Last week I discussed how poor housing affects all of us, through increased costs (estimated at £600 million per year) to the National Health Service, deprivation and under achieving children (our future).
I suggested that it is difficult for government to plan on dealing with this without a clearer picture of the extent of the sector and where it is. For this we need some sort of landlords registration system.
A landlord registration system would also facilitate imposing a standards regime.
The case for landlord accreditation
I don’t think something as important as peoples housing should be allowed to be provided by just anyone.
I am not saying that people should not be allowed to rent out homes – we desperately need more homes for people. What I am saying is that the people managing those homes should be property trained and accredited.
So if a landlord wants to manage his properties himself, he should undergo training, and his properties should be subject to periodic inspection.
Surely that is not too much to ask? The good landlords will normally have undergone voluntary training anyway.
National not local
I also think that any system set up should be a national scheme rather than left to the Local Authorities.
A commentator on my last post pointed how unfair it is, when a landlord who holds properties in more than one area has to pay multiple fees.
It is also unfair when different local authority systems have different standards and levels of enforcement. It should be the same for all.
Accredited landlords qualification
Landlords who do the training and acquire accreditation should be rewarded for this by having a proper nationally recognised qualification (lets call it an accredited landlord) – something they can feel proud of and which will give them status and standing in the community.
Landlords provide an important service – they should be respected for this.
Carrot and stick
Accreditation could also bring extra rewards. For example accredited landlords could come within the more favourable business tax regime rather than having their property portfolio taxed as an ‘investment’.
Maybe there could be other financial incentives such as grants for property improvements and the right to reclaim VAT for certain business expenses.
Landlords who are not accredited should not be prevented from renting, but they should be required to use a properly accredited letting agent.
If these is not done then there should be penalties. Maybe fines. Maybe the right for tenants to withhold rent. What do you think?
But, you will be saying, at present we don’t even have accreditation for letting agents!
I’ll be looking at that next week.
In relation to your comment,
“I don’t think something as important as peoples housing should be allowed to be provided by just anyone.”
Should we not first look to regulation of agents before we impose regulations on landlords? Landlords are already unhappy at paying fees to businesses they feel are overcharging and underqualified.
Will this not this simply ignite that argument further?
Absolutely we should look at agent regulation – I will be coming to that next week.
I have also written about it a lot in the past eg http://www.landlordlawblog.co.uk/2011/07/11/when-will-government-deal-with-the-scandal-of-our-unregulated-lettings-industry/
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Agents are the main ones for me. I just cant fathom why they arent required to be regulated when poor agents can drop their landlrods into serious legal and financial hot water.
I think the landlord accreditation issue is a very complex and difficult one though. I do think they should be accredited overall but I admit the various components to be taken into account, including tenants needs and the way property investment works make it a bit like playing Jenga.
I’m always wondering what the best solution would be, the trouble is the various proferred solutions dont take enough perspectives into view. Its a bit like trying to broker a peace deal in Gaza, given that landlrods and tenants seem to hate each other so vehemently
I think we first need to sort out agents, and then I think any landlord accreditation should be brought in slowly by the use of “carrots”. I expect that if a useful landlord accreditation scheme became common that BTL mortgage providers will start to demand it before lending.
Thats what I mean Ian, its more complex than just saying “Hey lets regulate landlords”. Not that I’m saying that is what Tessa is saying coz I know it isnt.
The RLA raised an issue when Rugg was first mooted, suggesting that regulation would disincentivise investment in the PRS at a time when we need more properties than ever. I get that argument but at the same time, speaking as one who works in landlord/tenant disputes I have to say the curse of the PRS is amateurism and the lack of knowledge or skills it brings with it, that drives 90% of disputes.
Both landlords and tenants think that all the laws are biased towards the other party’s side without a clear picture of what those rights and obligations are.
Tenants need educating as well because they are also part of the system.
I agree that we should start with agents. They are the one part of the PRS that is the truly professional bit and yet they too are bedogged with amateurs, giving the good ones a bad name.
If you read around the internet as I do every day, you will notice a groundswell movement speaking out against agents, a genuine hostility being accelerated by Shelter’s work in Scotland and Wales. A new tenants lobbying group “Housing for the 99%” has formed and is intent on championing safe properties at affordable rents and much of the arguments being raised by them and some landlords too over the ludicrous rent levels in London is being blamed on agents telling landlords they can charge more just because they can get away with it. When tenants and landlords have the knives out for agents and at the same time there is a steady growth in online agent services at a fraction of the cost of high street ones you would have to start worrying if you were an amateur agent.
There are going to be three parts to the accreditation section of this series – I look at agents next week.
Let’s look at how food hygiene works, as I understand it, there is is no “fix and proper” person test etc., however everyone that is in charge of a kitchen is expected to do one day training with a short easy exam at the end. The cost of this training is very low; very few people fail the exam.
