Labour and Conservative Plans for the Private Rented Sector
David Lawrenson of www.Tenants-Renting-Guide.com says the Conservatives have come up with a raft of good ideas for the private rented sector to help tenants and landlords. Even Shelter have applauded them, albeit with a few reservations. Labour’s sole idea is rent controls – more on that later.
So what have the Conservatives come up with? Well there are four key proposals.
Landlords Redress Scheme
First up is a compulsory registration scheme for all landlords along with a redress scheme. The thinking here is that tenants should have a simpler and faster route for resolving issues.
We like it because letting residential property today requires landlords to have a great deal of knowledge – and we all know that there’s an annoying minority of landlords who really don’t know what their responsibilities are. So, providing any future scheme is properly marketed and then enforced, we are in favour.
Of course, enforcement is the big question and I know that the National Landlords Association have concerns that a compulsory scheme is no good unless it somehow can act to expose the rogue landlords and the incompetent ones who will, of course, never join any registration scheme.
But what will such a scheme really look like? At the moment we don’t know the details, (just like we don’t know what Jeremy Corbyn has in mind when he talks about rent controls – is that control of rises in rents during the term of a tenancy or is it “full on” rent controls where the state decides what any landlord can charge).
The idea of a “light touch” compulsory registration scheme for landlords was actually promoted back in 2008 in the “Rugg Review”, by Dr. Julie Rugg et al – a report which was commissioned by the then Labour Government and which contained much joined up thinking that was applauded by just about everyone involved in the private rented sector.
We say that as long as any registration scheme for landlords is easy and low cost to join, (and hopefully slightly easier than the Rent Smart scheme which is now live in Wales), and providing there is also strong action against landlords who refuse to join along with an adequate level of promotion for such a scheme, then yes, please bring it on.
Shelter like the idea because they say too often tenants don’t always, (at least under current systems), have a clear route for redress, which not only breeds resentment, but which can leave renters living in inadequate and sometimes unsafe accommodation. We would argue that tenants already have a right to compel a landlord to carry out repairs, under the “Fitness for Human Habitation’ Bill” so any legislation and scheme would need to ensure it did not “double up” on what is already in place. But all in all, not a bad idea.
Where this would leave existing licensing schemes, and whether it would supersede them, in whole or in part, is a question for another day.
Next up is their idea of creating a dedicated Housing Court.
This is a great proposal and if done well, could solve one of the biggest challenges in the private rented sector (PRS) which infuriates both landlords and tenants – which is the delays in our overstretched courts, where it takes far too long to get a court hearing date and there are too many stories of cases being adjourned, sometimes for months. Anything that provides faster, more effective justice and which could end protracted disputes has to be sensible.
Regulation of Letting Agents
The third proposal is the regulation of agents, which the Conservatives have hitherto long resisted.
The regulation of letting agents could offer more meaningful protection but we would be interested to see the detail. Today, anyone can set up as a letting agent, there are no tests of competence (though national trade bodies like ARLA and UKALA have their own standards, for their member agents).
Letting agents who are not in one of the big trade bodies are covered by an ombudsman scheme and that’s about it.
So we wait to see exactly what the regulation would mean, but with too many poor letting agencies out there – like the rogue and competent landlords – undermining the sector as a whole, anything to raise standards has to be a step in the right direction.
The fourth idea is to give incentives to landlords to offer 12-month tenancies, though what the incentives will look like has not been spelled out yet.
This is a bit of an odd proposal because the majority of tenants have 12-month contracts already, so it’s not clear why the government plans to incentivise something the market is already doing
Most 12 month (and six month) initial fixed term tenancies are extended well over the 12-month period, with actual tenancies running for around three years on average, with the vast majority being ended by the tenant, not the landlord. So where is the problem?
An earlier housing white paper focused on incentivising Build-to-Rent institutional investors who were somehow to be encouraged to offer tenancies of three years to all tenants, so maybe this 3-year idea will be quietly dropped. (Three year tenancies are not an option for buy to let landlords with mortgages as most mortgage lenders don’t allow them to issue over a two-year tenancy fixed term and many do not even allow anything over a one-year fixed term!).
But it could work alongside housing courts. For those landlords who don’t have a mortgage and can therefore issue longer tenancies, if the housing court could be a route to much faster repossession for excessive non-payment of rent / antisocial behaviour, I am sure that far more landlords would issue longer term tenancies than is currently the case today.
So, in summary, a good set of ideas from the Conservatives – and much welcome after the various fiscal assaults of George Osborne in recent years.
Labour’s sole idea for private rent is rent control, but most observers says that evidence from around the world and from the UK suggests this would lead to a reduction in the quantity and quality of stock.
Tenants looking for property and also searching for good landlords and letting agents would be well advised to buy my book, “Tenants Guide to Successful Renting”.
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