November 2

At last! The government tackles rogue landlords and lettings agents

Unregistered agents and DIY buy-to-let landlords are in the regulatory firing line

We’ve long supported the efforts of ARLA Propertymark to persuade the government that slum landlords and rogue letting agents need bringing into line. Finally, it’s happening. During his speech at the recent Conservative Party Conference, Communities Secretary Sajid Javid announced that all letting agents would have to be registered with a suitable professional body. He said:
“We will change the law so that all letting agents must register with an appropriate organisation. It will mean that letting agents would be required to satisfy minimum training requirements and comply with an industry code of conduct.”
“About time, too,” is what we say. But what could it mean to unregistered letting agents and DIY buy-to-let landlords? And what effect may it have on rental prices?

Rogue letting agents will be a thing of the past

When buy-to-let landlords let their property through a rogue letting agent, there can only be two reasons for doing so:

  • The first is that the landlord knows no better. He isn’t made aware that the agent isn’t registered with a professional body. ARLA Propertymark, the body with whom we’re registered, will only accept agents who can prove that they know the business of letting and act in a trustworthy and responsible manner towards both landlords and tenants.
  • The second is that the landlord is trying to delegate their responsibilities a cut-price rate.

While it’s understandable to try to save money wherever you can, you get the service you pay for. And there is usually a reason why agents don’t register with a professional body. Their employees may be lacking in experience or qualifications, or fail to follow the laws and regulations that currently exist.
Often, rogue letting agents won’t do what they say they will. They won’t check properties properly. They fail to protect deposits correctly, don’t segregate monies effectively, and don’t offer a route for redress should the landlord or tenant have unresolvable issues.
You should always ensure that the letting agent or investment property manager you use is registered with a professional body. It’s the most important check on an agent that you can make.

Slum landlords – could they be a thing of the past?

Of course, there will still be buy-to-let landlords who prefer to do it themselves, whether because they want to or because they don’t want to pay for investment property management. That’s fair comment, but things are changing for these, too.
Most slum landlords either operate as DIY landlords or work through an unregistered letting agent.
Javid also announced that private landlords would be required to become members of an ombudsman scheme. It will give tenants a route to dispute resolution over issues such as maintenance and repairs. It should make it more difficult for slum landlords to exist and make money and is hopefully another step towards eradicating them from the private rented sector.

The ban on letting agent fees will come sooner rather than later

Javid also said that the proposed ban on letting agent fees to tenants is likely to come in sooner rather than later.
Letting agent fees to tenants cover things like vetting charges and the admin needed to conduct background checks. We think the government’s policy on this is madness. We can see what the government are trying to achieve: more affordable rents for tenants. But a ban on letting agent fees has been in place in Scotland since 2012, and rents have increased at a faster rate, compensating for the fees that are passed onto landlords.
We agree with Gladfish, who say that the ban on letting agent fees is not a factor for property investment, and will have the opposite effect to what the government intended.

A mixed bag for tenants

Like we do, tenants should welcome the government’s move to obligate letting agents and DIY buy-to-let landlords register with professional bodies and an ombudsman respectively. This is good news. It should help to remove the slum landlords from the system. However, this could also reduce the number of properties in the rented sector at the cheaper end of the market, pushing up average rents across the country.
While tenants may feel that banning letting agent fees to the tenant is a good thing and will reduce tenant costs, the evidence says otherwise.

Could there be a Budget surprise for landlords?

Javid also said at the conference that he wants landlords to offer tenancies of at least 12 months. He held out a carrot when he stated he would offer incentives to landlords for “doing the right thing”. You never know, this could mean tax incentives; and perhaps even reversing the phasing out of mortgage interest tax relief at the higher rate on those properties with a 12-month lease. We’d like to think so, although introducing and controlling such a system could prove to be an administrative nightmare.
Do you stay abreast of all the news that affects property buy-to-let property investors? To do so, contact one of the Ezytrac team today+44  01522  503  717, and discover why so many buy-to-let landlords are turning to Ezytrac for investment property management.
Yours in effortless property management,
Brett Alegre-Wood MARLA MNAEA


buy-to-let landlords

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