Licensing, regulation and accreditation in the private rented sector

Housing and the private rented sector is a major issue just now. The private rented sector is now larger than the social rented sector and in some areas houses up to 20% of households.

However, the regulation of landlords and letting agents is woefully inadequate. Although many landlords and agents provide a superb service, sadly others do not.

For example, it is not uncommon to read in the press about criminal landlords renting properties in horrendous conditions which their hapless tenants have to put up with as they have nowhere else to go.

Or letting agents who suddenly disappear taking their landlords’ rents and tenancy deposits with them.  Some landlords have suffered losses of many thousands of pounds as a result of this.

Although there is a lot of regulation on property management (for example with regards to gas safety, furniture and tenancy deposits) there is very little regulation of landlords and agents themselves.

However this is shortly to change in Wales

Regulation of landlords and letting agents in Wales

The Housing (Wales) Act 2014 will be bringing in a mandatory licensing scheme for landlords, plus they will only be able to manage their properties if they are accredited – which means that they will have to undergo training.

If they are not accredited, then they will need to use a licensed letting agent and all letting agents in Wales will need to be licensed and be properly trained.

It will be a criminal offence for an unauthorised landlord to grant a tenancy agreement and manage property, likewise it will be a criminal offence for an agent to trade without being properly licensed under the act.

The Act is not yet in force and the Welsh Government are still working out exactly how the new Act will be implemented.  Until such time as the act comes into force the situation in Wales is the same as in England.

Regulation of landlords and letting agents in England

At the moment, there is nothing to stop anyone from renting out property or setting up as an agent. There is no overarching licensing system.

However there are the following:

• All letting agents in England must be a member of one of the Government authorised property redress schemes
• All of the larger HMO properties need to be licensed with the Local Authority
• Some Local Authorities have additional or selective licensing schemes in their area
• Many letting agents accept regulation voluntarily by joining ARLA or RICS or similar organisations and/or sign up to codes of practice
• There is also the PRS Code which Property Redress Schemes will expect agents to comply with, in default of having signed up to any other code
• Many landlords belong to voluntary accreditation schemes although these are generally not well known

Further regulation of agents fees is coming when the relevant parts of the Consumer Rights Act 2015 come into force (England only).

Conclusion

Whether an overall licensing system for landlords and agents in the private rented sector is needed is hotly disputed topic.

The landlord associations generally maintain that licensing will be a waste of money, will not solve the worst problems and that instead more resources should be given to enforcement of standards.

However many others feel that requiring landlords and agents to be licensed is essential as it will private details about the size and makeup of the sector (at present unknown in any detail) and will help enforcement.

This is why many Local Authorities are introducing their own schemes. However the problem about leaving it to the Local Authorities is that standards will vary in different parts of the country. Which is inequitable.

It will be interesting to see how the Welsh reforms work out. If they are successful it is probable that something similar will be introduced in England at some stage.