Regulation tops landlord concerns

Nia Williams

January 13, 2010

Nearly six out of 10 (58%) landlords said that they were worried about the level of regulation required in relation to the running of their property business during the year.

Landlords operating in the private rented sector are already heavily regulated with an estimated 50 Acts of Parliament and 70 sets of regulations governing the sector, but more could be on the way. The Government has recently concluded a consultation on the launch of a national mandatory registration scheme for landlords and is due to report its findings shortly.

In addition, HM Treasury (HMT) is currently consulting on whether the Financial Services Authority’s (FSA) remit should be extended to regulate the buy-to-let sector. This is likely to tighten buy-to-let product availability and increase the cost of mortgages, which will have knock-on impacts for both residential property investors and tenants.

John Heron, Paragon Mortgages’ managing direct, said: “It is not surprising that regulation tops the list of landlords’ concerns for the year. They already have to comply with a myriad of regulations, which seem to be regularly added to or amended by the Government. Several new statutes have been introduced in recent years, including Energy Performance Certificates, tenancy deposit protection and Houses in Multiple Occupation licensing. Employing a good managing agent can help but individual landlords have ultimate responsibility to ensure that they are complying with the necessary rules and regulations.

“But regulation can also impact landlords indirectly. For example, if HM Treasury legislates to give the FSA the power to regulate the buy-to-let market, then buy-to-let mortgage product availability may decline and it could become more expensive to borrow. Any extra costs are likely to be passed on to the ultimate end user – the tenant – and could price the private rented sector out of the reach of some of the more vulnerable households. This must be avoided.’”

With buy-to-let lending levels subdued and mortgage product availability limited, landlords also expressed concerns about how they will fund property purchases in 2010, with 37% stating that they were worried about this. The buy-to-let sector is marked by a lack of competition, with just two lenders accounting for an estimated three quarters of current new business.

Other concerns included retaining tenants (32%), finding tenants (31%), tenant disputes (24%), and meeting mortgage payments (12%).

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