|
A tightening of regulations regarding the letting of larger properties
containing three or more stores, converted into smaller self contained
residential units, came into force at the beginning of April 2006.
Further information on the License for Multiple Occupation is available
on www.propertylicensing.gov.uk, but here are the basic facts:
The licenses will be issued by the Local Authority after an inspection
regarding room arrangements and sizes, facilities included and fire and
safety regulations. The landlord will also have to satisfy the Local
Authority that acceptable arrangements have been made for the management
of the properties. The costs of these licenses are expected to be around
£100 per each tenant and will be renewable every 5 years.
It’s felt that the tighter regulations may help genuine landlords
wishing to enter the market, by assuring mortgage lenders that these
properties are to be converted and managed in such a way that they could
be favorably considered as suitable for buy to let mortgages.
Unscrupulous landlords may be less than happy with the new rules, which
carry a fine of up to £20,000 if they don’t conform!
Typically the property we’re referring to would be student
accommodation. If you live in or near a University town you’ll be aware
of the huge demand for such accommodation.
Here are a further two rules designed to protect tenants in multiply
occupied properties:
- Tenancy Deposit Scheme (TDS)
- Housing Health and Safety Rating System
First, TDS - This regulation comes into force in October 2006 and is
being introduced as an amendment to the Housing Act 2004.
It has been found that a source of contention between landlords and
tenants is the refundable deposit situation. Some landlords are less
than scrupulous and on the other hand, some tenants are slightly less
than perfect! As soon as TDS comes in, all refundable deposits will be
held in a Tenancy Deposit Scheme. A scheme administrator, acting as a
neutral “referee”, will hold the deposit. At the end of the tenancy the
administrator will pay back the deposit to the tenant if all has gone
well on both sides. If there are any adjustments to be made, they should
be agreed at this time and then the administrator should be informed of
the situation. Payment should be made by the administrator within 10
days of this notification.
If it is impossible to reach an agreement and it proves necessary for
either party to obtain a final court order deciding the proportion of
the deposit to be paid to either party, then the administrator holds the
deposit until this stage is reached and will then pay out the money
accordingly.
When an administrator returns a deposit, interest must be added. The
decision on the rate will be announced by the Government. Any balance of
interest will be retained by the administrator and may be used to fund
the running of the scheme.
Secondly, the Housing Health and Safety Rating System – If a tenant is
concerned that the condition of the property is affecting their health,
they can call in inspectors to make a judgment on this. These inspectors
will have the power to demand any repairs which they think are
necessary. The fine for landlords not complying with these conditions
will be up to £5,000.
Obviously, there will be a cost to landlords in complying with these new
rules and this will have to be recouped. Not all landlords will have the
means to carry out the work and in the short term some of the properties
in really poor condition may close. The end result, though, should be a
better standard of accommodation and a fairer deal overall, making it
more tempting for shrewd investors to enter this type of market via a
buy to let mortgage!
Resource Box
Scrouge Online are a uk based finance website that offer uk residents
access to Life Insurance
along with providing them information on many different financial
services including Mortgages
|
