Buy to Let property investors in the UK market may be interested to learn that the coalition government has decided not to press ahead with the uptake of a new national register for landlords within the country.
The plans to introduce a national database, which were put forward by the Labour government, were described as having the potential to manifest themselves as another Home Information Pack and would act as a barrier to anyone wanting to invest in real estate in the private rented sector.
Under the proposed guidelines any individual who had invested in real estate in the UK and wanted to rent their property would need to apply for a license and pay a license fee of 50 pounds.
The move, which was touted as a measure for cracking down on rogue agents and landlords and introducing more regulation to the sector, was claimed to affect over one million investors in England and Wales.
As such, housing minister Grant Shapps told the House of Commons that any plans to introduce the register had now been shelved, with the government trying to move away from "any burdensome red tape and bureaucracy" and to allow landlords to continue to offer their tenants a good service without the need for additional paperwork.
The decision has been largely welcomed by those within the industry, with a number of leading bodies announcing their support that it was no longer to be introduced.
Among the professionals to voice their opinion on the recent decision is the National Landlords' Association. David Salusbury, chairman of the organisation, said that the government's decision was the correct one.
"We are very pleased that the government is rejecting previous attempts to introduce a register," he explained. "It was the wrong way to go about raising standards in the private rented sector
and would not have rooted out rogue landlords. In fact, we believe the likely consequence could have been to penalise the law abiding, while at the same time driving the worst landlords under the radar."
Also supporting this opinion is John Heron, Paragon Mortgages' managing director, who believes that the move away from red tape and bureaucracy was good for UK landlords, but he said that ignoring letting agent regulation is a mistake.
"The vast majority of the UK's tenants are happy with the service they receive from their landlord and additional regulation was unnecessary and burdensome," he said. "The private rented sector is critical to the housing market going forward and needs to expand to ensure that it continues to meet growing demand from tenants."
When the plans were first mooted last year, Paragon Mortgages undertook some research which suggested that the many landlords feared that the guidelines would put people off investing in property.
The survey of about 200 landlords found that some 57 per cent of those polled believed that they will be forced out of the market altogether because of the increased regulatory costs.
A further 56 per cent said that the introduction of such a register would deter landlords from making further investments in the rental sector.
Barrier to Improvement
However, not everyone has welcomed the move, as the Association of Residential Lettings Agents (ARLA) said that it was "disappointed" with the government's decision not to look at regulating the sector.
According to the ARLA, by deciding not to pursue new rules, there was a risk that improvement in the private rented sector could be impeded.
"We have long campaigned for the introduction of compulsory regulation of lettings agents, along the same lines as our own member-led licensing scheme launched last year," Ian Potter, of the organisation, said.
"This move risks seriously hampering the improvement of standards in the private rented sector, the sector's reputation and the fundamental role it plays in the wider housing market."
Changing Investment Climate
Over the past few years the landscape for private investors has changed dramatically. The availability of Buy to Let mortgages has fallen as the economic situation worsened and many would-be investors failed to cover themselves when things did not go to plan - hence the emergence of calls for more regulation in the sector
- which suggests that some form of guidance could be a good idea to protect both tenants and legitimate investors.
However, as the market begins to recover, imposing more regulations, especially at a time when many landlords are already bracing themselves for a rise in capital gains tax
, may not seem like the fairest of ideas and the decision to scrap it is certainly one which has been welcomed by many across the industry.
- Tuesday 15 June 2010