© 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.
QUESTION
Dear News on the Block,
The buy-to-let (B2L) culture has taken off and estate agents and property management companies do not wish to bite the hand that feeds them. However, there is real and growing concern with resident shareholders to the B2L market; that it will reduce the effective management of blocks of flats that have ownership of the freehold. If too many flats are bought and let by B2L investors the integrity of the flats falls apart and management is undermined. The B2L investor does not wish to know about the issues of management as they are wholly interested in the investment aspect of the matter only. In blocks of flats in central London where money is no object the problem is less acute as the freeholders can contract out the management of the block to an external property management company.
We are in the process of having a new 999-year lease prepared. We have taken the liberty of including in it new clauses which forbid:
any person from having more than one share in the estate so as to discourage multi-ownership of flats in one block;
not to allow charities, housing associations or businesses to make investments so as to produce social dumping on our estate;
no further subletting over and above the initial let;
insisting on an initial residency period of not less than six months by the purchaser so as to deter B2L investors.
Peter McNally, Devon
ANSWER
The question assumes that B2L investors have a negative impact on the management of a development; an assumption that in my experience is incorrect.
B2L investors invest in property in order to generate and maintain wealth. In our experience of advising private investor clients, this translates into investors taking ownership very seriously. They realise that upkeep of the development is important to those that live there (both their tenants and other owner occupiers) and that a well-maintained development attracts quality tenants, and also enhances the rental income that can be achieved and the capital value of their investment.
Furthermore, well-informed investors ensure their property assets are cash flow neutral and geared at the correct level to ensure that meeting service charge payments is never an issue.
Rather than vilifying B2L investors and putting measures in place to prevent investors owning flats in the development, I would encourage your readers to welcome them with open arms; he or she could be pleasantly surprised by the effect that it will have on enabling the entire development to realise its true value.
David Mackenzie
Portfolio Manager – Young Group