Blanket scheme is unnecessary
The Welsh Government does not understand the scale or complexity of its registration plans for private landlords, argues Douglas Haig
Having sat on the Private Rented Sector Stakeholder consultation group for the last two years considering the development of this Bill much of its content was to be expected, although there were still a few surprises.
The main aspect of the legislation concerning the private rented sector is the registration of all private landlords in Wales through the Welsh Agent and Landlord Licensing Scheme (WALLS). The increasing importance of the private rented sector within Wales and the UK as a whole is undeniable. It is rapidly increasing as a proportion of the housing market and understandably government wants to ensure that people are protected. Undoubtedly there are stories of terrible conditions of properties, poor energy efficiency, awful management standards and sometimes illegal eviction. However, in a sector that has over 85 per cent tenant satisfaction rating compared to approximately 80 per cent in the social sector (English Housing Survey 2010) the problems are not as prevalent as they are made out to be. It is also worth noting that just because a tenant is not satisfied that doesn’t automatically mean the landlord is being criminal or doing anything wrong.
Costs will be unfairly borne
As the sub-standard element is such a small percentage of the market, a blanket registration scheme of all landlords is completely unnecessary. The landlords that will sign up will be good landlords that the local authorities probably already know about. The costs will be unfairly borne by these early adopter landlords and will ultimately be passed on to the tenants. The landlords that are openly flouting the laws already will not sign up and we fail to see what difference adding yet another piece of
legislation will do to control their activities. There is also a concern about the many
one-property or accidental landlords that are in the market, according to some surveys nearly 80 per cent of the total, and do not see themselves as landlords.
The detail around the licensing terms needs fleshing out. The Bill notes that the terms of a granted licence can be altered and we are not yet aware of all the conditions of this licence. The terms of changing the licence and what these licence terms can include are a cause for worry. It has been noted in many additional or selective licensing areas that licences are being used to bring in unnecessary, onerous and unwarranted conditions on the property. This catch-all licence term on a landlord has the potential to add regulatory burdens unrelated to the initial intention
of registration without the need for extra legislation.
If the legislation passes as stands then there must be penalties and these should be enforced with education in mind. Those that are clearly unaware of new regulations should not immediately be prosecuted but action should be taken against those who clearly are aware. The rent stopping order seems a fair back stop and, given the process to get there, it would seem unlikely that many would ever be put in place as before getting to this stage, the landlord should simply have registered. There needs to be clarification of what happens to housing benefit payments if there is a rent stopping order in place; we believe they should not be paid.
The task in hand
We do not believe the Welsh Government fully understands the scale or complexity of the task in hand. The estimated costs are comparable to running the Scottish scheme, which even Shelter Scotland has stated has not been a success. The Welsh Government states that WALLS goes a lot further than simple registration, which it does, but where is the comparable increase in cost? The scheme is going to have to have massive resources thrown at simply running and managing the database and we have major concerns that the valuable time of our housing enforcement officers is going to be spent ensuring people are registered, and not actually ensuring property and management conditions are appropriate. This is going to be a massive distraction from them doing their job and we cannot see where the resources are coming from to ensure this doesn’t happen.
Registration and licensing
We completely support the registration and licensing of letting and managing agents. For too long, experienced landlords have been putting their properties in the hands of inexperienced agents with little benchmark as to what a ‘good’ agent is.
Instead there has been a race to the bottom in standards as more and more agents enter the market and only compete on price. The RLA would like to see this scheme brought in and we believe this will have a major beneficial impact. Agents are easier to find and police and are obviously fewer in number with a much greater number of properties. The resources to achieve this would be considerably less and therefore a much more cost-effective option than registering and licensing landlords. With regulated agents there should be an increase in standards and therefore officers can focus on dealing with issues that are reported with landlords.
If the Bill passes as it stands then agent licensing should be introduced for at least a year before registration and landlord licensing. This will allow the industry to get everything in place, and those that are not up to standard will have been forced out by then. Registration and licensing of landlords is likely to increase the number that have their properties managed by agents and landlords need to know the agents are up to the job.
Co-regulation scheme
The registration and licensing of landlords effectively makes HMO licensing unnecessary. Everything in HMO licensing can now be achieved through landlord licensing and this duplicates costs and effort. We would like to see the abolition of HMO licensing if the current Bill were to happen. However, instead of mandatory registration for landlords we would like to see a scheme of co-regulation along the lines of the building regulations model. This would allow landlords to choose a professional body with which to register. Those that don’t want to register with a professional body can instead register directly with the local authority. This system would be a lot more streamlined and involve partnership working, again allowing local officers to focus efforts on finding those landlords that are not complying.
Overall the Housing (Wales) Bill is a brave one. Whilst we are not at all against efforts to improve standards within the private rented sector and actively encourage the education of landlords and removing the criminal landlords from the sector, we can only support mechanisms that will work, especially when proposed ones are so expensive and could mean disinvestment in Wales at a time when more rented housing is needed.
Douglas Haig is director for Wales of the Residential Landlords Association