In Conversation with… David Lawrenson
March 27, 2014
There’s a plethora of leading figures in the property, investment, finance and charity sectors who we’re regularly in conversation with, many of whom are guest authors for PRSupdate. If you would like to feature in this series, or to suggest someone who might, please get in touch through our contact us page or let us know on twitter. Why not take a lucky dip into our In Conversation archives and discover:
- Jasper Goodford, Relationship Director – Real Estate Finance at Santander
- Susan Fitz-Gibbon, President of ARLA
- Liz Peace, Chief Executive, British Property Federation
Today we speak with David Lawrenson, Director of LettingFocus.com.
David, can you tell us a little about your background?
I started as a landlord 30 years ago and gradually built up a portfolio of properties, mostly in London, whilst also working as a consultant and project manager for companies like Lloyds Bank and Direct Line. I really wanted an alternative to the standard workplace pension and investing in property gave me that.
Publicly, I’m probably best known as the author of the UK’s highest selling personal finance book, “Successful Property Letting – How to Make Money in Buy to Let”. At the time lots of the books about being a landlord and residential property investor were very poor and I thought I could write a better one. So, I jotted down some ideas, got it published and it went on to sell a lot – 55,000 copies, over four editions, since 2005.
For those who may not know, can you briefly explain your role?
In terms of my consultancy role for corporates I try to help organisations better understand the PRS. For banks, and other mortgage lenders with buy-to-let mortgage products, it might be to help design the underwriting of the mortgages to ensure they win profitable business. What we do and the sorts of organisations we work with can be quite wide ranging, but it is always connected with the PRS.
What are the major challenges faced by the Private Rented Sector?
There is a real danger of over-regulation and/or the wrong type of regulation. I think some of the reasons for this comes from the fact that the PRS has grown so fast and the government has failed to recognize this. We urgently need people in local government who really understand our sector.
This really is a pressing need as I have yet to meet an executive or councillor, at any local authority, who has a housing background at a senior level. Sure, there are some good people at the “coal face” of the local authorities who are doing their best, and understand the PRS, but at a senior level there is a massive gap in the understanding of what the PRS is all about.
The default position of government to something big is “let’s license it” (just before, “let’s tax it more”). Hence we see a rush of local authorities scrambling to copy Newham’s borough licensing scheme, even though that scheme was, in my view, based on questionable data and there is no evidence that licensing itself has achieved anything in that borough that would not have been achieved without it.
What are your thoughts on how the Private Rented Sector should be regulated?
I think that we need a greater level of regulation of letting agents. Also, there are some obvious basics, such as a need for an electrical safety check when a property is first let and then every two years after. A requirement for carbon monoxide detectors also seems sensible.
The penalties for criminal “landlords” are nowhere near as harsh as they should be – and I would like to see the local authorities being able to keep the monies gained from successful prosecutions and penalties, so they could then look sensibly at whether to drop the various borough licensing schemes.
What can the government do to open the PRS to more investors?
Quite a lot has already been given to large scale investors. Perhaps more could be done on the planning rules to enable more building for private rent to take place. I also like the London Assembly’s push for more accreditation – that has to help raise the standards in the sector and make it more palatable to all investors, who perhaps worry about reputational risk. However, I am very doubtful that, with the current plans, they will achieve the desired number of accredited landlords.
What does the future hold for the Private Rented Sector?
I will answer this question in more depth in my article for the June Newsletter but I am sure we will see more regulation, and not all of it for the good of the industry.
I also believe there will be more attention placed on how to make investment in the PRS work for the institutional investor – in particular via better design of the initial product and also a focus on reducing the costs of finding and managing tenants.
Finally, do you have a favourite London landmark?
My home – seriously. And also The Shard.