Buy-to-let landlords deserve our help

Buy-to-let landlords aren't greedy, money-grabbing villians - they're victims of an unfair system and they deserve our help, argues John Fitzsimons.

Is there a bigger pantomime villain than a buy-to-let landlord? The mere sight of such an investor is liable to prompt boos and hisses from a British public currently enjoying a large dollop of schadenfreude at landlords' current troubles.

There may be trouble ahead

And they certainly do have a lot of troubles.

Just last week, research from the BBC suggested the repossession situation with buy-to-let properties is far worse than it seems, as the official figures do not include certain cases.

Rather than go through the official channels, a lender can instead appoint a receiver of rent, who replaces the landlord in taking the rent and passing it on to the lender.

When you take those into account, there have actually been 4,100 buy-to-let repossessions in the first quarter, more than double the official figure of 1,700.

And now the Council of Mortgage Lenders has published guidance for buy-to-let lenders when their borrowers fall behind on payments, emphasising lenders must act fairly and take individual circumstances into account before repossessing.

It described Government plans to legislate the repossession of rental properties as "sketchy", and with that legislation unlikely to be in place before 2010, the Council is clearly a little worried that certain lenders will take advantage.

We need a strong rental sector!

Our blasé attitude towards the plight of landlords is not a good thing.

Too often we overlook the fact that a strong rental sector is essential. Home-ownership is not a right, nor is it right for everyone.

And while the social rental sector does a good job, I think it is vitally important to have an equally strong private rented sector, to help take the pressure off the state. The private rented sector has also been a great success in improving the standards of rental properties.

Landlords are getting a rough deal

Whenever the topic of an owner-occupier being repossessed is raised, there is always a lot of handwringing, and calls for that person's individual circumstances to be recognised.

Perhaps they have lost their job, or their partner has upped and left, and that's why they have fallen behind on their mortgage payments.

However, landlords are never afforded the same luxury. If they fall into arrears, it is automatically because they over-extended themselves financially, they were greedy or they took too big a mortgage.

Yet research from the National Landlords Association in March found that 37% of landlords currently have tenants behind on their payments. Indeed, over the past six months, around 44% of landlords have at some point had tenants in arrears.

That's not the fault of the landlord, and yet because of those missed rental payments, they may fall behind on their own mortgage payments, putting them at the mercy of the lenders.

What's more, the lenders know that they even have the law on their side.

I fought the law and the law won

Back in November, a ruling at the High Court affirmed the right of lenders to take advantage of the Law of Property Act (1925), which allows them to take possession of a property without explicit permission of a judge after just two missed payments.

A Private Members Bill has been introduced in Parliament to try to amend this law, but we are still at the reading stage, so it will be a while before it can come into law.

And while lenders are unlikely to risk the inevitable public backlash that would follow utilising the law on an owner occupier, there is no such hesitancy with a buy-to-let mortgage.

Indeed the case that prompted the ruling was the repossession of a buy-to-let property!

A Landlord Mortgage Support Scheme?

So what should be done? Personally, I like the idea of a buy-to-let version of the Homeowner Mortgage Support Scheme.

Under the current scheme, mortgage owners are able to defer interest payments on their mortgages for up to two years.

Why not extend this to buy-to-let landlords? It would mean that they could afford similar breathing space to their tenants, if they are also struggling with their payments.

And it's not like such an extension will somehow damage the scheme - so far, the scheme has only helped two owner occupiers!

Landlords on the whole do a great and invaluable job, and our property market needs them - there are currently more than one million buy-to-let mortgages in place.

That's a lot of landlords at the mercy of circumstances beyond their control, just like normal homeowners.

Yes, they might make a bit of money out of it - and good luck to them if they do - but right now I think they also need our help.

More: Buy-to-let investors are getting what they deserve | Help your kids buy a house today!