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ARLA criticises new Governmentproposals for private rented sector

  • 11/12/2001
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Proposed legislation will damage investor confidence in buy-to-let

Members of the Association of Private Letting Agents (ARLA) have declared the proposed regulation of the private rented sector as valueless.

One of the key proposals will have a direct effect on buy-to-let investors with properties rented to sharers.

A private members bill is seeking to treat any private house or flat, rented out to unrelated individuals, as houses in multiple occupation (HMO). This has, until now, only referred to hostel-style accommodation or bedsits, but the bill will impose the same hotel-style licensing and building standards on small private residences. This follows legislation in Scotland that is driving landlords from supplying the market for sharers.

Speaking at the recent ARLA annual conference, chairman John Crossley said: ‘The Government’s priorities are all wrong. Since the Housing Act 1988 the private rented sector has been running well and the ARLA blueprint for lettings established in the past 20 years safeguards the monies and the health and safety of landlords and tenants.’

John Heron, managing director of Paragon Mortgages, the specialist buy-to-let lender, said: ‘The confidence shown in the buy-to-let market at the moment could be damaged if the Government persists in widening regulation needed for HMO, to include unrelated sharers in ordinary residential property. The buy-to-let sector could also receive the wrong signals if selective licensing in deprived areas is introduced.’

The Government is also considering selective licensing of landlords in deprived areas, in order to prevent abuse by landlords. However, deprived areas are not usual investment areas for individual landlords, therefore the proposal is unlikely to affect many private landlords directly.

The announcement coincides with the release of Paragon Mortgages’ quarterly Property Investor Confidence Tracking Index.

Confidence in the sector remains high at the moment, according to Paragon’s survey.

But it found many landlords are relatively new to the sector, 34% of landlords are in their first three years and 7% in their first year. As a result Paragon believes the proposed legislation would be an unnecessary worry for these relatively inexperienced people.


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