Affects of new licenses for landlords

Nine months after the new licences for landlords were introduced it is now
time for the buy to let landlord to count the cost and evaluate just how the
market has changed.

The new licences only affected landlords who owned houses in multiple occupation,
commonly known as HMOs. In reality, this meant that student landlords were
the most likely to have seen market changes and increased costs.

A report by Heritable Bank has revealed that there is a dramatic disparity
in costs of complying with the new regulations, with some postcodes costing
as much as £1,040 more than other areas. It is only a matter of time
before these differences begin to have an effect on the buy to let market in
the regions that charge the most to obtain the necessary licence, in order
to own an HMO.

Worryingly, even after nearly a year, 12 percent of landlords confessed to
knowing absolutely nothing about the new regulations, implying that there are
still thousands of landlords failing to comply and potentially facing large
fines.

Those investors who have fully embraced the new regulations face an enormous
range of potential fees, leading to a huge disparity of costs, thus altering
the student let market for buy to let investors.

Huge range of licensing fees

As part of the research 57 local authorities were examined
and it was found that licence fees range from between £60 and £1,100. Amazingly,
Richmond charges £105 a year for the licence, whereas Wandsworth charges
a whopping £1,100 for the very same licence. Geographically, the two
regions are extremely close and these added costs are likely to drive investors
more towards Richmond. Even with no additional changes, a landlord in Wandsworth
will now have to make approximately £83 more per month compared with
a landlord in Richmond, just to be on a level playing field when compared with
neighbouring investors.

In the know

Fortunately, as a savvy buy to let landlord who is now aware of the potential
differences, you are one step ahead of the game in making sure that you calculate
the impact of these new fees, local authority by local authority. For many
investors, the new licence requirements mean that simply they will no longer
invest or manage HMO property, leaving the market undersupplied and ripe for
those who understand the new system. In time, these disparities will become
part and parcel of any buy to let project calculation. But in the meantime,
those in the know can make the most of their additional knowledge!

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