New buy-to-let regulations will hit tenants and landlords where it hurts. But it's good news for homeowners...
Government plans to make it harder for landlords to rent out large, shared properties have been met with widespread condemnation from the buy-to-let sector.
Last week, Housing and Planning Minister John Healey announced that, from April, it will require any landlords who want to provide Houses In Multiple Occupation (HMO) to apply for planning permission first, before they build or convert a home.
This costly and time-consuming measure will put many off, and even those who jump through the hoops could be denied permission. There are fears that NIMBYs (people who say Not In My Back Yard) will oppose each and every HMO planning application to stop students, migrants or those on low incomes moving into their neighbourhood.
What exactly are the new rules?
Landlords will need to obtain planning permission where a material change of use will occur - which will now include renting a property to three or more occupants who are not members of the same family.
Healey also outlined proposals to give councils the right to introduce licensing schemes without seeking permission from central Government in so-called 'hotspot areas'.
Local Authorities currently have to seek approval to introduce HMO licensing schemes, which require all private landlords with properties within the area to get a license.
The councils can also decide if the landlord is a 'fit and proper' person to manage their properties, impose conditions and standards on licenses and charge landlords a fee at their discretion.
Why the crack-down on houses in multiple occupation?
The Government says that a cluster of too many shared houses can cause problems, especially if let to short-term residents with little stake in the local community. It also claims tenants can also suffer from poor conditions and management of the properties by landlords.
The new rules are intended to help 'stem the growth of large pockets of shared homes - which can change the balance and nature of communities.' They will also aim to tackle these 'pockets of unsafe and substandard accommodation'.
The Minister claimed that many towns and cities across the country have suffered the effects of a concentration of HMOs. Market, coastal and university towns have reported problems due to large student populations and HMOs.
And the reaction to the changes?
The National Landlords Association (NLA) condemned the changes saying they will reduce the supply of essential shared housing.
It claims that by making it more difficult and costly for landlords to provide this type of accommodation, the measures will reduce choice for tenants and increase pressure on local authority housing lists.
Plus it notes that last year's Rugg Review, an independent review of the private-rented sector commissioned by the Government, dismissed these changes as an 'extreme response' which local authorities are 'ill-equipped to handle.'
Of course you'd expect the NLA to be peeved at the measures, but it's not just them. The British Property Federation, Residential Landlords Association, and National Union of Students have all rubbished the rules.
Many of the objections point to the fact that the Government seems to have bowed to a small number of people who have shouted very loudly about anti-social behaviour in areas with a high level of HMOs. The NIMBYs have won.
But by making it harder for landlords to offer these properties they will have to raise rents, which will drive students and migrants in to ghetto-style communities, a far cry from the Government's stated policy of social integration.
Shared housing accounts for 20% of the private rented sector and plays a vital role in provided low cost housing for students, young professionals and those on low incomes.
The British Property Federation argues that a tiny fraction of places suffer from a high concentrations of HMOs and that using a broad brush approach to deal with different issues relating to anti-social behaviour makes no sense.
The NUS added that students contribute hugely to their local areas, not least by giving the local economy a massive boost. Indeed, small businesses in new HMO no-go areas would be likely to suffer.
Defending the Government
A massive 94% per cent of respondents to a Government consultation on this issue last year said they'd experienced problems of the effects of HMOs, including anti-social behaviour, litter, noise, and problems with parking. A whopping 84% of respondents agreed with the proposal that planning legislation should be amended to deal with the problems associated with high concentrations of HMOs.
Of course, this could well be a small minority of people punching above their weight. Perhaps there wasn't enough landlord representation during the consultation process, for which they, and their trade bodies, only have themselves to blame.
Bound by red tape
However, the Government has a pretty good track record of being heavy handed with landlords over the last few years. They are already regulated with an estimated 50 Acts of Parliament and 70 sets of regulations governing the sector, and more on the on the way, according to Paragon Mortgages.
Just when they have got to grips with the tenancy deposit protection scheme, introduction of HMO rules, and the need to provide Energy Performance Certificates, more rules are proposed. These include a National Landlords Register, licensing all letting agents and statutory regulation of buy-to-let mortgage lending and advice, on top of the new regulations above.
On the one hand the Government says it wants to develop a vibrant rental market, but its approach of using a sledgehammer to crack a nut when it comes to regulation doesn't support this aim, in my view.
Of course, protection is essential for tenants and affected homeowners, but landlords are being ever more tightly bound by red tape. A survey published last week showed that 60% are worried about the level of regulation.
The housing market needs a healthy private rented sector to help fill the enormous gap caused by insufficient housebuilding and the growing population.
Let's not make life too hard for landlords eh?
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