Taking the ‘secret’ out of private renting
Why tenants welcome plans in the Housing Bill for mandatory registration of private landlords and their agents
Who are private landlords?
Private renting has become increasingly important here in Wales growing steadily since 2000. There are no exact figures on the composition of the sector, as there
is no monitored nationwide registration scheme. However the National Statistics Office estimates the size to be around 185,000. With an estimated 80,000 landlords and managing agents here in Wales, this represents an average of 2.3 properties per landlord/managing agent.
The private rented sector has been growing steadily since 1991 now making up approximately 14 per cent of housing here in Wales while the trend appears to be growing still, with owner occupation declining. The increase in demand has been due to a number of factors, including affordability problems for first time buyers and the reduction in social housing stock, partly due to right to buy and lower investment.
As a number of studies have demonstrated, the make-up of the sector does point to some risks that the Welsh Government needs to consider. There appears to be a limit to the growth of the sector in terms of demand from low income groups, this should inform the investment in social housing provision. The possibility of disinvestment or limited access is therefore a real concern and has consequences for supply side subsidy intervention.
The sector has a higher vacant property rate than any other. It also has a significantly older stock profile, but while unfitness has decreased through buy-to- let investment and portfolio buying, it is still significantly higher than other sectors which have impacts on accidents and health budgets for Wales.
Of the 185,000 around 75,000 are claiming local housing allowance (43 per cent) while rents are more than a third higher than the social housing sector. The highest claimant rates are in Neath Port Talbot (69 per cent), Bridgend (61 per cent), Denbighshire (59 per cent), and RCT (56 per cent). Although the average housing benefit claimant rate is higher in the social housing sector, it still represents a considerable government investment that is largely responsible for the rising housing benefit bill.
There is also demand from private landlords themselves to work with local authorities and the government, to assist them to invest, manage and improve information, advice and support, and tenant involvement in the sector, with consumer satisfaction within some groupings being of considerable concern.
Regulation of the sector
While local authorities have significant powers in relation to the sector in the form of their obligations under the Housing Act 2004 and a number of other legislative requirements, the sector is largely self-regulated through professional bodies managed by a small amount of members. By and large they do
a reasonable job in ensuring their members have the skills base upon which to perform their duties. However, the membership of professional, and or voluntary bodies, make up for a small fraction of the total sector’s stock and is no guarantee of good management and compliance to legislation.
Welsh Tenants doesn’t believe that landlords should therefore remain ‘secret’; there should be no such thing as a ‘secret sector’. The private label given to the non-social housing provision should not mean ‘covert’. People and organisations responsible for providing homes should be transparent about their interests least of all to the bodies that are responsible for ensuring that they comply with legislation.
Landlords are accumulating vast databases of tenant profiles, of ‘good’ and ‘bad’ tenants, collectively referred to as ‘landlord referencing agencies’. This aspect of the sector is growing exponentially causing some concern in the form of premiums payable to access a roof over one’s head. Given the supply, growth and complexity of pending issues, not least welfare reform, it is therefore imperative that the government should seek to have a registration of all landlords and letting agents.
On the issue of competence, as a motorist you are required to have a licence for a car, this is because a vehicle can seriously maim or kill someone. Owners have to have insurance and regular MOT tests, while the driver has to prove their competence to drive. But a landlord or letting agent doesn’t have to prove their competence to manage properties that could kill the inhabitants as a result of their failure to provide a safe home or as a result of their incompetence or negligence.
Within a sector of this size, there are the inevitable issues of organised criminal activity such as tax and benefit fraud, human trafficking and yes, servitude, that go beyond the basic breaches in legislation concerning the various housing and consumer Acts.
It is estimated by the sector’s own representative organisations that two- thirds of the sector are not part of any professional body despite efforts to improve voluntary registration. That’s an estimated 52,800 landlords and their agents here in Wales, where there is absolutely no ‘proof of competence’ to manage a home.
The provisions outlined in the Housing (Wales) Bill to ensure a mandatory registration scheme for all landlords and their agents are therefore welcomed by tenants and of course to ensure that they work towards competency to manage.
We also cannot overlook the economic advantages and the jobs that could be created with tens of thousands of private landlords choosing to opt for management of their home to a more responsible ‘registered letting sector’. For those who do not, 35p a week does appear to have some significant cost benefits given the known unknowns in the sector – not least for tenants as consumers. We would therefore hope that Wales’s first Housing Bill receives full support.
Steve Clarke, managing director, Welsh Tenants
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