30 August 2013, There’s increasing pressure on the private rental sector to do better.

Landlords must improve their standards and so – too - must lettings agents say the legislators and voluntary sector, almost as one voice.

Landlords and their agents recently faced acting as unofficial immigration control officers under Government plans and hear ever-louder calls for regulation. The Lib Dems are reported as wanting to raise Capital Gains Tax from 28 per cent to 40 or 45 per cent, which might ring the “sell up” warning bells despite the alleged buy to let bubble in the current market. And for many landlords, the solution may be delivered by none other than George Osborne.

When the Help to Buy scheme announced in Osborne’s March Budget comes into full effect in January, 2014, it will make buyers with low deposits but high incomes viable buyers of older properties that have, until now, been excluded from any scheme. Many of these individuals live in Greater London, just the area where pressure is at its highest for landlords in particular with Boris Johnson’s “voluntary” register, the London Lettings Standard.

With Help to Buy, anyone looking to buy a property up to £600,000 property can become home owners providing they have at least a five per cent plus stamp duty and legal fees. With lenders also under pressure to deliver more mortgages, and London a prime property market where homes prices have risen almost as much as they’ve fallen elsewhere, there’s sense in financing the London market for both lenders and the Government, which will see its funding guarantees facing less risk of a shortfall should the borrower default.

Landlords face further pressure in the cap on housing benefit and it is now paid to the benefit claimant and not to the landlord direct. People on benefits have money they’ve not seen before just as their other income diminishes. They have cash in their pocket to fund a possibly dwindling lifestyle – until the landlord wants his rent arrears.

There will be a real temptation for landlords in that situation to get out of the lettings arena once they get possession. After all, Help to Buy and the vibrant property market in a city peopled by plenty with good incomes and a desire to own a home combine to deliver the perfect solution. Sell up and invest in a town where their cash will buy a house appealing to tenants not funded by benefits, or cash in and find another investment vehicle for what is, for many, their pension pot.

Many of the properties currently let in Greater London will have values below the £600,000 ceiling even in the current market and the temptation to take the cash and run may be irresistible for many landlords.

Consequently, this will place even greater pressure on the London rental market as squeezed tenants chase ever diminishing numbers of lettings properties. Simultaneously, the boroughs are likely to see an increasing number of unauthorised, unsupervised and unsuitable lettings properties in the suburban garages and garden sheds which have been a recent focus of enforcement activity.

Landlords who stay in the game may need to fund improvements to their stock to keep up with legislators’ quality and safety demands and instruct an agent who is a member of a professional body, such as ARLA to ensure their property complies, again placing upward pressure on rents and in turn driving even more potential tenants to seek Help to Buy funding to take refuge in ownership.

At the same time lettings agents are also under the cosh. There are calls for fees to be advertised, scrutinised, and even abolished but many agents argue that fees are essential to fund their businesses. Certainly, agents in Central London have high overheads for their premises even before they are staffed and the stock is marketed.

Fee abolition and severe pressure on management charges to landlords will almost certainly cause rents to rise in order to cover the shortfall. To be realistic, rents will have to be at a level where they cover all fees during the first period of tenancy. As this may only be six months, the fees will be added to the rent at a sufficient rate to recover them in that period.

It’s hard to see what solutions exist to suit all those concerned, but it’s increasingly easy for landlords to see the exit door that opens in January.