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13 June 2006
New legislation to be implemented in the buy-to-let sector next month means that landlords must comply or risk fines of up to £20,000, mortgage experts have advised.
Landlord licenses will be required for any House in Multiple Occupation (HMO), although the situation is complicated as only some HMOs will require a mandatory license, claims mortgage broker John Charcol.
Licenses vet a landlord's suitability for being a landlord, and so will not be transferable to a new landlord if the property is sold.
Local authorities will be able to set their own charges for the licences, with initial indications suggesting that fees could range from £100 to £1,100 in different areas.
Other changes mean that landlords will no longer be able to hold their tenant's deposit without insurance and lenders who don't lend on HMOs may find themselves doing so as property is reclassified.
"Much depends on how many buy-to-let investors will avoid the sector in view of the extra costs and hassle of these changes," said Ray Boulger of John Charcol.
"This will determine to what extent, if at all, investor demand will be reduced for the types of property affected."
If you have a buy-to-let mortgage and feel that you may be affected by additional costs, order your credit report now and find out where you stand financially.
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