A tangle of red tape?

A new batch of regulations is threatening to stifle the rental market. Chris Partridge reports

Gordon Brown's announcement of an attack on red tape in his Budget speech last week left buy-to-let landlords feeling distinctly left out. According to letting agents, a rising tide of regulations is threatening the viability of many buy-to-let investments, and nothing the Chancellor announced is going to help.

Gordon Brown's announcement of an attack on red tape in his Budget speech last week left buy-to-let landlords feeling distinctly left out. According to letting agents, a rising tide of regulations is threatening the viability of many buy-to-let investments, and nothing the Chancellor announced is going to help.

The president of the Association of Residential Letting Agents, Robert Jordan, believes landlords are now faced with such a volume of paperwork there is a danger that many will simply sell their properties to owner-occupiers. The subsequent dearth of rental properties would push rents up - and the wave of property hitting the already weak sales market could depress prices further.

"There has been a whole raft of things one after another," he says. "If you look at each one in isolation they are sensible but if you put them together it amounts to a burden of regulation that could kill off a private rented sector that has made 2.5 million houses available to rent with no tax breaks and at no cost to the Government."

Regulations and inspections designed to protect tenants from harm are laudable but are putting an unbearable burden on landlords, who have to pass the added expense on to tenants in the form of increased rents, Jordan says.

For example, the Housing Health and Safety Rating System, which is soon to come into force, is intended to give surveyors an "evidence-based" system for assessing the risks posed by properties. The risks can be almost anything, from falling down stairs to asbestos in the lagging. To assess the risk, however, surveyors must take into account the probability of harm occurring (a calculation involving logrithmic scales to various bases) and the seriousness of the harm.

So, for example, a window that opens outwards is a risk to children, but such a window on the ground floor with a flower bed underneath is unlikely to cause serious injury.

All these risks must be listed, assessed and a ranking calculated using a formidably complex form or specialist computer software. The system replaces the Housing Fitness Standard, which used just nine simple ratings.

Private landlords who save money by doing their own simple plumbing and electrical work will also be hit by new building regulations that require any electrical work more complex than changing a fuse to be either performed by a registered electrician or inspected by a local authority buildings control officer.

Building control is a particular nightmare. "I know a lady in London who installed a central heating system and she had to get approval from three separate departments, including the fire service, the planning officer and the environmental health officer. Each one gave different and conflicting orders," says Jordan. "It is a total joke; we haven't got joined-up government at all." She was lucky she did not own a listed building, otherwise the local conservation officer and English Heritage would have been involved as well. The Kyoto treaty on greenhouse gas emissions will soon mean that every landlord will have to have an energy use survey done every five years for every property.

Even the recently introduced Tenancy Deposit Scheme comes in for criticism, even though it was set up as the result of an ARLA initiative. "The Government wants a raft of competing tenancy deposit schemes instead of just one, which will baffle everybody," he says. Jordan adds that even the Chancellor's promise to cut the number of regulators from 39 to nine will not help the private rented sector because the Government has consistently refused to appoint any regulators at all.

"The Government wanted to regulate but won't take the logical step of setting up a regulatory body for the sector," he says.

The lack of an overall regulatory body for private rentals means that cowboys can prosper, according to Jordan. He says: "A lot of rogue landlords and agents live in the twilight zone and they will just continue to ignore it all completely and they will not be picked up. I am very keen on the Australian model where they have specific regulatory regimes but marry it with a high- speed court process."

According to James Scott-Lee, the chairman of Chancellors estate agents and chairman of the lettings group of the Royal Institution of Chartered Surveyors, the main victims of the proposal will be small investors.

"I think the new regulations are going to be seen as very complex and expensive, and loads of people will ask if they can cope. If they need professional help, it may be too expensive," he says. "It is important that the sector remain competitive."

Ironically, one of the Chancellor's main actions in his fight against red tape was to promote the Better Regulation Task Force into the Better Regulation Commission, a sort of "regulation regulator"; yet another body qualified to stick its nose in and create confusion.