With the deadline for landlord registration now passed, the housing sector in Wales will be watching with interest the process of enforcing landlord registration and licensing, says Steffan Evans.
Rent Smart Wales faced well-documented problems when attempting to ensure that landlords in Wales had registered with it in time for the November deadline. As of midnight on Monday 21 November 2016, 55,000 landlords had registered with Rent Smart Wales, according to the Welsh Government. However, it has estimated that there are between 70,000 and 130,000 private sector landlords in Wales. Whilst the number of registered landlords is likely to have increased by the deadline of 23 November, it appears certain that there are thousands of landlords breaking the law in Wales. The next 12 months are likely to provide an indication as to how rigorously Rent Smart Wales will enforce these new requirements.
Under the Housing (Wales) Act 2014, a landlord who is not registered with Rent Smart Wales is committing an offence, and is liable on summary conviction to a fine not exceeding £1,000. In addition to this, any landlord or agent that carries out property management activities or letting activities, and is not licenced by Rent Smart Wales to do so, is liable on summary conviction to a fine. The Act does not set out a cap for such a fine.
However, the Act does set out that, in proceedings bought against a landlord or agent who has breached these requirements, it is a defence that a person has a reasonable excuse not to have been registered or licenced. This provision could have an effect on Rent Smart Wales’s ability to enforce the registration and licencing requirements in two ways.
REASONABLE EXCUSE?
The defence of reasonable excuse means it is possible that proceedings against landlords who have failed to comply with registration and licencing requirements could be time consuming. To date only one case has been bought against a decision of Rent Smart Wales concerning either registration or licensing: Tovey v Rent Smart Wales.
This case, which appeared before the Residential and Property Tribunal, was an appeal against the decision of Rent Smart Wales to reject the application of Mr Tovey and his wife for a landlord licence as a result of Mr Tovey’s unspent previous convictions for fraud. Under section 20 of the Housing (Wales) Act 2014, Rent Smart Wales is permitted to reject applications for a landlord licence if an individual is not a fit and proper person. One ground for finding that an individual as not fit and proper is if they have an unspent conviction of fraud, or if they are associated with someone with such a conviction.
The appeal was brought before the tribunal on the grounds that Rent Smart Wales should consider all factors when deciding whether someone is a fit and proper person. Mr and Mrs Tovey argued that Rent Smart Wales should have considered their 11-year record as landlords of multiple properties in the Bridgend and Merthyr areas when making their decision. The appeal was brought in front of the Residential and Property Tribunal on the 5 November 2016, yet it took the tribunal until 15 December to reach their decision to uphold Rent Smart Wales’s original decision to refuse Mr and Mrs Tovey a landlord licence.
With the Tribunal taking six weeks to reach its decision, the legal process was not a swift one. It is possible that this could be replicated in cases concerning a failure by landlords and agents to register or obtain a licence.
This provision also provides a further complication to the enforcement process. There may be a number of reasons why landlords have not registered and it seems probable that one of the most prevalent reasons will be a lack of awareness of the need to register.
On 22 November Welsh Government released an evaluation on Rent Smart Wales’s performance. Research conducted for the evaluation suggested that 94 per cent of landlords and 99 per cent of letting agents were aware of the changes that were being bought about by the Housing Wales Act 2014. Whilst these figures seem encouraging at first glance, they do not seem to paint a true picture of the situation in Wales.
The evaluation report’s methods section contains an important passage. It reveals that, having failed to generate a sample of sufficient size when seeking the views on landlords, the evaluation team utilised the database of landlords held by Rent Smart Wales to achieve this. In adopting this approach the evaluation team effectively canvassed the opinions of those landlords who were either known to Rent Smart Wales or who had already registered with them. It is therefore not surprising that these landlords were aware of changes brought about by enactment of the Act. The survey results would not appear to be reflective of the sector in its entirety.
REASONABLE DEFENCE?
A question that is likely to come before the courts therefore is whether being unaware of the requirement to register is a reasonable defence? Whilst it seems unlikely that this defence could be used to avoid conviction under the Act, it could well influence how prepared the courts are to impose a fine on landlords. If this is the case then it seems likely that the ability of Rent Smart Wales to fully enforce the requirement for landlords to be registered will be curtailed. It is therefore imperative that Rent Smart Wales continues its work in attempting to boost awareness of the changes brought about by Act, to limit the ability of landlords to argue that they are unaware of the changes brought about by the Act.
Steffan Evans is a PhD student at the Wales Governance Centre at Cardiff University