74% of landlords say selective licensing will deter new entrants

A poll of landlords by Paragon Mortgages has found 74 per cent think selective licensing will deter new landlords if it is ever introduced nationally.

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Landlords were asked for their views on selective licensing and other regulations affecting the landlord and buy-to-let market in  Paragon Mortgages’ quarterly trends survey.

The Housing Act 2004 provided councils with the power to introduce licensing of privately rented properties in selected areas, and the powers introduced in the act came into force in 2006.

Selective licensing requires that within a designated area all private rented properties are licensed. Certain standards and conditions are required to be met in order for a licence to be granted.

In an area subject to selective licensing, all private landlords must obtain a licence and if they fail to do so, or fail to achieve acceptable management standards, the authority can take enforcement action, either by issuing a fine of up to £20,000 or in some cases, assuming management control of the property.

More than half (60 per cent) of landlords said they would not invest in buy-to-let property where selective licensing was in force. This sentiment was shared almost equally by professional landlords (60 per cent) and private investor landlords (61 per cent).

Just 20 per cent believe that selective licensing will not impact on their rental business.

Those surveyed were also asked to comment on other regulations impacting the landlord market on what they felt would hit them the hardest. City Wide Licensing and Article 4 for houses in multiple occupancy were top in terms of what landlords thought had the potential to impact their business the most (14 per cent).

Paragon’s director of mortgages John Heron says that while it is often suggested that the buy-to-let market is not regulated enough, in reality the market is heavily regulated and landlords have to comply with more than 100 regulations.

He says: “It is clearly important that landlords who operate in the buy-to-let market are regulated and run responsible businesses. However, what our survey shows is that landlords are becoming increasingly concerned about selective licensing and other areas of regulation.

“If selective licensing is employed in the appropriate way it will be beneficial in areas that need it, but there is a danger of putting off new landlords – which the market needs in order to grow – if a broad brush approach is taken.”

Article courtesy of Mortgage Strategy

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