Over-regulation is the biggest threat to Britain's buy-to-let sector, according to Rob Thomas from the Council of Mortgage Lenders (CML).
Speaking at the Mortgage Business Expo in London, Thomas – a senior policy adviser at the CML – claimed the market was robust, despite problems with financial markets and a growing fear that UK house prices will fall.
He told the Expo that he expected the buy-to-let market to remain stable, but warned of tougher times ahead for intermediaries.
“The outlook for the private rented sector is positive as it is based on a growing need for a flexible tenure. Buy-to-let has given a new dynamic focus to an old market and altered the image of the private rented sector; however the biggest potential negative I can foresee is the risk of over-regulation,” he says.
Thomas outlined two specific areas of concern, licensing of properties and the deposit protection scheme.
Some properties, such as houses of multiple occupation (HMO) or those in areas with large amounts of poor quality housing, can require a landlord to take out a licence from their local authority which ensures minimum standards are set.
Thomas says: “The problem here is that different councils interpret the rules in their own way, which can cause major headaches, particularly for landlords with properties across different local authorities.”
Licensing is a particular problem in Scotland, referred to a registration north of the border, as all rented properties need to be registered, which has created a shortage of housing, particularly in student towns.
He also claims the deposit protection scheme is overly bureaucratic, with large amounts of paperwork and time needed to handle the scheme, but says the CML supports the scheme and the protection it offers tenants from the few landlords who unfairly withhold deposits.
Thomas thinks a more targeted approach would be better and says: “Rather than using blanket regulation, a targeted approach, such as fining landlords who unfairly withhold deposits, would be more efficient and less costly.”
If you would like to comment on this story, contact:
Tel: 020 7034 2682
e-mail: [email protected]
Staying invested could prove lucrative
Consider lasting powers of attorney
Less environment, more governance threatens to undermine firms' green credentials
Evidence your compliance