New research from Landlord Mortgages suggests that the proportion of buy-to-let property investors who intend to manage their own property in the future has dropped to four per cent as a result of the Tenancy Deposit Scheme (TDS).
The difference in numbers is stark. In 2005, 22 per cent of landlords who used letting agents intended to manage their own property when the current lease expired but by 2006, this number had dropped by 18 per cent.
More than half of respondents (52 per cent) cited the TDS' introduction as the reason for keeping faith with a letting agent's management on their behalf.
The scheme is due to be introduced in October 2006 and it will become a legal requirement for all landlords to take on either a custodial or insurance-based version of the scheme.
The idea behind the TDS is that it will safeguard tenants against landlords who illegally retain all or part of their tenants' deposits when they leave a property, which, although a positive step in increased industry confidence, will increase administrative costs.
"While we welcome any move which benefits consumers and improves the image of the buy-to-let market, this research reveals the hidden impact of regulation especially the Tenancy Deposit Scheme," said Lee Grandin, managing director of Landlord Mortgages.
"As the market becomes increasingly complex such legislative changes may even lead to some landlords abandoning the sector altogether," he warned, "a move which would adversely affect consumers over the long term."To read more about buy-to-let mortgages, click here.
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