Jennifer Clarke BBC Radio 4

Investors thinking about getting involved in buy-to-let have to consider a number of key risks.

How easy will it be to find tenants? And how long will they stay?

The Small Landlords Association reckons landlords should expect their property to be empty for 10% of the year.

That empty period, or void, can make quite a big difference to any profit margin.

And even if you do find tenants, unless you pay a letting agent to manage the property, you will also have the hassle of collecting the rent every month.

If the tenants do not pay, it is up to you to pursue them for the money - possibly even through the courts.

Radio 4 listener Richard Uff is keen to invest in property

But as Richard Uff discovers in BBC Radio 4's Inside Money, there is a scheme which appears to cut out many of the risks by offering an alternative to letting a property on the open market.

It is called the Private Sector Leasing Scheme or PSLS.

The idea behind it is simple. Local authorities with a shortage of housing stock persuade private landlords to rent properties directly to them.

It is much cheaper for the local authority to lease and manage properties from private individuals than it is to buy or build new housing.

Housing Association

In some cases the scheme is run in conjunction with a local housing association, in which case it is known as a Housing Association Leasing Scheme or HALS.

It is not clear exactly how many councils offer this kind of scheme, as the government department responsible, the Office of the Deputy Prime Minister, does not collate this information.

But the ODPM did tell Inside Money "The majority of councils offer such a scheme in London, South East, South West and the Eastern Region. Coverage is thinner as you move further north."

At the end of March 2002, there were approximately 21,500 leased properties in England.

This includes a mixture of Private Sector and Housing Association Leasing Schemes. The overwhelming majority of current leases are HALS.

The Scottish Executive says there are currently no similar schemes in Scotland.

Guaranteed rent

Richard Uff's local authority is South Hams District Council in Devon and they are desperate to encourage more landlords to get involved.

The council currently manages around 40 properties but has just been given permission to adopt another 20. And it runs a particularly attractive scheme.

It offers landlords a guaranteed rent, which it pays monthly in advance.

Housing Manager Jonathan Hunt feels both landlords and the community benefit

This means the landlord gets paid even if the property is empty, or if the council is in dispute with its subtenant.

In addition the council also takes on the day-to-day management of the property.

In fact, it guarantees to return the property in the same condition it was at the start of the lease.

No empty periods

So the council undertakes to put right any damage done by its tenants.

The only potential downside is that the rent offered by the council tends to be around 10% below the market rate.

But given that most letting agents charge around 13% plus VAT to manage a property, the council scheme could still be more profitable for landlords, especially as there would be no empty periods.

Jonathan Hunt, Housing Manager for South Hams says "I think it is a win win situation because the community is benefiting by attracting more housing for local people who are in need of accommodation, and private landlords get a guaranteed rent, so there are fewer risks for them."

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If you would like information about whether your local council offers a similar scheme, contact the housing department.

Be warned - the schemes are not very well known, and the first person you speak to may not know anything about it.

Make sure you refer to it as the Private Sector Leasing Scheme (PSLS) or Housing Association Leasing Schemes (HALS).

If in doubt, ask the person to check and get back to you.

For details of the South Hams Private Leasing Scheme featured in the Radio 4's Inside Money programme, you can contact the council at the following address:

Housing Advice Office
South Hams District Council
Follaton House
Plymouth Road
Totnes
TQ9 5NE

Tel: 01803 861234