Assetz® News - Landlords prepare for Respect agenda

Landlords prepare for Respect agenda

12th January 2006 |

This week Tony Blair unveiled his new Respect agenda, which is designed to tackle antisocial behaviour and its associated problems.

In an effort to deal with the problems of so-called 'yob culture', the prime minister stated he would be aiming to "restore the liberty of the law-abiding citizen".

His plans are set to have a major impact on the thousands of residential landlords in the UK, because the details of the proposals contain measures that could put those property investors who have buy-to-let portfolios in the UK in a difficult position. Mr Blair's strategy includes providing police officers with the power to "close down" homes and other premises for up to three months at a time if the properties are being used for "significant, persistent or serious nuisance".

What will be of keen interest to landlords across the country will be what the meaning of "significant, persistent or serious nuisance" will be in practice, because any tenant accused of such behaviour could find themselves evicted, leaving a landlord's property empty for up to three months at a time. While the measure is likely to face strong opposition from human rights groups on the basis that it could force poor people and their families onto the streets for months at a time, property investors are also likely to be concerned about the financial implications of such powers.

The prospect of losing rental yields for up to three months at a time could result in many potential property investors deciding to turn their back on the sector, deciding that the risks of losing money are not worth the potential gains that can be made. This would be a serious blow for the property market in the UK, which has seen prices cool over the past year, because the buy-to-let sector has been the most buoyant in the property industry in recent months.

Conditions are presently good for property investors looking to put money into the UK market, as relatively high house prices means that there is a large pool of people looking to rent. With price inflation recently creeping back up, it has been suggested that the buy-to-let market is set for continued success. However, there will be fears that such an optimistic outlook for the industry could be dampened by the new rules – should they be passed into law – because they could result in potential property investors choosing to avoid the sector.

Another potential pitfall for the sector with the new regulations is that landlords could be caught in the middle of any legislation comprising the ability to close down premises for three months at a time and a threat of legal action from human rights groups.

Therefore, property investors in the UK will need to be closely involved in the future development of the prime minister's plans if they are to develop a scheme which can tackle troublesome tenants while at the same time does not penalise those landlords that have carried out their obligations to the best of their abilities.