Generation Rent Manifesto – 3 : Management

This is the third in my series of posts looking at the Generation Rent Manifesto.  You can see the last post here.

Previously we have looked at security of tenure and affordability.  Today I am looking at the next part of the manifesto which is on

Management

I think most people will agree that there are unacceptable standards in the private rented sector and that inept and criminal landlords are allowed to get away with too much. I discussed this in some detail in my Bigger Picture series.

I therefore agree with mandatory registration for landlords and letting agents. Indeed this will be coming shortly in Wales under the current Housing Bill.

Giving landlords a ‘landlord registration number’ strikes me as a good idea and I can see this working well.

I also agree that a national licensing scheme would be better – at present there is a massive variation across the country, along with a massive variation in licensing fees – which is unfair on landlords. It should be the same for everyone.

However ‘fairness’ is dependent upon the national scheme being properly run. National schemes do not always work well in these cost cutting days, so self funding measures would need to be carefully built in. If set up properly and properly run though, it could be a force for good.

Licensing for letting agents

This is long overdue. Letting agents hold huge sums of other peoples money but are currently wholly unregulated. When I practised as a solicitor and held clients money this had to be held in a separate client account which was audited annually with a report being filed by my accountant with the regulator. Letting agents should be subject to similar rules.

Letting agents should also be properly trained and their license should be conditional upon this and also upon obtaining regular CPD. Landords who are not indepenently accredited should only be allowed to let via accredited agents.

This was put forward by me in my Bigger Picture ebook and, I understand, is the basis of the new rules coming in, in Wales.

The proposals for local authority letting agents and for small landlords to put their properties out to management by professional (and accredited) management companies also seem fairly sound.

Tenancy deposits

I like the idea deposits being protected as standard for the whole of the life of the tenancy and for deposits held in a custodial scheme to be passported on to the next property.

The main argument against the custodial scheme just now is the time it takes for the money to be returned to the tenant. If the money could be forwarded on to the next landlord under the system this would remove the problem. I have always preferred the idea of the deposit money being held by the scheme as it removes the ability for landlords and agents to dishonestly make off with it.

Also if it were the TENANT who paid the money into the scheme rather than the landlord, this would resolve the problem of landlords failing to protect.

I can see problems practically though, in changing the current set up, in view of the investment made by the three schemes under the present system.

Model tenancy agreements

As I have written elsewhere, tenancy agreements are currently flawed as often clauses are actually unenforceable without either the landord or the tenant being aware of this.  Tenancy agreements also may not tell the full story if mandatory landlord and tenants obligations (such as the covenant of quiet enjoyment and the statutory repairing covenants) are left out.

So they can be very misleading documents.  Model agreements are one answer.

However as many organisations will want to have their own agreement, another answer is a procedure whereby a tenancy agreement can be ‘validated’ by an independent organisation on payment of a (modest) fee by the landlord / agent / publisher and for landlords to be only permitted to use the standard model agreements or a validated tenancy agreement.

The Law Commission’s proposed penalties for landlords failing to provide a tenancy agreement could also be introduced to ensure enforcement – from memory I think this was the right to withhold rent for a period of time (up to a set maximum period) or until the agreement was provided to the tenant.

Next time I will be looking at the manifesto proposals on Conditions. See the Generation Rent Manifesto here.

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