Regulation of buy to let market

As many readers will know, in a sign of the times and perhaps long overdue, the self certification mortgage market will be regulated in the near future. It is unfortunate that such tight regulation is needed but the huge excesses and fraud of the last decade have made this inevitable.

With lenders adopting stringent criteria in any event, is it specifically necessary for the buy to let market to be regulated, bearing in mind that some landlords own multiple properties and have been or remain highly leveraged ? What form should such regulation take if it does happen ?

In a recent survey by Move with Us, estate agents, not exactly known for being in favour of any regulation which might fetter a sale in any way, were asked whether they consider that the buy to let market ought to be regulated. Interestingly, over 50% were in favour of regulation, which indicates that even estate agents are now adopting a far more measured approach to the property market and see clearly that an ongoing boom and bust cycle, especially when the bust part is so severe, is no longer sustainable.

We are unaware of any plans to specifically regulate buy to let or as to what form any regulation might take. If you have any views on this issue, please do let us know.

Significant increase tenants in arrears    

Research by Law of Property Act Receivers Templeton suggests that whilst the buy-to-let market seems to be giving a minor renaissance, Landlords should be very cautious and realistic. The headline figures from the research are :-

• Nearly 8,700 more tenants are over2 months in arrears
• There are over 29,000 buy-to-let mortgages in severe arrears compared to 3 years ago.
• In the second quarter of this year, there were nearly 75,000 tenants in England and Wales in severe arrears

The latest position on letting renewal fees

The OFT case involving Foxtons generated plenty of publicity several years ago, but it remains unclear whether much has changed in the area of letting agents fee reasonableness.

Some may recall that the outcome of the case was perhaps a little unsatisfactory. The court found that in principle letting agents can charge renewal fees, even at what appear to be extortionate rates, but must make this clear to their landlord clients at the time the contract is entered into.

The OFT seem to have their doubts that this is happening as they have advised this last week that they are reminding agents of their obligations via trade associations and such like. It appears that the problem has not gone away, and in economic conditions where estate agents have become ever more reliant on letting management income due to the inertia in sales, it is tempting to seek to maximize the renewals, effectively for doing nothing. So, if you are a landlord, be cautious, your letting agent may have done a great job finding tenants but always read the terms and conditions and particularly ongoing charges which may be triggered simply from a maintenance of the status quo.