But how many landlords can identify a forged passport? And how will they cope in shouldering this responsibility along with other council licensing schemes, changes to housing benefit and other government initiatives?
In other words, is the buy-to-let sector in danger of becoming a political football?
For this week’s Marketwatch, our commentators are:
The Buy to Let Business managing director Ying Tan, who says the latest proposal is a tick box exercise which will swamp landlords with even more red tape
Lettingfocus.com founder David Lawrenson, who expects political intervention in a world where BTL investors are sometimes not as savvy as they ought to be
Moore Blatch partner and head of asset recovery Paul Walshe, who suggests more initial checks by landlords could prevent tenant issues in the long run
Ying Tan, managing director, The Buy to Let Business
At a time when the private rented sector is needed more than ever before it seems the government is intent on stalling it. The proposed regulation of the sector, which has split opinion, will undoubtedly have an impact on landlords whose innovation and enterprise during a challenging time have helped the market to expand to meet growing needs.
Now Cameron and his government want to make things even more difficult with this latest proposal.
I am not against political input in the sector where it can be seen to be helping tenants and, indeed, landlords. However, in this instance it seems to be a distinct case of passing the buck.
Most landlords will already be checking the backgrounds of their tenants as part of their due diligence process however the responsibility for assessing a tenant’s immigration status should not lie with them. Greater controls and focus need to be put in place at the borders before the problem arises. Indeed, how will landlords be trained to see what well-paid immigration control officials miss?
In my opinion this is just another layer of red tape bureaucracy which will prove to be little more than a tick box exercise and will not actually achieve the immigration control that is intended. However, if it is implemented then I have little doubt that landlords will embrace it and continue to show the resilience that has seen them thrive in a market that shows no signs of slowing down.
David Lawrenson, founder, Lettingfocus.com
You wonder about the practicalities of this latest initiative. There is no guide to tell landlords what is a fake passport or what is a valid work permit. Is the government going to give us training?
Politics already enters the world of buy-to-let in many ways, especially given the fact many BTL landlords are not as knowledgeable as they should be.
The current government has finally admitted the need for a greater level of regulation of letting agents. In a few years we may also see the introduction of new ‘forms’ of Assured Shorthold Tenancy with a normal term of five years (or even longer), though still retaining the option to evict for antisocial behaviour or for two or more months non-payment of rent.
For governments, a growing sector means a sector that can be taxed more. In the last quarter we have seen more local authorities move to charge landlords full council tax on any empty property that is between tenants – whether unfurnished or not.
In terms of mortgages, Lettingfocus has always said that blanket restrictions by some banks and building societies restricting all landlords letting their properties to tenants on Local Housing Allowance was not justified by past arrears experience. In March 2013, partly as a result of our work on this, BM Solutions and The Mortgage Works removed restrictions on landlords letting to ‘benefit tenants’.
However, if lenders refuse to pick up the tab for future government welfare ‘improvements’, it is entirely possible selective restrictions on letting to benefit tenants could make a return in the future.
Paul Walshe, partner and head of asset recovery, Moore Blatch
The Queen’s Speech announced a proposal to make private landlords liable to check whether their tenants are eligible to live in the UK. This is at a time when some landlords and letting agents already claim to be overwhelmed with administration.
Adding immigration checks on behalf of the UK Border Agency will inevitably add to the administrative burden and could make future legal issues such as evictions more complex. It’s also likely that there will be a fining system imposed, similar to the system in employment law, where an employer can be fined up to £10,000 per illegal employee – a figure that many buy-to-let landlords would find difficult to cover. There could be a knock on impact for landlord insurance and we can reasonably expect terms and conditions to change.
However, so long as the landlord follows all the appropriate checks the process should not be overly onerous and there are measures in place to ensure that landlords that do everything appropriately do no not suffer such as protecting then against comeback if forged documents were used.
From a legal perspective such measures whilst creating extra work could ultimately have benefits to landlords, as more thorough checks at the start highlight potential issues before they happen.
