PRIVATE SECTOR LANDLORDS NOT SO BAD AFTER ALL

There could be 700,000 private landlords in England, many with two to four properties and 33% with just one. Nearly one in five privately rented dwellings was once the landlord's own home.

However the reports says many tenants choose to rent - perhaps because it suits their lifestyle more than the commitment of owner occupation. A quarter of tenants in the private sector earn over £30,000 a year, with 8% topping £50,000.

"While the private rented sector houses a similar proportion of the very poorest households as social housing (provided by local authorities and housing associations), poverty is not nearly as concentrated as in the social housing sector," the report says.

"Indeed, parts of the private rented sector accommodate the wealthiest households."

This analysis sits uncomfortably alongside strong criticism aimed at Buy to Let landlords for the past decade, who have been blamed for pushing up house prices, squeezing first-time buyers out of the market and speculating at the expense of other people's lives.

Now, it seems, private sector landlords might not be all bad. But this report grudgingly gives them two marks out of three - and barely 1.5 in some cases.

Catherine Glossop of Centre for Cities, a contributor to the report, says: "Many private landlords are involved as a sideline activity and face severe capacity and resource constraints. The result in some cases has been a lack of professionalism and poor management standards.

"Reports of insecure tenancies, poor-quality stock and overcrowding are commonplace, particularly, but not exclusively, at the lower end of the market."

The central argument in the Centre for Cities report is that an investment climate must be created which brings major institutions back to private renting.

Rosamund Taylor, a spokeswoman for the report, says: "We argue for the return of major institutional investors - pensions companies, and big insurance firms - able to work alongside responsible management companies to produce secure tenancies which remain unaffected by the sort of downturn we see at present.

"For example, it would ensure tenants would be less likely to have to look for somewhere else to live, which tends to happen if a private landlord sells up.

"The crux of our case is that institutional investors are best placed to invest in rented property on a large scale."

At present, professional investors are reckoned to hold only 5% of the total private rented stock.

As far as small landlords are concerned, the report suggests capital allowances are used to encourage landlords to upgrade older homes over 70 years old, with spending on capital works on kitchens, bathrooms windows and heating systems set against income tax at the time of completion, instead of charging them against capital gains tax at the time of eventual resale.

However, Malcolm Harrison, spokesman for the Association of Residential Lettings Agents (ARLA), says: "We remain convinced private sector landlords have a key role to play.

"The typical investor commits for the long-term, is cautious with a small loan compared to the value of the property, and won't seek a sudden exit in a downturn. They see it as a method of saving for retirement.

"Those getting their fingers burned at present are mainly 'Buy to Flip' investors who were tempted to buy in Northern cities by rental guarantees for two years from developers.

"When they try to sell, they can find the value of the property has not gone up - and may well have fallen."

INFORMATION: The Future of the Private Rented Sector is published by Centre for Cities and The Smith Institute.

:: SOUTH-EAST HOMES STRONG ENOUGH TO AVOID MARKET SLUMP

After its property prices climbed 7% during 2007, South-East England is likely to escape with only 'limited' falls in property prices during 2008, "on a par with Greater London and still outperforming the wider UK market".

That's the view of leading London and country agents Knight Frank, which points out that the number of households in the region is forecast to rise by 36,000 homes per year until 2026, against a likely supply increase of only 27,500.

The analysis also suggests some variety in the performance of the housing market, with established 'hot spots' set to race ahead.

"The South-East housing market continues to outperform the UK average essentially because of the region's economic strengths: strong productivity, high rates of employment and the fact that median earnings are on average 10% higher than the national average, have contributed to an additional market driver - wealth," the Knight Frank analysis says.

According to the report, the average home in South East England has risen 102% in value since 2000.

"In fact, for the 31% of the region's households that own their own home outright, this has meant the market's performance since 2000 has generated on average £116,700 in equity over the eight year period," it says.

Regional hot-spots during 2007 included South Bucks and the Wealden area of East Sussex, where prices rose by more than 19%. There were similar rises in coastal locations including Adur (Shoreham-by-Sea) and Hastings, both involved in major regeneration schemes.

