggle with debt, in many respects blocks could become easier to manage, as well as friendlier places to live. A shrinking BTL sector brings other benefits too. Once the mortgage famine abates, first time buyers may be better able to compete for the sort of homes - run-down flats, ex-council properties - that offer a realistic first step on the property ladder, but were quickly snapped up by investors. And then there are all those repossessed BTL flats going cheap at auction.
We could also start thinking about what tenants want. There’ll always be a place for Buy-to-Let, and short-term furnished lets at market rents are fine for flat-sharers. But who wants to share a flat once they get past thirty? There’s a crying need for secure, unfurnished tenancies, for the sort of flats that councils used to build. And, as the government contemplates the country’s chronic shortage of affordable family housing, there are signs it’s waking up to this - the last housing rescue package included permission for councils to bid for housing corporation money, not as Arms Length Management Organisations, but in their own right.
Finally, BTL’s decline could bring higher quality flat-building. No more investor-friendly ‘luxury apartments’ with show-off living space, but bedrooms and kitchens too small for kitty-swinging - it’s notable that, as the government tries to persuade housing associations to take unsold properties off developers’ hands, one obstacle is that many of these flats fail the social housing sector’s more rigorous building standards.
So, the BTL crash is by no means all bad news for blocks of flats. OK, your flat is worth less and you may have negative equity, but if you can pay your mortgage, enjoy living there and don’t need to move, you don’t have a problem. It’s your home after all. And isn’t it time flats became homes again, not investments?
JANE BARRY IS A PROPERTY JOURNALIST