Government Wants FSA To Rule BTL Sector

As if it’s not bad enough trying to keep up with the BTL regulation tinkering from the current government, it’s set to get a whole lot worse if the plans they have go ahead.

Regulation tops private rented sector landlords’ list of fears for 2010, research from Paragon Mortgages has revealed.

HM Treasury (HMT) is currently consulting on whether the Financial Services Authority’s (FSA) should be extended to regulate the buy-to-let sector.

Personally I cannot think of anything worse. It means buy-to-let product availability will be even less which will increase the cost of mortgages even further. The impact for both residential property investors and tenants will be great.

Nearly six out of 10 landlords said that they were worried about the level of regulation required in relation to the running of their property business during the year.

Paragon said landlords in the private rented sector are already heavily regulated with an estimated 50 Acts of Parliament and 70 sets of regulations governing the sector, but more could be on the way. More is on the way after the Government concluded a consultation on the launch of a national mandatory registration scheme for landlords and is set to report its findings shortly.

Frankly, how ridiculous is that? 70 sets of regulations! And they want to add more which will have much wider reaching effects for the sector.

John Heron, Paragon Mortgages’ managing director, said:

“It is not surprising that regulation tops the list of landlords’ concerns for the year. They already have to comply with a myriad of regulations, which seem to be regularly added to or amended by the Government. Several new statutes have been introduced in recent years, including Energy Performance Certificates, tenancy deposit protection and Houses in Multiple Occupation licensing. Employing a good managing agent can help but individual landlords have ultimate responsibility to ensure that they are complying with the necessary rules and regulations.”

More Costs = Higher Rent

Any extra costs for the landlord are likely to be passed on to the tenant, which means higher rents and more people ending up on the social housing list. Landlords don’t like housing benefit tenants due to the other bit of legislation allowing them to receive the money direct instead of the landlord. This is legislation gone mad and a very short sighted move. The government is hell bent on rules, rules and more rules. They never follow the thought through to it’s natural end and potential consequences. Who advises the government on this stuff? Do they know anything at all about property? Makes you wonder doesn’t it.

Lending levels  are already subdued and mortgage product availability seriously limited, landlords also expressed concerns about how they will fund property purchases in 2010, with 37 per cent stating this was a real danger. The buy-to-let sector is marked by a lack of competition, with just two lenders accounting for an estimated three quarters of current new business.

Add to all this the other factors; retaining tenants, finding tenants, tenant disputes and meeting mortgage payments. Who would want to be a landlord? If landlords start ditching their properties who will buy them all? Where will all those tenants live? How will the DSS find and pay for all the extra housing that will be needed?

Oh, and before I go, the government want to make the landlord register mandatory. Great.

Landlords provide a valuable service, it’s time the government woke up and realised just how  much hangs on them staying in the market.

My Property Mentor

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