Other positive influences on the housing market, says the report, include planned improvement to transport links, like the new high-speed rail link between St Pancras, Ashford and the Kent coast, and the new Hindhead tunnel on the A3 in Surrey.

Even the drive for more energy efficient 'eco homes' could boost the South-East: besides three proposed 'Eco-towns', the Ashford (Kent) Growth Area and growth points in Maidstone, Basingstoke, Reigate and Banstead will deliver nearly 51,000 new homes by 2016, all with a "strong eco-bias".

Knight Frank says that investor interest will sustain Shoreham-by-Sea (where major regeneration is already under way), Chichester, Canterbury, the Kent coast and rural locations between Tunbridge Wells and Ashford.

Canterbury will be only 61 minutes away from London - "almost on a par with Brighton and Tunbridge Wells" - when the new hi-speed rail link opens in December 2009.

Meanwhile, Chichester has over 38% of its residents classified as "comfortably well off", against 28% nationally. It will need an additional 111,000 new homes between 2016 and 2026.

Knight Frank's bullish predictions for South-East England are based on the that the end of the 'credit crunch' is not too far away.

"Our assessment is that the South-East will experience at best moderate price falls in 2008," Knight Frank says.

"However, there is a risk of more significant falls should the mortgage market not see any improvement over the next six months."

:: WHY SOME HOME PACKS TAKE (MUCH) LONGER TO COMPILE

Will Home Information Packs (HIPs)- made legally compulsory by the Government to simplify the house buying process - necessarily speed up the purchasing process when you find a buyer for your home?

Don't bank on it. A report in The Negotiator, the estate agents' magazine, claims that compiling the packs in some areas is increasingly difficult because local authorities take so long to respond to local searches.

The report says Hillingdon in West London is the slowest council out of 250 local authorities in England, requiring 33 days to turn around land searches made by HIP compilers.

Gravesham, Kent, needs 29.5 days, followed by Greenwich (23), Hackney (19,34) and Copeland in the North-East (16.7).

By contrast, South Staffs DC is turning enquiries around in 2.5 days, followed by Harrow, North London (2.72); Christchurch BC (2.8), South Ribble BC (3) and Crawley BC (3.13).

The survey also found that some local authorities impose restrictions to data access: Copeland BC, for instance, allows unlimited searches between 10am and 12pm on Friday mornings, but only by appointment.

Walsall Council allows five searches per day, but only with an appointment made online at least seven days in advance of a visit.

At least one company that compiles HIPs on behalf of vendors is threatening to sue the slowest local authorities and is demanding action from Hazel Blears, Minister for Communities and Local Government, "before the housing market collapses under the weight of local authority ineptitude".

:: COLLAPSE OF NEW HOMES MARKET COULD AXE 150,000 JOBS

The number of new home completions is set to fall from 175,000 in 2007 to 135,000 in 2009, according to the economics consultancy which led the way in predicting a major 'correction' to the housing market.

The plunge means that Government targets of 240,000 new homes a year to be built by 2016, and a total of 3m by 2020 will be missed by a huge margin.

But it also means the housing collapse could develop into a wider slump hitting the entire economy.

According to Capital Economics, housing construction activity has been in 'sharp decline' since January as builders recognised they had rising levels of unsold stocks.

Buyer interest has plunged because of the problems of getting a mortgage and fears of further price falls.

Capital Economics thinks the slump will spread to the wider economy, knocking around 0.3% off GDP growth in 2008 and 0.9% in 2009, causing the loss of 150,000 jobs in construction in the next two years.

Persimmon, one of the largest house builders, has suspended construction work on new sites until market conditions improve. Many smaller rivals are taking the same step.

The Home Builders Federation (HBF), whose 300 member firms account for some 80% of all new homes built in England and Wales, has detailed the rescue package that the Government needs to put in place to save the industry from meltdown.

Its proposals include a 0.5% cut in interest rates, a stamp duty holiday for first-time buyers, a permanent rise in the stamp duty threshold to £250,000, a £50bn special liquidity package, abolition of HIPs, and the return of mortgage interest relief for first-time buyers and parents helping children onto the housing ladder.

ends