There has been a positive flurry of tweets and emails crossing my computer screen today, preceding and then following, the announcement from the Communities and Local Government (CLG) Dept. about their plans for the Private Rented Sector.
You can read the news item here, and the report itself can be downloaded from here.
This follows on from the consultation document published in the summer, which I wrote about here.
The CLG on their news page set out a list of new measures, and I copy this below, with a few comments from myself and others.
However everything needs to be read in the light of the forthcoming election (believed to be taking place on 6 May), which many people consider is most likely to be won by the Conservatives. The government therefore have limited time to get things done, and much of this list therefore should be considered just as a statement of intent, should Labour stay in power.
“Funding for a new housing hotline offering free help and advice for private tenants should things go wrong”
This would I am sure be very welcome to tenants. However would it not be more cost effective simply to provide more funding to the existing organisations who already provide help to tenants, such as Shelter and the Citizens Advice Bureau?
“An online word-of-mouth directory of landlords similar to tripadvisor or mumsnet.”
I suspect that this suggestion will not be popular at all with landlords, although vote wise, there are more tenants in the country than there are landlords! See also the NLA comments below. It is most unlikely however that anything like this can be set up before the election (so landlords are safe for a while).
“A requirement for written tenancy agreements”
This was of course suggested by the Law Commission in their report, years ago. The Law Commission took the view that there should be prescribed forms of tenancy agreement setting out all the relevant law, which should be in plain English. They also recommended penalties for default.
The government paper states that prescribed forms of tenancy agreement are being considered, but goes on to say that more work is needed before a decision can be made. This probably means that nothing much will happen before the election.
“An increase of the short-term rental threshold from £25,000 to £100,000 a year.”
This has been on the cards for a long time, and of all the announcements made, this is the measure most likely (indeed it is virtually certain) to come into effect. The report states that ‘subject to the availability of Parliamentary time, we plan to lay a Statutory Instrument changing the threshold to £100,000’ which would come into effect on 1 April. Landlords of high rent properties should therefore start considering which tenancy deposit scheme they will be using after that date.
“A National Register for Landlords to help tenants make basic checks on their prospective landlords. Councils will be able to identify local landlords more easily, making enforcement of letting rules easier, and registered landlords will gain access to the latest advice and information on what their role entails and how best to fulfill their responsibilities”
The proposal for a register has been vigorously opposed by many landlords ever since it was first suggested. The government report however states that they are ‘committed to the establishment of a National Register’, and that they are now clear on the firm proposals for the its basic operation, which are as follows (and I quote):
- A national register run nationally
- Compulsory for all landlords (defined as those letting a property on a tenancy agreement – this excludes leasehold, resident landlords and holiday lets)
- Basic information required on registration will be name (plus date of birth to ensure uniqueness), contact address, address(es) of property for rent
- No further information will be required and there will be no hurdles to registration
- There will be a registration fee to cover administration costs
- Registered landlords will receive a unique registration number which will be a prerequisite to key landlord activities
- Failure to register will be a civil offence attracting a cash penalty
- Compliance will be enforced through the two elements set out above backed up by extensive national publicity focused on both landlords and tenants
- On registration, landlords will receive a “starter pack” containing information about their rights and responsibilities and helpful links to other organisations.
- Similar information for tenants will also be made available as part of the Register website
- public enforcement agencies will have access to the full data. Landlords will be able to access their data (using their unique registration number). Tenants will be able to access current or prospective landlords’ data (using the relevant landlord’s unique registration number and, therefore, only with permission from the landlord)
However there are a lot of other matters relating to the Register which he CLG are still unsure about. So it is possible that this also may not make the statute book before the election.
Needless to say, the National Landlords Association is deeply unhappy about the proposals:
“At the same time as having to provide more accommodation in order to plug the housing gap, landlords are also now expected to be on a register, declare the addresses of their rental properties and also have feedback (whether true or false) posted about them on the internet. Where is the incentive for landlords to develop their housing provision in today’s proposals? And how exactly do these administrative functions actually improve the quality of rental property?”
Better regulation of letting and managing agents
This is very welcome and long overdue. Many of the problems encountered by both landlords and tenants stem from inept (and occasionally downright dishonest) letting agents. Good agents (of which there are many) will also welcome this, as it will root out the bad agents who, most unfairly, give them all a bad name.
These are what the government report says are the key principles and characteristics which should underpin the new regime (and I quote):
- A separate regime from estate agency.
- Should cover all letting and managing agents, including landlords who manage properties on behalf of other landlords, and those managing long leasehold properties. Should not cover landlords managing their own properties.
- Self funding through fees paid by agents to join
- Must contain the following elements:
- A clear mechanism by which consumers feel confident that they will get a fair hearing if they complain
- The ability to provide redress, where appropriate
- Non-negotiable and enforceable safeguards to protect client money
- Hurdles to entry ensuring agents conform to basic standards including basic levels of knowledge and expertise.
- Enforceable undertakings around the quality of stock let and managed by agents (including energy efficiency) and the fairness and transparency of fees
- The ability to impose sanctions
The CLG report also sets out proposals for accreditation and for creating Local Letting Agencies.
There are a lot of good things in the report. Personally, although I know it will annoy landlords of high value premises, I think that the increase of the AST rent limit is well overdue. I also think that a requirement for all landlords to give tenancy agreements is a good one.
So far as the Register is concerned, I can see many advantages to it and can certainly see why it is attractive to government. For one thing, it will enable them to have a much better understanding of how many landlords there actually are, so they can plan accordingly. I can also sympathise with landlords though, and there may perhaps be some human rights implications if they are forced to make make public what which many landlords consider to be private information.
It could also end up being an expensive waste of time. Professor Martin Partington in a talk which I reported here was of the view that ‘light touch’ regulation would either be ineffectual or not ‘light touch’. We will have to see.
The NLA however is steadfast in its opposition, to what it believes is the wrong approach to the problem of rogue landlords:
“The NLA has said again and again that we do not need further regulation which over-burdens the overwhelming majority of good landlords. However, we recognise the desperate need for local authorities to better use existing powers to drive up standards and root out rogue operators. Once again, we call on councils to devise strategies which target rogue landlords without penalising the law-abiding majority.
“For many landlords today’s announcement when combined with last week’s proposed changes to the planning regime surrounding Houses in Multiple Occupation (HMO) will not make for good reading. Very little of what we have before us recognises the value of the majority of good landlords who work tirelessly in the provision of decent and affordable housing solutions. Landlords could be forgiven for thinking that this latest round of measures is little more than landlord-bashing by the Government.”
The British Property Federation is also critical
The government risks alienating the UK’s one million plus private landlords with pre-election showboating policies that overshadow the desperate need to encourage investment in the sector,
Going on to say
“There is a growing mood of hostility towards registration amongst landlords. We will defend landlords’ interests robustly on any legislative proposals because past experience has shown that policy theory often ends up being indiscriminate in practice. It is important that any new measures target the rogues whilst being fair to good landlords. Decent landlords are up for raising standards, but do not believe the current proposal for landlord registration is true to the Rugg Review vision of a simple and well-enforced scheme.”
It will be interesting to see how much of the program set out in this paper makes it to the statute book before May 6th, and if the Conservatives then take over government, how much of it will survive the change.
