BLOG: ‘Why I feel sorry for Rachel Reeves’
Adam Walker is in danger of finding himself in a minority of one, as he pleads the case for Rachel Reeves – but not as a Chancellor, but as an accidental landlord bamboozled by legal compliance.
I never thought that I would utter these words but I actually feel quite sorry for Rachel Reeves this morning. She has been caught red-handed letting out her house without the correct licence from the local authority.
She claims that she was unaware of the legislation but ignorance is no excuse for breaking the law and she should be fined the maximum amount of £30,000 as an example to ‘rogue landlords’ of the need to comply with all legislation.
The reason that I feel sorry for her however, is that the legislation itself is unfair and it has been so poorly publicised that many other landlords and a significant number of letting agents are unaware of the provisions and have fallen foul of the rules.
Trade sale fall-through
Recent legislation concerning supplementary and additional licences has had a direct impact on my own business. We recently had a multi-million pound business sale fall through because the lettings manager had failed to apply for several dozen licences.
We recently had a multi-million pound business sale fall through because the lettings manager had failed to apply for several dozen licences.”
Another multi million pound sale has been postponed for the same reason. In addition we have several other businesses that we cannot put on the market until they have applied for and obtained a licence for every single one of their qualifying properties.
It is worth reflecting on how this legislation came about. When I started driving speeding tickets and parking tickets were very rare. Many people would park on a blind bend or drive at twice the speed limit with impunity. There was a consensus that something had to be done and the early legislation that was passed to deal with these issues was both popular and effective.
Money-making councils
But fifty years later most of this legislation has been turned into a shameless attempt to raise money. Local authorities in London issued over nine million penalty tickets last year and earned many hundreds of millions of pounds from parking charges and fines. The system is totally out of control and the legislation is now detested by the majority of motorists including those who originally supported its introduction.
Local authorities in London issued over nine million penalty tickets last year and earned many hundreds of millions of pounds from parking charges and fines.”
Exactly the same thing is now happening in the property sector. The process started with statutory licences for large HMO’s These were necessary and included sensible provisions such as fire precautions. Some local authorities then introduced licences for smaller properties
The trigger was usually three or more people from different families occupying the same property. The need for this legislation was much less obvious If two friends decide to share a two-bedroom flat and one of them then falls in love and ask their partner to move in – why is the risk to their safety suddenly increased?
Financial motivation
The motivation for this legislation was in my opinion mostly financial and the scheme has raised many millions of pounds for local authorities since it was introduced.
The licence fees have been supplemented by the fines that have been levied on both landlords and agents who have broken the rules very often inadvertently. However despite many objections from landlords and agents the legislation has been extended further.
This legislation cannot have any purpose other than to raise money.”
Now we have a third category of licensing which means that any property situated in a designated road needs a licence to rent it out even if it is occupied by just a single tenant. This legislation cannot have any purpose other than to raise money.
Once the fee has been paid the local authority doesn’t have to do anything at all. There is usually no inspection of the property and sometimes it takes many months before the licence is issued. It is just another way to collect money from landlords for doing nothing at all.
Huge penalties for innocent mistakes
The level of fines that can and are being imposed for innocent mistakes is huge. The maximum fine for not having a licence is £30,000 which is wholly disproportionate to the offence. The tenants have not suffered any financial loss or being put in any danger but regardless of this a fine is imposed. Imagine what would happen if the average fine for speeding was to be too increased to £30,000. There would be absolute outrage.
So why is it OK for landlords to be subjected to these draconian penalties ?
I fear that in view of the size of the fines local authorities will soon start to mount proactive campaigns to catch out as many landlords and agents as possible so as an agent it is essential that you take the steps necessary to protect yourself as a matter of urgency.
As an agent it is essential that you take the steps necessary to protect yourself as a matter of urgency.”
This will require cooperation from your landlords but if any of them refuse to apply for a licence then you need to take stern action against them. This might include making them aware that they are liable for the fine not you, withholding rent until the application is made and even terminating your contract with them if they continue to flout the rules
Take action immediately
This is not something that you can ignore and you need to take action immediately. We are regularly seeing businesses that are unsaleable and virtually worthless because they’re not compliant with this legislation and the time and money necessary to put things right can be very significant.
My advice therefore would be to conduct a thorough audit of all of your properties immediately and ensure that you take the necessary action without delay
Adam Walker Is a business sales broker who has been selling letting agencies for the last 32 years.
Why becoming an accidental landlord is so much more than red-tape
The embattled Chancellor of the Exchequer whose frequent leaks to the media about possible SDLT changes, Mansion tax initiatives and tax on uplifts on property equity at point of sale, now finds herself ‘bunny in the headlights’ for not getting a licence to rent her home out.
This means her tenant could receive £41,000 of rent, that Reeves could get a £30,000 fine and a civil or even criminal conviction. Plus of course she has a residential mortgage on her Dulwich home – so did she inform the lender. If not the lender could withdraw the mortgage and she would need to get a commercial landlord mortgage at higher cost. Also some lenders charge a higher rate of interest if a house is rented out, having formally been a residential home.
Why all of this matters is that the UK economy is worth about £2.7 Trn annually and the fiscal events – budgets given by the Chancellor have a great impact on the that economy, they stimulate growth or stagnation. Given the importance of getting the budget right – I think it is time to re-think if Rachel who lied on her CV is actually up to the job of steering UK Plc out of the economic turbulence it presently finds itself in.
Reeves become an accidental landlord because her life changed, a move to 11 Downing street. This brought with it a new set of rules and regulations that needed to be complied with, failure to do so will have both financial and probably political repercussions. But for even those not in the cabinet, it is clear that there is a real push for the Private Rental Sector (PRS) to only have institutional landlords to ensure things are done properly, (irony) as the minefield of regulations – recently bolstered by the new Act which has pushed even more power to the tenant, means that there are now beartraps aplenty for the armature landlord.
And on that theme, given the amount of kites that have been flown by the treasury team, and the lateness of our next budget the 26th of November, maybe what the government and the nation needs is not an amateur Chancellor bereft of fiscal strategy. Looking as the ex-governor of the Bank of England recently commented to solve things with weak policy worked out on the back of a ‘fag packet’.
Maybe Rachel has one merit, if there is only to be one budget a year, instead of the usual two, by Autumn 2026 it is likely that she and the present PM might well not be in the cabinet, her fall from grace being that she lied to the PM over this present rental licencing debacle, and Starmer’s fall being due to his trouncing in the May 2026 local elections.