Regulators need to listen to professionals working in the private rented sector to ensure that the registration and licensing system works effectively, says Douglas Haig.
As is probably known by many in the industry, the Residential Landlords Association (RLA) has been strongly opposed to the introduction of a mandatory registration and licensing scheme for landlords. The RLA supports the idea of making renting better, but we want it done in a way that works, allowing landlords to provide good quality, safe, and secure property to their tenants without driving up their costs and pushing them out of the market.
One simple way to go about this might have been to licence agents in advance of landlords, as we had proposed to policymakers before the Housing (Wales) Act became law in 2014. A professionalised, government-approved letting agent industry, as the face of renting in Wales, was the first logical step in attaining improved outcomes for both landlord and tenant alike.
A heavily bureaucratic scheme like Rent Smart Wales forces local authorities’ attention away from the areas that require genuine enforcement– the criminal operators that have long evaded other legal requirements aimed at raising standards in the sector. Public funds are not properly stewarded under this scheme. As we have long argued, resources are targeted first at ensuring compliance amongst the already compliant, whilst the criminals continue to evade the radar.
Despite our opposition to some of the proposals, the RLA is keen to ensure that the new requirements are as practical as possible. It is landlords like our members that comply, therefore our mission now is to work towards helping devise ways to target those who are less likely to comply and to ensure that costs for our members are not driven up in the process. We know landlords and we know our sector, a fact that seems to have been ignored by Welsh Government through the consultation process over the last five years.
The introduction of mandatory landlord and agent licensing in Wales might have gone over better with those working professionally within the industry had the formulation and implementation of the scheme been better thought through. We say ‘those working within the industry’ because realistically these are the individuals who are paying close attention to these developments. Through no fault of their own, ‘accidental’ landlords are largely caught unawares. Then there are the criminal operators who flout their legal obligations entirely, regardless of efforts like this or others aimed at ridding them from the industry.
Landlords and agents alike welcome those measures that will render a fit for purpose, professionalised private rented sector. However, the licensing scheme was doomed from the onset, as this all-encompassing measure was rushed through a hasty legislative process that largely ignored the advice and imploring of those involved in day-to-day workings of this housing sector.
The RLA made efforts to rectify the proposed scheme’s shortcomings long before they were codified. Recommendations to licence agents ahead of landlords were ignored, and Welsh Government projections, particularly around the number of staff that would be needed to implement the scheme were woefully understated, as we had predicted. The original projections stated an increase of staff from 1.5 FTEs under the voluntary scheme to 10 FTEs for the mandatory scheme would be needed. At present, we understand that Rent Smart Wales has employed 79 staff, nine of whom are tasked with the colossal task of enforcement. This is just at Cardiff Council. This does not include those staff employed throughout the other 21 local authorities in Wales charged with helping to enforce the scheme. By way of comparison, a survey of the Scottish scheme identified an administrative staff of 138 FTEs across 32 authorities.
After the scheme formally launched in November 2015, not enough was done to grow awareness amongst landlords. This was evident in the number of those licenced ahead of the enforcement date, with Rent Smart Wales having captured just over 2 per cent of the 100,000 landlords they anticipated needed licences.
The RLA had recommended incentivising early compliance by rewarding those who registered or licensed well before the enforcement date with a discount on the associated fees and having the licence validity date begin on the date of enforcement for all licences. Agent representative bodies agreed with these proposals, but unfortunately these recommendations were also ignored.
Although Rent Smart Wales is slowly catching up with those landlords caught unawares, the enforcement date, November 23, 2016, has come and gone. This leaves those that have not yet registered and/or been licenced vulnerable to some considerable sanctions, including criminal sanctions. We are particularly concerned for the small operators, those with one property, and those accidental landlords who have no idea that they can be severely punished for what could largely be an innocent oversight. Rent Smart Wales has pledged to use their enforcement powers in a ‘fair and proportionate manner’, but this is no guarantee that those naively caught out will be saved from severe sanctions. The law is the law and it allows for punitive measures to be taken against any offender.
Looking forward, we need to see a more robust increase in Rent Smart Wales’s awareness campaign. Landlords, and particularly agents, who have proactively come forward to comply would like to see their efforts rewarded in some way. Inevitably, those involved in the industry will come across a non-complier. The protocols for dealing with this situation have not been vetted and are worthy of a broader discussion.
Most importantly, regulators need to open their ears to those involved in the industry. A point made a number of times by regulators is that the law is what it is, and has to be followed. Had our concerns been listened to back during the consultation period, we wouldn’t be facing the confusing and time-consuming matters we are now. We have been at the negotiating table since the beginning. The recommendations of those who know this sector could have gone a long way to help the council avoid some of the very problems it ise still struggling to overcome. Having said that, there seems to have been a recent mood shift in the administration at Rent Smart Wales, and we always welcome an open dialogue, which we hope will be the road to a longer and broader collaboration.
Whilst we don’t agree with the scheme in its entirety, we appreciate that it is in the interest of our members, tenants, and the wider community to ensure it works as effectively and as economically as possible. Improvements in the private rented sector will arise from change in attitude, not necessarily from regulation itself. We continue to hope that this attitude change does not detract from the supply of the much needed housing the sector provides.
Douglas Haig is director for Wales of the Residential Landlords Association