As a Landlord I would not object if I had to do a 1 day training course before letting without using an agent, provided it was cheap and I could take it somewhere local. By the end of the day most people would at least know that there were laws they had to keep to and that they needed to get the process right, as well as hopefully knowing who to ask for when they needed help.
Then have a 2nd day of training that is needed before any one rent out a property on more than a single AST or to more than 2 unrelated people (e.g. HMO).
Let’s aim low so that benefits can be got quickly and cheaply. This could be brought in var the deposit protection process with the deposit protection schemes checking that training has been done etc, likewise it could be make a legal requirement that any “listings only” service check that the landlord had done the training.
Thinking of this a bit more, if RightMove just had a logo for accredited landlords and accredited agents on all listings and defaulted to only showing listings when the property will be managed by an accredited person, this could come in very quickly…
I like your thinking on this Ian (although we have argued in the past :) )
Tessa is running a distance learning accredited landlord course as we speak.
And I think you are right about companies like RightMove simply running a badge. Tenants could then decide how important these badges are when choosing a landlord and thats where tenant training comes in as most tenants dont have a clue about the various agent accreditation bodies anyway.
I have said before ion here that my Missus is a travel agent and she told me that ABTA is meaningless to people booking holidays as it mostly protects agents from problems, not their customers. I had always thought when booking holidays that I would be safe if the firm was ABTA regulated, when in actual fact it meant Jack.
Ian your solution is simple but well thought out. If the BTL mortgage companies and the deposit protection scheme monitored it then I could see that it would work.
I often have conversations with would be tenants that tell me about the conditions they are currently living in. When I suggest they speak to the environmental people I’m either told that they are scared of losing their home or they already have and barring a visit not much else has been done.
The Welsh Government (based in Cardiff)has recently produced it’s Welsh Housing White Paper looking at all aspects of housing in Wales.
One of the proposals is that all Landlords and Letting Agents operating in Wales will have to be registered, or face a substantial fine.
Currently the idea is out to consultation, but following on from registration is the suggestion that as well as being registered all Landlords and Letting Agents will have to become accredited.
Again non compliance will mean a hefty fine.
Welsh Accreditation is currently on a voluntary basis, and can be obtained via a classroom based one day course, or via an online accreditation course run by the National Landlords Accreditation scheme.
“I don’t think something as important as peoples housing should be allowed to be provided by just anyone.”
Couldn’t agree more Tessa so why is any private Landlord allowed to rent a property privately? Can they sell me a pension without regulation? Or do a valid MoT on my car – or 1001 other things where first they have to belong to some body, have some form of licensing?
Start with the agents – what a laugh Ian. With all due respect not all agents are perfect but a lot know what they are doing and belong to bodies and get training etc etc.
Very few Landlords do – either belong to accredited bodies (3% – scandalous) or get any training.
Industry Observer,
I expect I lot more than 3% of landlords that rent without using agents belong to something like NLA and have had some training (any landlord reading landlordlawblog for example have some ideal what the law is and knows where to find out more details if needed).
Most landlords use agents and most surveys will get at least some response from landlords that are not self-managing. (E.g. we use an agent, but both myself and my wife would tick a box to say we were landlords, and we are not members of any bodies)
Ian
Many agent wish Landlords did use agents. The UK estimate is that less than 60% do and within the M25 Adrian Turner stated when Chief Exec of ARLA that the figure within the M25 shrank to 43% – this was about 10 years ago and with increased squeezing of landlord margins I see no reason to assume those figures have changed to more using agents.
The 3% figure of Landlord Association members was given to me as part of training material I deliver to Landlords. The source is VERY reliable.
However at each course as and when I get to the part about Associations I ask how many Landlords present are members of one. It is usually one hand that goes up out of about 20, which I accept is 5%, but then sometimes that hand is a member of NAEA etc.
Easy enough to validate the figure I guess. How many private Landlords are there estimated to be in the UK and how many members do RLA, NLA etc have?
This is not going to help tenants and is a government stealth tax. All the properties I have are very well maintained, if anything over and above current requirements. I should imagine some clipboard carrying council snooper will be around ticking boxes @ 500 quid a year cost to me. I will just pass that cost on so the tenant. They will have the same standard of property they would have done without the legislation for an extra 500 quid. I am certain this will be very much the case accross the UK.
Is there legislation already which allows English councils to impose compulsory registration ? If so what are the limits on their power?
This will push some owners who are looking to long term capital growth to leave homes empty rather than have corrupt/inefficient LAs meddle in their affairs (I believe this is happening already in Scotland). The bad landlords will continue as they are but become more secretive.
@John Murray yes there is legislation, and there are procedures they have to follow, which I think includes consultation.
Bad landlords will always be with us – the thing is to make life more difficult for them.