Why More Buy to Let Landlords Means More Landlord Licensing Schemes

David Lawrenson of LettingFocus notes the big rise in buy to let lending and how everyone wants to be a landlord now. Plus he fears an increase in the regulatory burden.

Many years ago and time and again I predicted that the private rented sector (PRS) would grow bigger than social housing. And many times I was shouted down by the naysayers who predicted calamity and hard times for the UK’s army of “Mom and Pop” landlords.

Well now, with recent Council of Mortgage Lending figures just out which show more and more people are taking buy to let loans and becoming private landlords, it looks like I am being proved right. (And in case you missed it last year, the PRS also now houses more people than the whole social housing sector does).

All Landlords Now

Of course, this had all led to lots of comment in the media where many commentators have observed that with record low and below-inflation saving rates at the bank, a toppy stock market and with the memories of endowment mis-selling, split caps and all the other financial sector disasters still fresh in the mind, many more people will consider becoming landlords, often, simply because there is no other game in town. Or, at least no other game they can trust!

My only fear about this is that this will bring in more “have a go” landlords and duff letting agencies into the world of letting property.

Some landlords and agencies will bother to find out what their responsibilities are. Some will buy the brand new edition of my book, “Successful Property Letting – How to Make Money in Buy to Let” – which comes out next week by the way. Search for the new 2013 edition online and buy it now!

But many will not join the 50,000 who already have a copy of an earlier edition and will try to muddle through.

And this “muddling through” will lead to demands for more regulation of what landlords do.

Regulations

But instead of enforcing the current regulations and imposing far harder penalties on the wilfully rogue landlords, lots of councils will instead go down the licensing route – creating a whole layer of additional bureaucracy that in most cases is not needed.

Last week I had a meeting with some very senior people from a consultancy who themselves come from a social housing / local authority background and who therefore naturally enough, do a lot of work with councils, including work on the PRS.

Some of their work involves helping implement licensing schemes for landlords.

They told me that most local authorities wanted licensing a la Newham – i.e. across entire boroughs and for ALL privately let property.

This consultancy knew just enough about the PRS to get the work in the first place, but they also knew that that licensing was probably often the wrong policy.

But it was impossible to argue the case with councils who had already made their mind up. And anyway, the council tenders did not call for an evaluation of whether licensing was needed. They were not interested in evaluating; they just wanted someone to implement it.

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