Regulation and red tape for the modern day landlord

Landlord Expert
By Landlord Expert April 13, 2010 09:48

In a recently published report the Treasury states that it has decided to consider making some changes to the form of buy-to-let regulation it originally envisaged.

Under the original proposals the whole buy-to-let market was to be regulated by the Financial Services Authority in much the same way as the rest of the mortgage market is. But the Treasury is now believed to be reconsidering how regulation of the sector might work, including which parts need to be regulated and which don’t.

Of course, the arguments for and against regulating buy-to-let have been polarised ever since Mortgage Day. But in recent times, with the increase in defaults by many speculative and so-called accidental landlords I suspect the pendulum has swung in favour of greater regulation.

On the whole, professional landlords seem to run a pretty tight ship - that’s the perception in the wider marketplace. This perception is carefully nurtured by organisations such as the Association of Residential Letting Agents whose code of conduct seems robustly adhered to by most of those operating in this market.

Regulation is intended to protect and inform consumers so that risks to tenants are minimised and widely publicised. But most of the problems that have come to light in recent years have centred on the investment vehicles involved - the properties - rather than the way tenants have been treated by landlords.

In some well-documented cases tenants have been evicted with little or no notice following the repossession of a property by a lender, and in some cases they have been unable to get their deposits back from unscrupulous landlords.

But you could argue that these are occupational hazards. After all, nothing in life is risk-free. Most tenants can limit their exposure to problems by basic preparations such as avoiding landlords who deal with properties themselves rather than engage the services of a lettings company.

Most lettings firms indemnify tenants’ deposits.

So if regulation is needed at all in the sector it should be restricted to amateur landlords who have one or two properties, and should take the form of ensuring these properties are professionally managed.

For example, it should ensure that lenders inform tenants of any impending action against their landlord so they have a chance to find alternative accommodation.

In other words, the buy-to-let sector should be treated in the same way as the commercial sector but with one or two minor safeguards to ensure greater transparency

Landlord Expert
By Landlord Expert April 13, 2010 09:48

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