Commercial insurance article archive
Landlord regulation 'may allow bad proprietors to slip under radar'
There has been much media coverage of the private rented sector in recent months, as accidental landlords flood the market with properties they have been unable to sell.
This has led to anxiety about the quality of rented accommodation and the proprietors letting it, with various research suggesting that a minority of tenants are being exploited by unscrupulous landlords.
There has also been concern about the lack of experience among so-called "unplandlords", with speculation that they may not know about the various legislative and health and safety requirements involved in leasing property.
In addition, there is the threat of repossession, which is affecting many landlords in the private rental market.
Some proprietors are suffering from a vicious circle which is created by tenants' inability to pay their rent due to unemployment and the recession, resulting in landlords struggling to make the mortgage repayments.
Others are suddenly finding it difficult to make ends meet after investing heavily in the boom years, then suffering from a lack of tenant demand and an inability to sell on their properties.
On the back of this unease, the government and industry organisations have released proposals and plans for increased regulation of the sector.
Last month, housing minister Margaret Beckett unveiled a set of potential measures which she said are designed to increase professionalism, drive out bad landlords and strengthen protection for tenants who are victims of repossessions.
The proposals are based on Julie Rugg's independent review of the private rented sector and are currently under consultation.
They include what the government calls a "light-touch" register of every private landlord in England, with the aim of protecting vulnerable tenants and good proprietors.
Landlords would be required to include their registration number on all tenancy agreements and could be struck off the record if they showed persistently poor performance, examples of which could include failing to carry out essential repairs and not protecting tenant deposits.
Another proposal is to have full regulation of private sector letting agents, as they do not currently have to have professional credentials to operate, meaning that there is no realistic opportunity for redress if there is a problem. The government therefore plans to have an independent regulator for letting and managing agents.
Also included in the measures is the outline for an improved complaints and compensation procedure for tenants, allowing them to officially register grievances about sub-standard landlords, who would then be at risk of being removed from the national record.
Finally, the government is aiming for more support from local authorities to help good landlords. This will include encouraging councils to run letting agencies serving the community to facilitate the private rented sector and also aid people who need help finding accommodation, such as those receiving housing benefits.
The announcement also included plans to change the law so that tenants have a minimum of two months' notice if they have to leave their home due to repossession. Currently, occupiers can be evicted at extremely short notice, sometimes having less than two weeks to move out."
With almost three million private tenants in the country, the private rented sector plays a vital role in providing choice and flexibility in the housing market," said Mrs Beckett when unveiling the proposals.
"That's why we need to ensure tenants have the protection they deserve, the many decent landlords receive the support they need, and those landlords whose performance is inadequate either improve or leave the sector," she added.
She insisted that the plans would help the sector to "embrace greater professionalism without creating unnecessary burdens on landlords".
However, this is not an opinion shared by everyone within the private rental market.
Malcolm Harrison, a property industry expert, said that landlords are "puzzled" about what the new register would "demonstrate or prove".
He predicted that the question as to how such a national record could work would be a major feature of the consultation process, as proprietors will seek to understand the purpose of registration.
"The difficulty that there has always been when it comes to the question of 'is a landlord up to standard?' is finding the bad landlords. You still have that problem, in that the bad landlord won't register," Mr Harrison asserted.
He added: "The reliable, well intentioned landlord will register, pay over their £50, wonder why, and be there to hit everybody's targets. The landlords you really need to get hold of, because their property is in a total state of disrepair and has no proper heating or running water, are still going to slip under the radar."
Mr Harrison said that identifying unscrupulous proprietors has been a key aim for the industry for many years, but that the practicality of pinpointing them makes it very difficult to put into practice.
"You could go around knocking on everybody's doors saying 'do you let this property? I want to have a look at it and inspect everything', but nobody has the capacity to do that even if they wanted to," he explained.
In order to find these crooked operators, the authorities need people to report them, but often their victims are the more vulnerable people in society and are therefore less likely to register a formal complaint, he asserted, which could prevent the regulatory system from working.
"They may be frightened to, not know if they can, or don't know what should be provided for them. It is a very difficult problem," he added.
The government's proposals were pre-empted by the Association of Residential Letting Agents (ARLA), which announced that it would be requiring all members to be licensed as part of their affiliation to ARLA.
This requires them to hold a gold standard professional qualification, undertake continuing professional development, ensure they have money protection schemes in place to protect landlords and tenants and abide by a strict code of practice, among other things.
Tom Entwistle, director of online property portal LandlordZONE, welcomed the decision to try and tighten up the rules governing letting agents, but expressed the same concern as Mr Harrison.
"Any attempt to raise standards is a good thing and will definitely help. However, there are still many letting agents who are not members of any of the main professional associations," he said.
"Landlords and consumers should be aware of this and should always aim to deal with agents who are members of one of the recognised professional associations," Mr Entwistle concluded.
19 Jun 2009