Summary

New regulations concerning larger properties in multiple occupation may make a buy to let mortgage a viable proposition. The end result of this should improve the standard of such properties.

New rules for buy to let landlords

Author: Michael Challiner

A tightening of regulations regarding the letting of larger properties

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Life Insurance News

containing three or more storeys, converted into smaller self contained residential units, came into force at the beginning of April 2006. Further information on the Licence for Multiple Occupation is available on www.propertylicensing.gov.uk, but here are the basic facts:

The licences 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 licences 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 favourably 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.

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