RICS recommendations for the Private Rented Sector

by Property 118

14:31 PM, 8th December 2016
About 2 years ago

RICS recommendations for the Private Rented Sector

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RICS recommendations for the Private Rented Sector

RICSThe Royal Institute of Chartered Surveyors (RICS) have produced a Rented Sector Policy Paper for England.

To see the full report Click Here

The Introduction starts:

“Since the 1990s, the UK has undergone significant demographic change: people are settling down later and living longer, incomes of younger households generally haven’t risen in real terms since 2008 (Redfern Report 2016), albeit disproportionately to house prices. At the same time the UK is experiencing a difficult economic climate, and homelessness is on the rise. As a result, a much greater proportion of the population will be renting property, and those applying as homeless are expected to increase over the next two Parliaments.”

The RICS Recommendations for the Private Rented Sector are:

– Repealing the second home SDLT charge. As a minimum, Built to Rent properties should be exempt if sold onto smaller investors.

– Reconsideration of the proposed changes to mortgage relief as a means to halt, and reverse, the exodus of small scale investors leaving the sector.

– The UK Government introduces a legal obligation for all letting agents to be a member of a recognised professional body, such as RICS and ARLA, or the National Approved Letting Scheme (NALS).

– Investigation into the notion of tenant passports as a means to negate the charging by letting agents for background and finance checks. Held by local authorities, this passport should also save money for the tenants, and the administrative burden placed upon letting agents.

– Lettings agents should have to comply with the same regulatory requirements as estate agents through their inclusion in the 1979 Estate Agency Act.

– Introduce statutory minimum professional standards for all residential lettings agents, by giving statutory force to the Private Rented Sector Code of Practice.

– Establishment of light-touch landlord registration. This low-cost registration scheme, held and enforced centrally, will ensure that all let properties across England are known to HMRC and the Home Office. By using data held by Tenant Deposit Schemes (TDS), this proposal will also assist risk profiling and locating illegal immigrants.

– Establish Development Delivery Units (DDUs) to work in partnership with local authorities, using with Compulsory Purchase Order (CPO) powers if necessary, to allocate land specifically for use by Build to Rent, and other, developers.

– Stock owning local authorities should be enabled to use better the prudential borrowing capacity of their asset base to support Build to Rent development.

– The Government should enter into land covenants on public owned land under which the Local Authorities would retain ownership of the freehold, and negotiate fixed long-term leasehold on the land. The ground rent received by Local Authorities would be related to the land value and would represent a portion of the overall sites’ income.

– Commitment to a long term approach should provide stability for institutional investment, building on the Build to Rent Fund.

– Using the taxation system to encourage contributions from self-invested private pension schemes (SIPPS) to unleash the untapped potential of pensions to invest in the PRS. This should provide a route for the pressure building in the Buy to Let market, by enabling the creation of new vehicles and increase supply over and above existing development levels.



Comments

Dr Rosalind Beck

15:22 PM, 8th December 2016
About 2 years ago

So RICS now is also recommending:

'Reconsideration of the proposed changes to mortgage relief as a means to halt, and reverse, the exodus of small scale investors leaving the sector.'

i.e. reversal of this ludicrous legislation. RICS is acknowledging how this is leading to landlords' selling up, just at a time when we should be encouraged to expand more. The 'other side' often mention the 'German model' when in fact there is a massive proportion of 'traditional' landlords providing housing there. The Government's move to annihilate the sector and prepare the way for giant organisations, many of whom fund the Tory Party, must be stopped. If it isn't, the housing crisis is only going to get worse - with higher rents, evictions and homelessness.

It strikes me that the people at the top are only interested in lining their own and/or their Party's pockets and don't give a damn about the people they are supposed to serve.

James Fraser

16:28 PM, 8th December 2016
About 2 years ago

Well done RICS! Finally, someone has said what needs to be said. Cant disagree with any of that. Lets hope government now listen - and act on these recommendations!

Rachel Hodge

18:55 PM, 8th December 2016
About 2 years ago

Excellent report written by professionals, not politicians, reinforcing our message.

Who is going to read the paper, and will it have any influence?

Sean Graveney

9:00 AM, 9th December 2016
About 2 years ago

I fear the elephant in the room in all this is Interests rate rises. Even if S24 was repealed then what kind of interest rate rise would have an equivalent effect? No amount of campaigning would stop that and another rate rise from America seems to be on its way.

Gromit

10:18 AM, 9th December 2016
About 2 years ago

Reply to the comment left by "Sean Graveney" at "09/12/2016 - 09:00":

Of course, any business with any debts will have its profitability hit by an interest rate rise, and BTL is no exception; in fact, BTL is often more highly leveraged. This is something that Mark Carney raised concerns about as a possible cause of economic instability. However, what s.24 does is to bring down the interest rate at which a Landlords business becomes non-profitable - nice one George.

Is Carney right though? I didn't see Landlords rushing to the exit during the financial crash 8 years ago.

Sean Graveney

10:23 AM, 9th December 2016
About 2 years ago

I'm guessing that's because interest rates were reduced. That wouldn't be possible this time. My question was regarding what interest rate would replicate S24?

Gromit

11:22 AM, 9th December 2016
About 2 years ago

Reply to the comment left by "Sean Graveney" at "09/12/2016 - 10:23":

That'll depend on the individual circumstances of the Landlord i.e. exactly how highly leveraged, and what his/her rental cover is.


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