The decision by Housing Minister Grant Shapps to scrap a residential property landlord register planned by the previous government has been widely welcomed but calls have resumed for regulation.
The real estate letting industry said though it would also like to see it re-consider the controversial houses in multiple occupation (HMO) rules, which seek to crack down on homes shared by more than three people. The HMO restrictions, introduced by former communities secretary John Denham, give councils power to refuse landlords the right to rent homes to more than three unrelated people.
The plans for a landlord register came from the Rugg Report, produced nearly two years ago by York academic Julie Rugg. Labour had planned to take forward the plans despite criticism that they would be ineffectual and costly to the housing sector. ‘Landlords had lost all confidence in the ever more complex simple registration proposals and will be glad to see the back of them,’ said Ian Fletcher, director of policy at the British Property Federation.
‘It would be a pity, however, to also jettison a number of Rugg’s sensible recommendations, for example extending self regulation across the agency sector, which has the support of agent, landlord and tenant representatives. These at least deserve a fair hearing, before the minister decides what to do next,’ he added.
‘The importance of the private rented sector at this juncture cannot be stressed enough, with two out of every three new households at present finding their first home in the sector. There a number of issues stacking up that need the new government’s urgent attention: encouraging future investment from institutions and individuals, HMO planning constraints, returning choice to local housing allowance, tenancy deposit scheme compliance,’ he explained.
John Heron, Paragon Mortgages’ managing director, welcomed the decision to scrap additional red-tape for the UK’s private landlords, but said that ignoring letting agent regulation is a mistake.
‘There are no mandatory controls of letting agents at present, leaving both landlords and tenants at the mercy of the rogue elements that unfortunately blight the sector, undermining the good work carried out by the majority of agents. We have seen agents leaving landlords and tenants out of pocket all too often during this economic downturn by running off with deposits and rent,’ he explained.
‘The vast majority of the UK’s tenants are happy with the service they receive from their landlord and additional regulation was unnecessary and burdensome. The private rented sector is critical to the housing market going forward and needs to expand to ensure that it continues to meet growing demand from tenants. Tenant demand is already exceeding the supply of private rented properties, resulting in rental inflation. Reducing bureaucracy and red-tape will encourage further investment in the sector, but the Government should also examine how it can increase supply through, for example, helping to widen buy-to-let mortgage availability and creating a tax regime that supports long-term and sustainable investment from landlords,’ Heron added.
The Association of Residential Landlords Associations said it was extremely disappointed that the government is not pursuing regulation. ‘This move risks seriously hampering the improvement of standards in the Private Rented Sector, the sector’s reputation, and the fundamental role it plays in the wider housing market as well as failing to protect the consumer who has nowhere to go when there is service failure or fraud. A minimum requirement must be surely be consumer redress and protection of all funds taken from the public not just tenants deposits,’ he said.
‘We have long campaigned for the introduction of compulsory regulation of lettings agents, along the same lines as our own member-led licensing scheme launched last year. Currently, any person or organisation can become a letting agent. Until that is changed via national regulation, unprofessional, unqualified and unethical operators will continue to exist, to the detriment and expense of consumers and the market as a whole,’ he added.