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LETTING<br />

LETTING in the LAW<br />

EMMA FURSMAN<br />

warns that the rapid<br />

growth in regulation of<br />

the letting industry<br />

means that landlords<br />

must tread incre<strong>as</strong>ingly<br />

carefully if they are to<br />

make a return on their<br />

investment<br />

20 :<br />

The Journal: December 2005<br />

I left the legal profession in 1997 to join the<br />

world of property management, a career leap<br />

akin to waking up one morning Freaky Fridaystyle<br />

to discover I w<strong>as</strong> no longer an adult but<br />

w<strong>as</strong> 16 again.<br />

Gone were the hallowed halls ringing with ethical<br />

borders, centuries-old traditions carved in stone<br />

and regulations venerated <strong>as</strong> the law of the land.<br />

Instead I had crossed into a n<strong>as</strong>cent world where<br />

rules were rudimentary and regulations highly<br />

optional: if <strong>as</strong> a property agent you checked your<br />

landlord’s g<strong>as</strong> appliances once a year, you were<br />

ahead of the game.<br />

The duty of care landlords owed tenants w<strong>as</strong><br />

obvious and my company quickly established a<br />

code of conduct which included many<br />

precautionary me<strong>as</strong>ures to protect tenants, such<br />

<strong>as</strong> electrical portable appliance tests and safety<br />

checks, periodic electrical inspection <strong>reports</strong>, the<br />

installation of carbon monoxide and smoke<br />

detectors and soft furnishing checks.<br />

Eight years in, the industry is growing up.<br />

However, with growth comes responsibility and<br />

<strong>as</strong> landlords face an escalating amount of<br />

legislation that will trans<strong>for</strong>m the way the<br />

industry operates, many are <strong>as</strong>king, is<br />

bureaucracy overburdening landlords and<br />

threatening profits?<br />

Houses in multiple occupation<br />

The Civic Government (Scotland) Act 1982<br />

(Licensing of Houses in Multiple Occupation)<br />

Order 2000 (<strong>as</strong> amended in 2002 and 2003)<br />

heralded the current wave of legislation and w<strong>as</strong><br />

greeted with all the enthusi<strong>as</strong>m of junk mail.<br />

There w<strong>as</strong> angry chatter of huge conversion<br />

costs, <strong>for</strong> example the potential requirement <strong>for</strong><br />

external fire escapes.<br />

In reality, the cost today of converting premises<br />

<strong>for</strong> HMO purposes is approximately £2,000,<br />

illustrating the industry’s adaptability to this<br />

legislative challenge.This is not an insignificant<br />

amount, but <strong>for</strong> those landlords willing to invest<br />

in HMO properties, there are rich rewards, even<br />

with the ongoing costs of annual inspections and<br />

licensing fees. As many landlords have shied<br />

away from this legislation-heavy zone, creating a<br />

deficit of accommodation, a glut of student<br />

tenants in Scotland’s cities, backed by parental<br />

guarantees, h<strong>as</strong> kept demand high and pushed<br />

rents up.<br />

Antisocial behaviour<br />

Another piece of legislation set to further<br />

encumber landlords in the future with tough<br />

penalties if not observed, is the Antisocial<br />

Behaviour (Scotland) Act 2004, which will hand<br />

local authorities the power to regulate rental<br />

accommodation. Due to be implemented early<br />

next year, it will oblige all private landlords in<br />

Scotland to register with the appropriate local<br />

authority and specifies that it will be a criminal<br />

offence <strong>for</strong> an unregistered person to let out<br />

residential property.<br />

www.journalonline.co.uk

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