Rent controls will have sent a shudder through every private landlord in the country...but what else is looming? Mike White, from Martin & Co, discusses.
Both the two main political parties have now had their annual party conferences ostensibly for their faithful followers. For those of us interested in the world of buy to let investment, lettings and property rental, it's an opportunity to see what the current government is planning to do on housing and likewise the policies of the Labour party.
Whichever colour you sport politically, both sides have come up with some interesting 'solutions' and its worth just having a closer look at the impact these could have potentially on landlords and their tenants.
The Labour party, if you believe their rhetoric, are the government in waiting but provided the current one holds firm and doesn't go wobbly, they've still got more than four and a half years to wait. And, as the world will have changed a lot in that time, their policies can perhaps be discounted for now. Just as well really, as doubtless, the headline we all saw of 'Labour will introduce Rent Controls' will have sent a shudder through every private landlord in the country. On the other hand, since there's been limited real wage growth and quite a hike in rents in recent years, you can see why tenants might on the face of it find rent controls very appealing. Trouble is, whenever and wherever they've been introduced in real life, they just don't work – they have the almost immediate effect of supply decreasing at inordinate rates. There's no point having affordable rents if there's just no houses available to rent.
So, what has the Tory party come up with? Well surprisingly, for politicians, a few quite sensible proposals. First, and most importantly, they have finally bowed under pressure and have agreed to some form of regulation of the lettings industry. The government have already started consulting with the lettings industry, so we can only hope that it is introduced quite quickly. There's already a decent framework in place, many letting agents who take their businesses and their clients seriously, are already registered with professional bodies such as NALS, ARLA or RICS and any one of these could be appointed as the regulator. Since my own agency, Martin & Co in Norwich has been a member of NALs for all our 10 plus year existence, I have a preference for NALS to be made the regulator but frankly, I'd be quite prepared to have to register with a new one, whether that's ARLA/RICs or a completely new independent one. Just so long as whooever the regulatory body is, it has real teeth to both get rid of and, keep out the 'wrong-'uns'.
What's next?... ah here's an interesting one, at the moment only letting agents are required to be members of a redress scheme, for example we're registered with The Property Ombudsman and this gives any tenant or landlord unhappy with our service levels the opportunity to have their case independently adjudicated. This is set to be extended to all private landlords to give all tenants the opportunity to seek redress and not just those where the rental property is being managed by an agent. This actually makes a lot of sense and should over time have the effect of reducing the number of rogue landlords – how it'll will be implemented and policed though is anyone's guess at the moment. Before landlords reading this start shouting why isn't there a redress scheme against tenants, well there's potentially good news on that front too. The government have said they are going to consult on the introduction of a 'Property Court'. The Housing Minister, Sajid Javid said at the conference, 'We will explore whether a new housing court could improve existing court processes, reduce dependence on legal representation and encourage arbitration, with benefits for both tenants and landlords. And, lastly Mr Javid also announced that he was looking to introduce minimum tenancy lengths of 12 months but doesn't everyone do that already? Surely, any landlord using a letting agent insists on 12 month minimum tenancy, why would you want to run the risk of your tenant leaving after six months and then having to pay a letting agent twice in one year? The only people who benefit from this is the agent!
You can contact Mike White at Martin & Co in Norwich, sponsors of this column, at www.martinco.com/estate-agents-and-letting-agents/branch/norwich
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