Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.

The property industry in England welcomed the surprise election result this month with some relief.

The dreaded mansion tax threat, which had slowed the London sales market to a standstill, and Labour’s threat of drastic changes to the Private Rented Sector (PRS), coupled with highly misleading opinion polls, had already started an exodus by some buy-to-let investors.

This relief has not be repeated in Scotland and Wales. Here planned legislation changes to the PRS still pose a threat a big to landlords. It would seem a majority of politicians in these devolved regions of the UK see buy-to-let as being so lucrative that it can stand a big dose of regulation, almost mirroring that of the 1950s and 1960s. What they don’t seem to appreciate, or perhaps they don’t care, is that today’s buy-to-let investor will no more stand for control over their properties being taken away from them than did landlords back then.

In England, with the success of buy-to-let, now representing 20 percent of households and growing, it is perhaps inevitable that the industry will face more regulation. This is being brought on by those in the industry prepared to flout the law (beds in sheds etc.) and local authorities’ lack of resources or their lack of the will to enforce the already adequate laws to tackle the problem.

Consequently MPs feel the only answer is yet more laws: very likely extending the reach of mandatory licensing, perhaps lowering the threshold from three stories and five or more unrelated occupants, which the Residential Landlords’ Association (RLA) says is planned. The “revenge eviction” law is already passed, and there’s the threat of giving tenants an automatic right to sub-let.

A national roll-out of immigration checks on tenants by landlords, following a pilot in the West Midlands, has been announce by David Cameron and was included in the Queen’s Speech.

A further threat on the horizon to the small-scale buy-to-let landlord is the growth of institutional involvement in the industry. The professionals are waking up to the potential of residential investment which will be in large blocks of professionally managed rental units, as pointed out in our lead article today.

With government encouragement this type of development is beginning to take off and will inevitably have an effect on the lettings market wherever it takes place. However, we know from the statistics and predictions that the lettings market is very big; the growth prospects are such that the overall effects of increased high quality supply will be minimal for some time to come.

New rules for the full advance disclosure of letting agents’ fees came into force on the 27th of May. Agents are now under a legal obligation to fully disclose and explain their fees under the Consumer Rights Act 2015. Landlords are not directly affected unless they help manage properties for others, though they are still under a legal obligation to be open and honest about charges and when describing their lettings.

Landlords of properties where a deposit was paid before 6 April 2007 and where the tenancy continued as a periodic one after that date (which was the situation in the Superstrike case) DO have to protect the deposits, but have until 23 June 2015 to get this done. Provided the deposit is protected and the prescribed information is served by that date – you will not suffer any penalty and will be able to serve a valid section 21 notice if you need it.

The upshot of all these regulations and changes in the lettings market, as I see it, is that the opportunities will remain for landlords investing in buy-to-let for a long time to come but (1) they must be prepared to be diligent in the way they manage their tenancies, more time and administration effort will be involved from landlords and their agents, and (2) accommodation standards will need to be high to attract and keep tenants against what is likely to be increasing competition in future.

Tom Entwistle, Editor

Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.


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