Why are buy to let investors taking on the role of the Home office? And why do you need to know?
There’s usually two ways of getting people to do what you want, or to achieve the result you are after; and that’s by using carrots and sticks.
The metaphor, of course, comes from the days when farmers would simultaneously reward a donkey with a carrot whilst also giving it a good whack on the backside – that was enough to keep the donkey moving.
In the world of property the Government have obviously decided that the best way to get what they want – a slow down in buy to let- is to use the stick and the stick.
The first stick is tax changes (see previous video on section 24)
The second stick is more regulation.
The idea behind the second stick seems to be that even if you can’t tax a landlord or property investor out of existence, you can make the red tape so onerous they just give up the will to live, and with it the will to try and make property work.
So, although the budget had no new nasties for landlord/property investors, don’t expect the demands of new regulation to subside.
Regulation is all the rage. Even the party which is associated with de-regulation is enjoying it’s new found persona and dreaming up all sorts of stuff that even the party that has traditionally embraced regulation would have thought twice about imposing.
Who on earth came up with the idea that investors should take over immigration checks? Because, in essence, taht’s what happened. And if you don’t get it right, even if the potential tenant wilfully deceives you, you will be in for a big fine, and possibly (probably) prison.
And it’s no good leaving this with your managing agents – if they mess up, the buck stops with you, the owner.
So you will need to check potential tenants IDs including passports and get their NI numbers, but of course that isn’t fool proof is someone want’s to hoodwink you.
Why would they want to? Well, I’ve had a couple of occasions where canabis farmers have tried to get into my properties using false IDs.
Anyway, the point is that regulation is probably just going to get tougher and tougher, as an alternative to, and in addition to, tax being the main means of keeping property investors under control and disincentivised.
The upside of this is that it will encourage some to leave the Private Rented Sector altogether, providing some buying opportunities, and may keep others out, thus reducing competition and potentially increasing rents.
Here’s to successful property investing
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
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