Housing Scheme Finds First Landlord Success
Tuesday, April 15th, 2008
on behalf of Orchard & Shipman
The first landlord to sign up to an innovative scheme to help East Lothian Council tackle the problem of people in housing need is encouraging others to follow his lead.
Orchard & Shipman signed an agreement with East Lothian Council late last year to find and manage private rented homes in towns and villages across the area.
The Private Sector Leasing (PSL) scheme will allow the Council to provide quality accommodation to people who may have lost their homes through, for example, relationship breakdown or unemployment, instead of looking at temporary housing options such as expensive B&B’s.
Mark Crane, who owns East Lothian Extinguishers, was the first landlord to get on board the scheme with his two-bedroom flat in Haddington.
Mark, 37, of Haddington, said: “Being self-employed takes up a lot of my time. I was attracted to PSL because it takes the hassle out of having a buy-to-let property. Orchard & Shipman manage the property for me, find tenants and there is a guaranteed rental income for five years.
“I have lived in Haddington for 12 years so I was keen to invest in an area I knew. When I read an article about the PSL scheme being extended here I knew it was something I wanted to find out more about.
“I know investing in East Lothian is profitable as house prices have rapidly risen over the past five to ten years. But it is still a lot cheaper than Edinburgh and the return on my investment is a lot better.”
The average price of a property in Haddington was £197,812. That is up £71,664 on the 2003 average price of £126,148. Year on year there has been around a 7% rise, apart from a freak leap between 2004 and 2005 when there was a 32.5% increase, the highest in East Lothian.
And East Lothian as a whole saw reasonable rises since 2003. The average price of a home in the region in 2003 is £86,222. By 2007 this had risen to £202,346.
Mark added: “I have not invested in property as a way to make a quick buck – I understand it is a long-term investment. The capital gains to be made in property are an ideal way to build up an investment portfolio.”
The first PSL contract in Scotland was signed between Orchard & Shipman and The City of Edinburgh Council (CEC) in September 2005, with the company required to find 1,500 properties by 2010. Such has the success of the Edinburgh scheme been that Orchard & Shipman has already secured some 1,100 properties – two years ahead of target – and the scheme is already the largest of its kind in the UK.
Midlothian Council tendered first to set up a PSL contract but was later joined in a combined tender by Scottish Borders and East Lothian Councils – providing a good example of local authorities saving money through joint working towards a shared objective.
There have already been more than 1,000 interested inquiries from would-be landlords across the three regions.
Angela McLachlan, Director of Operations Scotland for Orchard & Shipman, said signing up the first landlord so soon is a major landmark for PSL in East Lothian.
She said: “This shows the level of interest for PSL in the area already. We are looking forward to getting more interested landlords signed up and get the scheme in East Lothian, as well as in the Scottish Borders and Midlothian, as firmly established as it is in Edinburgh.”
Angela said PSL is an important tool that councils can use to address what is an increasingly important social issue in their communities – as well as allowing private landlords to feel they are giving something back to society.
She added: “PSL works because it benefits the council who faces huge demand to provide housing, the people desperate for quality accommodation in areas that they want to live in and private landlords who see the benefits of long-term income for their investments.”
Landlords are attracted to the scheme as they receive a guaranteed rental income, with no voids, for three to five years with no agency fees.
A recent Bank of Scotland’s Rural Housing Review revealed that East Lothian is the least affordable area for property in Scotland when compared to average earnings and it has the second lowest percentage of first-time buyers. The percentage of private rented property in the region’s entire housing stock is 21 per cent, all of which highlights the difficulties the council has in finding available properties to house people in housing need.