Addressing delegates at the 2015 Buy to Let Debate in London, Mortgages for Business managing director David Whittaker said Eric Pickles’ tenants charter, first introduced in October 2013, “exacerbated the very problem” it set out to address.
However, now, Labour has proposed to introduce three-year tenancy agreements as standard in the private rented sector, with rent restricted to an upper limit. The opposition party also intends to prevent letting agents from charging fees to tenants when entering into an agreement.
On the charter Whittaker said: “It has two principal flaws to it. Firstly it ignores the fact that there is a direct linkage between the capital value of a property and the rental value there too.
“So if a potential incoming Labour administration interferes with certain geographical areas, landlords won’t take kindly to it; they’re not obliged to hold properties in those areas and sell up, thereby exacerbating the very problem that the piece of legislation is intended to address.”
He added that under such proposals landlords would rent out properties at a higher rate to make up for any loss made over the three years that they would be forced to remain with the same tenant.
“The fact that Eric Pickles got no traction on it in October 2013 tells me that this is just political gerrymandering in the run up to a general election,” he continued.
The panel agreed that currently too many rogue landlords and letting agents were able slip through the net, which was where extortionate fees for tenants were mostly found.
Paragon Mortgages managing director John Heron explained: “The problem is that it’s all too easy for a rogue agent to set up shop and fleece landlords and tenants and far too few landlords and tenants know how to avoid that. Without some simple compulsion on letting agents to segregate funds to impose client money protection, this is going to keep happening.”
However, further regulation imposed on the industry was not the answer, said the speakers.
“I don’t think you need heavy regulatory structure, but I do think you need to find a way of ensuring letting agents adopt a professional approach,” Heron added.
Valerie Bannister, head of lettings at Your Move and president of the Association of Residential Letting Agents, said the industry was already working with significant amounts of regulation with more on the way.
“It may come as a surprise but we’re already working with over 100 pieces of statute. We fall into the common law in the letting agent world and we fall into EU regulation. So I think we’re veterans of EU regulation and taking it on the chin.”
