Regulation
Landlords legislation

On April 6 this year the Tenancy Deposit Protection (TDP) scheme was introduced under which landlords will no longer be able to hold the deposits of their tenants but will have to hand them over to one of two forms of Government-approved schemes.

Landlords who fail to comply could be ordered by the court to pay a fine of up to three times' the deposit to the tenant.

The introduction of TDP is just one piece of a whole raft of legislation relating to property investment that has been passed by the Government. Last April saw the introduction of mandatory licensing for houses in multiple occupation (HMOs); this year will be marked not just by the TDP but also by the introduction of home information packs (HIPs) which will affect all property owners.

Finally, next year will see the national rollout of the local housing allowance scheme, which is already being trialled in 18 areas. HMO licensing is now widely being viewed as a success; it has driven many rogue landlords out of the sector, leaving the field open for responsible investors.

The only real point of contention has been the seemingly arbitrary charging structure for the licences, which are required for any property which has three or more storeys and which is occupied by five or more unrelated persons.

HMO licence fees are supposed to do no more than recoup the relevant local authority’s costs, and yet fees across the country range from £150 to £1,750
There is greater concern from property investors over the Local Housing Allowance (LHA) scheme, which becomes law next year. Under this scheme, housing benefit is paid directly to tenants rather than to landlords, many of whom are concerned that it may result in greater tenants’ arrears.

Selective licensing, which is also being piloted in a number of areas, is another new regulation introduced by the 2004 Housing Act which has given landlords cause for concern. It enables local authorities to designate areas of low demand or areas in which there is persistent antisocial behaviour. Once an area has been so designated, the properties within them will require licensing.

The Government’s thinking here is to ensure a higher standard of private rental sector property in deprived areas. But the obvious problem is that a selective licence may attach stigma to an area, and the anti-social behaviour element could mean that mortgage lenders refuse to lend in selective licence areas.

This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Your home may be repossessed if you do not keep up repayments on your mortgage.

Article date: 03.07