According to the Association of Residential Letting Agents (ARA) there are various pieces of legislation coming into play in 2016 which will result in increased compliance costs for landlords, and as a result push up rents for tenants.
‘We urge the Government to re-think its proposals around reducing Mortgage Interest Relief, scrapping the Wear and Tear Allowance and hiking up Stamp Duty by 3% on buy to let properties,’ said David Cox, ARLA managing director.
‘Whilst these remain, the Government’s goal of increasing the percentage of people in home ownership is getting further out of reach. The issue of supply and demand in the rental market will be increasingly pushed to its limit with rising demand outstripping supply,’ he added.
He pointed out that the good news is that regulation in the industry looks like it will be tightening up in 2016. ‘We hope that the provisions of the Housing and Planning Bill, when brought into force, will give enforcing bodies and the courts more teeth in tackling rogue and criminal landlords and agents. This will develop in 2016 to enforce harsher penalties for landlords and unregulated agents that aren’t complying with basic laws,’ explained Cox.
‘The Right to Rent checks introduced in the Immigration Act 2014 will be rolled out nationally from 01 February 2016 following a successful pilot scheme in the West Midlands. However, we worry that the goodwill established towards the scheme may be tested by the increase in volume, disenfranchising landlords from the process,’ he added.
Cox said that the industry is pleased that Rent Smart Wales will re-visit the Licensing Fee for agents in January. ‘We feel it is punitive and should be a graduated fee and not a flat rate. We also caution the Welsh Government to consider what resources are being put in place ahead of the enforcement roll out of Rent Smart Wales next November in order to achieve the stated aims of the Welsh Government,’ he pointed out.
ARLA also backs recent plans from the Scottish Government for regulating the lettings industry which it described as ‘bold’. ‘We look forward to working with them during 2016 on the roll out of the proposals. However, we caution against the introduction of rent controls and the withdrawal of no-fault possession route for landlords as this will reduce investment in to the Scottish private rented sector at a time when rental housing is needed more than ever before,’ Cox added.
Mark Hayward, managing director of the National Association of Estate Agents (NAEA), believed that next year we will see a growing struggle for those trying to get onto the home ownership ladder, with house prices further beyond the reach of low to middle earners and rent costs eating away at more of their income.
‘It is important that first time buyers remain at the top of the Government’s agenda in order to help them get a foot on the housing ladder. However, if the supply, specifically of affordable housing doesn’t significantly increase in 2016, first time buyers will continue to feel driven out of the market,’ he explained.
He pointed out that supply is a key issue and that while Chancellor George Osborne’s announcement on the construction of 200,000 new starter homes is a good place to start, it is not enough to solve the worsening crisis. ‘We are at risk of doing too little too late. We are still waiting to see new homes being built; and whilst we wait, house prices continue to rise,’ said Cox.
He predicts that areas outside of London will also continue to grow in popularity, in particular towns such as Oxford, Bristol, Cambridge and Bath which are becoming increasingly attractive and popular, regardless of market conditions.
‘These towns are intrinsically attractive, and favoured by those moving out of London whilst central London plateaus as a result of the astronomical prices,’ he added.
