Why is this?

Particularly as there are many reports in the press of negligent and criminal agents.

Two recent examples:

The first is from Plymouth (first brought to my attention by the excellent Property 118 blog) where Jacqueline and Tony Burridge trading as Hothomes UK disappeared owing landlords and tenants sums estimated at almost half a million.

Rent has been collected but not paid over to landlords, save by cheques which subsequently bounced.  Deposits have been collected from tenants and not protected (meaning that the hapless landlords will be liable to the tenants for the money).

Then there is this report on Lettings Today  about a company in Milton Keynes who have closed down, again owing both landlords and tenants vast sums of money.

These are just two recent examples of a problem which ocures again and again. It will continue to occur until letting agents are properly regulated by law.

The need for proper regulation

In my opinion, which I am sure will be shared by many people (not least those who have lost money by negligent and criminal agents) it is an absolute scandal that the lettings industry remains unregulated.

Organisations which hold other people’s money are in a special position. They have the power to cause very serious loss to people who trust them. Letting agents generally hold many thousands of pounds at any one time. Why are they exempt from regulation?

Other organisations holding other people’s money are regulated

Banks and financial institutions are regulated by the Financial Services Authority (FSA), the Treasury and the Bank of England. Solicitors, who often hold clients money, are reglated by the Solicitors Reglation Authority (SRA).

For example, as I solicitor I have to hold all clients money in a separate clients account. This is audited annually by an independent accountant who has to file a report with the SRA.

To get my practising certificate I have to confirm that I have professional indemnity insurance in place and have done 16 hours per year continuing professional development.

If I fail to comply with the requirements or if I breach the solicitors accounts rules and deal inappropriately with clients money, I can lose my practising certificate and my livelihood.

Finally, the whole profession pays into a fund which is used to provide compensation to clients who are for one reason or another unable to claim under their solicitor’s PI insurance.

So why are letting agents exempt?

If someone wants to set up as a letting agent, all they have to do is set up shop and start taking peoples money.

• They do not need to have any training
• They are not required by law to have a separate client account
• They do not have to get their accounts independently audited
• There is no regulatory body

And yet these people can hold thousands and in some cases millions of pounds of other people’s money.  To do with as they like.

Problems are not just financial

As well as the financial side of things, incompetent agents can cause endless misery by

• Failing to do proper or any checks on new tenants (resulting in unsuitable tenants being accepted, generally resulting in substantial financial losses for their landlords)
• Failing to do regular inspections of properties, meaining that problems do not get picked up
• Failing to deal with tenants requests for repairs
• Failing to protect deposits under an authorised scheme

To mention just a few things.

Confusion for the public

Not all agents are negligent or criminal. Not by a long stretch.   There are many, many agents who provide an excellent service.  Firms who are regulated voluntarily by joining organisations such as ARLA and RICS.  Or the forthcoming SAFEagent scheme (website here).

However excellence does not come cheap.  And if the firm further up the street offers what appears to be a more competitively priced service, they will attract customers.  Who will have no idea that the firm they have selected is unregulated and inefficient.  Until the problems start.

Calls for regulation

There have been calls for agent regulation for many years, in particular from ARLA. Understandably, as rogue agents taint the entire industry.

The report commissioned by the last government from Dr Julie Rugg recommended agent regulation and the last government indicated that they would be bringing this into effect.

However the current administration seems to be happy with things the way they are and see no need for additional regulation in the private rented sector.  This is maybe understandable for standard lettings law.  But in the case of agent regulation? I think that they are wrong.   Very wrong.

What do you think about it?

The report considers what seems to be a permanent trend – the decline in home ownership in this country.  Together with the worrying fact that this does not appear to be relected in government policy, which is still based on the idea of increasing home ownership.

Decline in home ownership

The peak of home ownership it seems was in 2003 with 70.9%. It has now slid down to 67.4% in 2009/10.

There are a number of reasons for this:

• property prices are high meaning that it is beyond the reach of most people
• Greater personal debt, in particular
• young people leaving full time education having to pay off loans taken out to pay for tuition and other expenses
• Since the financial crises mortgages have been harder to obtain, and
• Changing work patterns and increased mobility make renting more attractive

Problems for government

Heywood states that the English population is set to increase by about 30% in the next 25 years which equates to some 250,000 households per year. With house building at an all time low, this is worrying.

However government seems to be turning a blind eye. The coalition has affirmed its commitment to extending home ownership, for example  Grant Shapps ‘Age of Aspiration’ speech. To quote from the paper

Much government policy and activity is predicated on high and rising levels of home ownership. This includes economic policy, asset-based welfare policies such as elderly care in the community, revenue from taxation including stamp duty land tax, and a range of other services.

Asset based welfare policies are those which provide service on the basis that they will be paid back by the recipients from their assets – in most cases the family home.  However if people are living in rented accommodation this will not be possible – meaning in most cases that government will not get repaid.

