- THE FUTURE OF PRIVATE RENTED PROPERTY
THE
"biggest upheaval in housing legislation for over 25 years" is about to become law which is to take effect in August next year.
It could change the face of the private rented sector forever and destroy the popular buy-to-let market in the process.
When the Housing Bill receives Royal assent, expected by the end of November, many professional proprietors may disinvest and turn to other business warns the Residential Landlords Association.
"And if that happens, the rogues would move in which is the complete opposite of what the Government
intends.
Tenants will face higher rents as compliance costs are passed on. And many small landlords are likely to leave the sector, too. They will not want to lose control of deposits or face the cost and trouble of dealing with what they see as bureaucratic local authorities."
Said the RLA Chairman, Alan Ward.
The Residential Landlords Association, whose members own over 100,000 UK properties, has worked closely with the Government during the Bill's consultation process, but is still apprehensive about its likely effect on the property market.
"The Government has agreed to relax some of the more Draconian features as a result of the RLA's arguments,"
says Alan Ward, "but many others still remain and add up to a huge bureaucracy.
Some of the more recent buy-to-let investors, up to a third of the country's current 750,000 landlords could learn a harsh financial lesson. These 'amateur' landlords who were attracted to invest in the buy-to-let boom and manage their property through agents, could face more red tape than they bargained for.
Some invested to boost their pension, others just wanted a quick capital gain, but they didn't expect to cope with the mystifying licensing laws that this Bill contains.
What might have begun as a property to see a son or daughter through their university years could now need licensing as a House in Multiple Occupancy and be governed by strict legislation.
To fall foul could mean a £20,000 fine and the loss of a year's rent. And, in the meantime, landlords would not even be able to obtain possession.
Different local authorities will have different criteria for other forms of 'selective licensing' there is no national standard and landlords in breach will not be allowed to operate. They will be stripped of their entitlement to rent, which may affect their ability to pay the mortgage. And, an 'illegal' property owner would not be able to give a Section 21 notice to end a tenancy. Therefore the property can't even be sold. Therefore backing the owner into a corner!
Those that do make it through will face the cost of obtaining licenses
as well as carrying out costly works which will be needed to ensure compliance."
But the licensing issue is only one of the provisions to cause concern.
For the first time, many property owners will have to apply to license
their properties and, in order to pass a 'fit and proper person' test, their backgrounds will be examined.
Deposits will either have to be paid to a Government appointed body or be underwritten by insurance.
Where a property is not licensed a Management Order can be made. This means the local authority can take over and run the property. Rent will only be handed over to the landlord when expenses have been met.
If a property is unoccupied, the local authority will be able to make an Empty Homes Management Order to take over the property, authorise costly works at the landlord's expense, and then let it out them.
Antisocial behaviour provisions, contained in licenses, mean that a landlord will be responsible for controlling tenants and failure to comply could mean loss of
license.
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