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Landlord’s are getting battered by the government... so where is this going?

4th February 2016

Evictions are getting harder, tightening up regulation and paperwork, immigration act, Rent Smart Wales (licensing), tax changes reducing cash flow and stamp duty changes are all making the lot of a landlord much harder and is probably making many question, why they do what they do and whether to continue, so what is the objective here?

As someone who was once illustrated with my skeletal structure, being all about compliance, processes and systems, I in one sense am really pleased, with some of the regulation changes that are coming about, as i believe that it is really important that as an industry (the private rental sector or PRS) we need to be doing things right, on cue, but at the moment, it is starting to make me wonder, if we have all collectively broken a few mirrors... 

A few of the changes recently that landlords and agents now have to put systems in place to manage:

•We have to show PROOF that a gas cert and EPC was issued to the tenant

•We have to have PROOF that we issued the How to Rent guide to the tenants

•We have to test the Smoke alarm on the day of move in (and need proof of this for protection)

•Maintenance has to be dealt with within 14 days of being reported in writing by the tenant

If none of the above are done then a section 21 cannot be used and possession would be impossible without tenant default

Plus 

•Landlords and agents in Wales, now have to be qualified and licensed to rent or manage rental property in WALES

•The residential rights of all tenants have to be checked under the new immigration act rules from 1st Feb, along with other occupiers and follow up checks done on the residents and coming of age children and a mistake could lead to a criminal offence and potentially jail

•The new tax rules for private landlords (the only industry that will be taxed on turnover NOT profit) will actually make many landlords have more going out than coming in

•Stamp duty payable on second properties (this will include those buying accommodation for their elderly parents/children etc) 

So where is this going? Does the government want to get rid of the private landlord, favouring only the institutional investors and corporation type landlords? You could certainly be mistaken for thinking that... 

But here’s a question... If that is the case, are institutional investors, going to be buying single properties, houses, cottages, semi’s and detached properties in rural and small towns and villages? Or do you think they will focus on the big cities and large scale flat developments?

Because the problem for the government here that may slap them in the face, is that land is more expensive in the cities, therefore rents are higher, therefore if all the tenants are forced to rent in the big cities, as opposed to small market towns around the country, what does that mean for the housing benefit bill?

Also, I’ve been in the lettings game for many years, and in my experience, the properties run by larger organisations and even the council, are in worst conditions than mom and pa landlords, who come in and fuss over the property personally every change of tenancy, getting particular over a scratch on the worktop, or their pride and joy new doors. From a private tenants perspective, which now makes up nearly 20% of the entire housing population, this means limited choice, cities only along with higher rents as a result plus dealing with faceless organisations to get through to get anything done.

But what really concerns me is what does it mean to the smaller towns... consider the large employer, that is looking for a site location, if you need to bring in talent to work in your new factory or store, and you can’t get accommodation for your relocating management team, what do you do? You will be forced to locate your site on the edge of the bigger cities, this in turn, will increase your costs and the costs of the product you output, and this then gives MORE advantage to the Chinese and other importing nations, that do not have to bear such heavy costs.

The landlords collective fight against clause 24 (landlord tax changes) is thankfully gaining legs, with funds raised through crowd justice funding, Cherie Blair’s legal practice has been hired and is on the case to take the government to judicial review over it, challenging the government on the tax rules, on the basis that it is against human rights to be taxed in this way, and I personally wholeheartedly agree and watch with extreme interest.

As for the rest of the changes, they look as though they are here to stay I’m afraid, with lots more to come, so all landlords and agents, need to get particularly precious about paperwork and procedure moving forward, or you may just lose the shirt of your back.

Sally Lawson MARLA. MNAEA

CEO Concentric Franchise 

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