Pluses and minuses

However it is not all bad news. Here are some positive points on a declining home ownership:

• the private rented sector is more suitable for a more mobile work force which may be needed in future.

• a contracting housing market may be less prone to ‘bubbles’ and if less volatile this may  help improve economic performance

• if less personal wealth is locked up in housing this may result in a different pattern of saving which could benefit other parts of the economy such as manufacturing

On the other hand:

• would the fact that fewer people will have access to the equity in their properties to fund purchases result in a lower level of consumption, and

• would a lower consumption in owner occupier related expenditure such as DIY products have a negative effect?

Social housing

Turning to social housing providers, Heywood makes the point that falling home ownership levels (and an increasing population) will only exacerbate the current problems of finding affordable housing for those unable to buy.

If the government wants housing to be available at ‘affordable’ sub market rates, then government is going to have to get involved.  It is not reasonable or realistic to expect the private sector to provide this. However the current government does not seem poised to take any significant action.

Conclusions

I have only been able to skim through the report and it really needs a more careful analysis than I am able to provide. However some of the main concluding points are:

• Government must come to terms with the fact that its current policy of extending home ownership is unrealistic unless it is able to provide substantial investment – which we all know is not going to happen

• It must also look at how to bring in institutional investment and expand the corporate landlord sector. Bearing in mind that a large proportion of current landlords in the private rented sector are private individuals with only few properties.

• There is also the huge problem of how to increase housing supply from its current catastrophic levels.

• Plus there are also implications for other government activities as the assumption of high and rising levels of owner occupation are embedded in policies.

The report concludes as follows

In considering a strategic response to what could prove a continuing shift in the balance of tenures, the issue of an alternative social vision will therefore inevitably be raised. Such a vision will have to encompass the role of the state, the funding of welfare, and the relationship between housing tenure and the culture of citizenship. It will involve developing new concepts, but it will also involve a clear-sighted application of those new concepts across the full breadth of public policy formation.

You will find the report online here.  What do you think about this?  Do you think Heywood is right?  What action do you think government  should take in view of falling home ownership levels?

I now find that they have messed around with the Court Service website.  I know it is as a result of administrative changes but it is really annoying.

The Court Service website was very useful.  It had County Court addresses and contact details, court forms and a useful search index which was how I found a helpful notice on tenancy deposit claims (which I discuss here).

Now everything is moved over to the Direct.gov site and the Justice site.  So I no longer know where anything is any more.

The court forms are now on the Justice site here.

However I have not been able to find the court details and addresses.  I can find individual court details by doing a search on the court name in Google, but the court finder service was very useful to me.  If you know where it has gone please leave a message.

Likewise the helpful notice about tenancy deposit claims seems to have disappeared without trace.

However, strangely the enormously helpful and informative Residential Property Tribunal service website is still there.  PLEASE don’t move it!

I do wish that government would stop messing around with public service websites.  It causes huge inconvenience all round as none of our links work any more.  I can remember the same sort of frustration years back when then got rid of the ODPM website.

A message to government.  Can you leave the sites alone now.  Please?

Legal Aid
Long term readers of this blog will know that I have written extensively in the past on legal aid, and have expressed concern, along with other law professionals, at what appears to be the gradual destruction of our once proud legal aid system.  This was set up by a Labour government in 1949, and was at that time considered to be an essential service along with the national health service.

In the past
When I first started to practice law in the 1980′s, virtually all law firms offered a legal aid service, along with their work for fee paying clients.  Someone on a low income could get legal help and assistance from almost any firm they wanted.  However in the past 15 years or so, this has all changed.  Now hardly any firms do legal aid, and it is extremely difficult for people to get help for housing, welfare, and similar legal problems.

Giving with one hand …
It ironic that the government which gave us the Human Rights Act 1998 has taken away the ability for many people to use it.  We live in a complex society and our laws are therefore complex also, as a reflection of this.  Inevitably it will be difficult for ordinary people to enforce the legal rights which are available to them, without professional legal help.

Yet this government seems intent on dismantling the legal aid system, and is making it more difficult for people in need to get proper help.

The recent PRS announcements
A prime example of this is the recent announcement by Mr John Healey, the minister for housing.  He accepts that tenants need help, but what is he offering them?  A tripadvisor type web-site and a telephone helpline.  However what tenants in difficulty *need*, is to see a qualified and experienced lawyer face to face.  Yet this is something the government appears reluctant to countenance.

What tenants actually need
Face to face advice, in particular for people who are disadvantaged (which will include vast numbers of tenants), is really essential.  As I discussed in 2006, telephone advice can be worse than useless.

