As reported on this blog previously, landlords and landlords organisations were extremely unhappy at the changes which were brought in to the planning laws on 6 April this year by the last government.

Suspected to have been introduced largely because of problems in one minister’s constituency with ’studentification’, Labour’s new rules provided a blanket obligation on all landlords of new HMOs to obtain planning permission.

Labour’s changes were brought about by introducing a new C4 planning class which covered all HMOs of up to six people, bringing the definition of HMO for the purposes of planning in line with those used in the Housing Act 2004. However this was strongly criticised as being unnecessarily bureaucratic. Although some areas do have major problems with ’studentification’, these areas are comparatively few.

The net result, many feared, would be to reduce cheap accommodation for sharers in areas which needed it, as landlords would be deterred by the extra administration and expense. It would also place a huge burden on local authorities having to deal with the extra planning.

The solution proposed by the new government is to leave the new planning class, but allow landlords to rent properties as HMOs in most areas without having to apply for planning permission. In areas where there is a need to control HMO development, local authorities will be able require planning applications for changes of use.

The announcement on the CLG website states

This will enable high concentrations of HMOs to be controlled where local authorities decide there is a problem, but will prevent landlords across the country being driven from the rental market by high costs and red tape.

It is estimated that as many as 8,500 planning applications could be submitted each year if every landlord looking to turn their property into a HMO is first required to seek permission – instead, councils will be able to focus their efforts in particular neighbourhoods where HMOs present a problem, while landlords of HMOs in other areas will not be tied up in red tape.

The proposed changes will not be introduced until 1 October. It is hoped that in the meantime Local Authorities will go easy with landlords and not pursue them for planning applications in areas where this is not going to be required post 1 October.

Information is gradually filtering through about the current coalition governments intention for housing law reform. Basically they aren’t going to do any!

Grant Shapps said in the House of Commons yesterday :

It is important that we strike the right balance between tenants and landlords. The current legislative framework, which I have been looking at closely, does exactly that. We therefore have no plans to take forward the previous Government’s ideas about further regulatory measures on this subject.

The one thing which will be going ahead is the proposed change of the AST high rent limit to £100,00. This has already been set in motion, has almost universally hailed as a ‘good thing’ and, crucially, will not cost them anything.

However:

• The landlords register proposed by Labour will not now be going ahead. Landlords up and down the country will be cheering at this as the proposal was most unpopular

• Letting agent regulation also will not be going ahead. This is less popular (other than among cowboy letting agents) as regulation of the letting agency industry is something which agent bodies, such as ARLA have been calling for, for some time. Still, there is no doubt that it would have cost at least something, and could have been expensive, so it had to go

• Mandatory tenancy agreements would also have involved a cost as no doubt there would have to have been working parties to consider what if any prescribed terms they should have in them, so that is out of the window also

• The Mumsnet/Tripadvisor website was never seriously on the agenda and unsurprisingly there are no plans to implement this!

• Likewise the tenants advice line, although as has been pointed out, there are already services tenants can use, for example the Shelter helpline on 0808 800 4444.

• The planning law changes brought in by Labour look as if they are going to stay, although Mr Shapps has said he is going to ‘look at them’.

• Sadly, it looks as if this may be the death knell for the ill fated Law Commission Renting Homes Bill, and

• The government indicates that it will expect local authorities to deal with rogue landlords under the powers they already have rather than introduce new regulation.

Interestingly things may be different in Wales.  The PainSmith blog reports that the Welsh Assembly still wishes to go ahead with registering landlords and regulating agents and will be seeking authority to do this.

What are your views on all this?  Do you think it was always inevitable that these proposals be ditched, or do you think they should still have gone ahead?  If so, which ones do you think should have been kept?

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However the surprising piece of news is that the legislation will be retrospective   So all tenancies where the rent is between £25,000 and £100,000 on 1 October 2010, on the day the changes are scheduled to come force, will change automatically into ASTs at that time.

There are two main consequences following on from this:

• All landlords of these tenancies who have taken a deposit, will need to ensure that it is protected, or they will be in default, and

• The procedure for evicting tenants will then be the procedure laid out in the Housing Act 1988, so you will need to serve a section 21 or section 8 notice first (not a Notice to Quit as now).  Note also that the forfeiture procedure, currently available to ‘common law’ landlords, is specifically prohibited under the Housing Act 1988.

I have not had an opportunity to see any of the delegated legislation setting this up and will do a further blog post once I have more information.  Many thanks to the NLA for keeping me informed.

David Salusbury, Chairman, NLA, said:

“Although we are still piecing together the facts, the retrospective nature of this change is highly regrettable, and it could have a wide-ranging impact on the letting of private residential property. For example, landlords in this higher rent bracket will have to protect deposits for the first time. If they fail to do so by October 1 2010 they could be in breach of the law. We are told the courts are being forewarned.

“The NLA believes the Government is rushing through this change without fully thinking through the consequences.  We call for greater consultation to ensure this measure does not have a negative impact on the private-rented sector. We will continue to provide the most up-to-the minute help and advice on the issue to landlords and have published a guide to help landlords comply with the law. The NLA will continue the press the Government for further consultation.”

Watch this space!

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?

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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.