Statistics have shown that the private rented sector is increasingly important – and is set to become more so.
Over the next 20 to 30 years it is likely to house an increasingly larger proportion of middle to low income households and families.
Given its importance generally to society and the cost to us all through our tax bills, of poor housing (not least to the National Health Service) I have suggested that we can no longer allow this sector to remain unregulated (a decision already reached in Wales).
The framework could work something like this:
1. Compulsory accreditation and regulation.
All letting agents would be required to obtain proper qualifications and be regulated by a national body as a condition of being allowed to stay in business. In the same way that solicitors are.
This need not be that difficult. We already have excellent training programs run by national bodies such as ARLA. The better agents already provide regular training for their staff.
Agents should also be required to hold clients and tenants money in separate ring fenced accounts. As more and more cowboy agents go bust taking their hapless customers money with them, it is being recognised nationally that this must happen. I don’t see how anyone can argue against it.
I also think that they should have their accounts audited annually, as solicitors do. What do you think?
All landlords should be required to register as a landlord and register the properties to be rented out in a national rented property register.
I don’t think this is something that can be left to local authorities as standards need to be imposed nationally. Otherwise, if different landlords in different areas are subject to different standards this will be perceived as unfair (as the current licensing fees regime is seen as unfair now).
If a landlord wants to manage his properties himself, then he would need to become accredited as a landlord. This could be based on the accreditation schemes that already exist. For example the UKLAP already has an accreditation system and training courses for their landlords.
Any landlord who did not have the accredited landlord qualification would be required to use an accredited agent.
2. A national rented property register
All rented property would be required to be registered as a condition of being rented out. The landlord could either nominate himself as the manager (if he is accredited) or nominate an authorised letting agent.
Part of the register would be closed (for example landlords renting through an agent could choose to have their ownership kept confidential). Some records could be available just to tenants of that property, and others could be available to anyone conducting a search of the register.
All or part of the cost could be met from registration fees, fines for non compliance, and fees charged to anyone searching the register.
Here are a few advantages that would flow from this:
- It would help prevent fraud – for example maybe it could be linked to the Land Registry records so fraudsters could not purport to rent out properties they do not own
- It could contain links to tenancy deposit and EPC records to allow tenants to check these important matters
- If a property was found to be sub standard, say after an HHSRS inspection by a local authority, any category 1 hazards could be noted on the register. This could prevent ‘retaliatory eviction’ as once the hazards were on the register, evicting the tenants would not help the landlord. The only way they would be removed would be by getting the work done.
- It would also help government plan for the future.
At present no-one really knows how many landlords there are in the private rented sector. We know (more or less) how many rented properties there have been in the past from surveys and the census, but we don’t know exactly how many there are NOW.
How can government plan properly for the future if they do not know the true situation?
3. Carrot and stick
The new system could provide benefits for accredited landlords. For example:
- more favourable taxation
- access to grants to improve their properties
- maybe online guidance, forms and information
However landlords who failed to register could:
- be fined heavily
- be unable to use the section 21 procedure to evict their tenants, and
- tenants could be entitled to withhold rent and claim back rent already paid
It is also possible that where a landlord persistently refuses to register and/or put his property in proper repair, it could be taken into pubic ownership, repaired and then used to house the homeless (only as a last resort – but why not?).
Many landlords will not like any of this. However it is clear that the sector cannot regulate itself (any more than the financial sector can). Individual landlords and agents may be excellent, but there will always be those who fail to comply with voluntary standards.
With the increasing importance of the private rented sector, this is no longer acceptable.
Having a national register could also help in other areas. I’ll be looking at some of these over the following weeks.