To advise properly you need to see the paperwork.  An experienced housing solicitor can often get a complete understanding of a situation from just a brief glance through the papers.  He will then be able to advise on the correct course of action with confidence.  However a tenant at the end of a telephone line will not know the significance of the paperwork they hold.  They may, for example refer to a courts summons as an injunction, and fail to mention altogether documents which are crucial in the understanding of their case.

What happened to joined up thinking?
Proper professional advice can not only help the client, it can also in the long term reduce public expenditure.  For example there was a report recently in Shelter’s magazine Roof, about a recent case where a young man, who had got into a bit of a muddle with his rent.  Through the help of an experienced solicitor from the South West London Law Centre, he was able to bring a claim under the Human Rights Act against the Local Authority who were seeking to evict him.  He is now assured of accommodation.  Making him homeless would have done no-one any good, and if he had ended up sleeping on the streets, he could have developed medical problems which would then have been a cost to the National Health Service.

Save our Law Centres
The South West London Law centre is fortunate in that it receives support from City law firms (not normally short of a bob or two).  However even so it is finding it extremely difficult to survive.  Many law centres have closed over the past few years and others have major funding problems.  Yet law centers such as this are crucial for helping the under privileged.

If Mr Healey really wants to support and help tenants, providing more funding for law centres might be a better way of doing it. Rather than funding a ‘tripadvisor’ type web-site which is not going to do much to help needy tenants (many of whom won’t even have access to a computer), and will only serve to antagonise the landlord community who, understandably, consider it to be invitation to malicious tenants with a grudge to ‘bad mouth’ them.

Law Reform
Then there is the question of law reform generally.  The Law Commission was set up specifically to review the law, and make recommendations for reform.  From about 2003 it conducted a major review of  housing law and carried out a consultation exercise where literally hundreds of landlords, tenants, and advisors were spoken to and/or submitted responses. This culminated in 2006 with a final report, the Renting Homes Report, and an accompanying draft bill.  Shamefully, this major and well thought out report has been completely ignored.

What is the point of having a respected organisation such as the Law Commission, with expert lawyers such as Professor Martin Partington (who headed up much of the housing project), conduct an expensive and detailed review, if you are going to completely ignore it?

The governments main reaction was to commission yet another report (no doubt hoping that this would bring forth the ‘right answers’) from Dr Julie Rugg.  However the actions which are now proposed (including the proposed ill thought out reforms to the planning system) follow neither the (generally excellent) advice of Dr Rugg nor that of the Law Commission (although there are  elements of both).

The Law Society’s Manifesto
The Law Society, as the representative body for solicitors, who form the largest part of this country’s legal profession, has recently issued a ‘manifesto‘ setting out its position and its concerns. It looks at four main areas:

• The rule of law and access to justice
• The defence of the rights of the people
• Good governance and better law-making
• A strong and independent legal services sector

The document makes some very important points, and I hope that both those in power at present, and those hoping to be in power, will read it and take note.  You can download the pdf here.

The tenancy deposit disaster
One of the points the Law Society make is about ill drafted legislation and unintended consequences. We have seen this with the tenancy deposit legislation, added as a late amendment to the Housing Act 2004.

Although generally based on a good idea, the drafting of the clauses have proved so problematic that we are at the time of writing left with a situation where a tenant’s right to recover the penalty award of three time the deposit money (supposed to be there as a deterrent to landlords) is now dependent on the rules of the tenancy deposit scheme concerned.  Surely it should be the terms of the Housing Act which decide this, not a third parties terms and conditions?

Is this what we want?
One of the problems we have, and in particular with legal aid, is the general negative attitude people have towards the legal profession.  Generally people’s response when learning about cuts in the legal aid scheme is something along the lines of “good, that will stop all those greedy lawyers making fat profits from our money”.

Leaving aside the fact that legal aid lawyers are finding it difficult to make any sort of profit at all, let alone a fat one, the fact is that in the long run it it is not going to be the lawyers who will suffer.  They are all pretty clever people with a good qualification, they will find something else to do (and will probably be a lot better off financially as a result).  The people who will suffer will be the clients, desperately in need of good legal help, but with no-one available to provide it.

Is that the sort of society we want to live in?

1997 – Hilary Armstrong
1999 – Nick Raynsford
2001 – Lorde Falconer
2002 – Lord Rooker
2003 – Keith Hill
2005 – Yvette Cooper
2006 – Ruth Kelly
2007 – Hazel Blears
2008 – Caroline Flint
2008 – Margaret Beckett
2009 – John Healey

How can the department hope to have a consistent policy with so many different ministers? Roof Magazine (the source of this information) is generally approving of Mr Healey’s appointment. However with a general election looming on the horizon, he is obviously not going to have that long in post.

From the press one rather gets the impression that ministerial posts are mere tokens of Prime Ministerial approval or disapproval (depending on the post). However they are also government departments that affect all our lives. It would be nice if after the election, the next housing minister (assuming he or she is effective) could stay with us a bit longer.