Tne number of regulations affecting private buy-to-let landlords has increased by 32 per cent since 2010, that’s according to new research by the Residential Landlords Association (RLA)
The RLA has identified 156 different regulations, statutory instruments and Acts of Parliament affecting landlords, a figure that’s grown from 118 since the Conservative-led coalition government came to power.
In other words, it’s becoming a legal minefield for anyone operating in the private rented sector (PRS), and its resulting in one-third of landlords with just one buy-to-let property considering selling up. On the other hand bigger landlords are looking to buy more.
The tax hit introduced by George Osborne on buy-to-let is taking its toll on both new purchases and existing owners. The stamp duty premium on second homes has dramatically increased the cost of buying an investment property and changes to mortgage interest relief mean higher costs for existing landlords.
All this taken into account it’s the bigger more professional landlord, often investing though a limited company, that’s winning out – the sweeping tax reforms and ever increasing regulations for buy-to-let landlords, and the Government’s aim of limiting small-scale amateur landlords, appears to be winning out.
Recent surveys reveal that around 40 per cent of landlords who own two or more properties intend to buy at least one more in the coming year.
In the meantime the trade association for mortgage lenders is urging the government to put a halt to further intervention in the buy-to-let market amid all the evidence of the negative effect of regulatory and tax changes on the industry, reducing supply and putting up market rents.
A recent report from the Intermediary Lenders Association (ImLa) is warning that the private rental sector is still absorbing the adverse effects of the changes already made, and it predicts more change would force more landlords out of the sector, reducing tenant choice and raising rent costs.
The RLA says that the increase in legislation is not leading to any improvement in enforcement action against criminal landlords. Many councils throughout Britain are failing to properly use the powers they already have.
Previous research by the RLA found that in 2017/18, two thirds of councils had not commenced any prosecutions against private landlords. In the same year, 89 per cent of councils told the RLA they had not used new powers to issues Civil Penalties of up to £30,000 against private landlords for a range of offences. Over half, 53 per cent, did not have a policy in place to properly use the power.
Against this rising tide of regulation and poor levels of enforcement by local councils, the RLA is calling on all political parties in the election to commit to improving enforcement of the powers already available rather than introduce new legislation which councils will be unable to use to root out the crooks.
In its manifesto for the General Election the RLA proposes scrapping licensing schemes which serve only to penalise good landlords whilst enabling the criminals to operate under the radar. Instead, councils should use the wide range of data already available to them, including council tax, benefits, tenancy deposit and electoral roll information to identify landlords. This needs to be backed up by central government providing a multi-year funding settlement to properly resource enforcement.
David Smith, Policy Director for the Residential Landlords Association:
“Removing criminal landlords from the sector will only be achieved if councils have the resources and the will to properly use the wide range of powers they already have. Piling more regulations onto the sector which will continue not to be properly enforced is meaningless and serves only to put off good landlords from providing the homes to rent we need.
“It is time for smarter enforcement, not more regulation.”
· The RLA’s report, The Postcode Lottery of Local Authority Enforcement in the PRS, can be accessed here
· The RLA’s manifesto for the General Election is available here