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Letting Agents Face More Regulation And Red Tape

Will UK Letting Agents Face Further Regulation?

Will UK Letting Agents Face Further Regulation?

Letting and property managing agents face the increasing likelihood of mandatory licensing following the Government’s cabinet reshuffle and the appointment of Mark Prisk as UK Housing minister.

The recent appointment of Mr Prisk as housing minister is hoped to mark a new beginning for the UK property market and it is hoped that he will be more receptive to the idea of mandatory licensing of the UK lettings industry as he first tried to introduce mandatory licensing for letting agents into a Bill back in 2007.

It is widely speculated that Mr Prisk’s views on the subject remain the same now and it is hoped that he will be more amenable to the mandatory licensing than former housing minister Grant Shapps was.

With the support of the new Housing minister it is thought that the licensing scheme is much closer to becoming a reality, although not a certainty, as the Government have previously stated that pursuing further regulation would be a waste of time and effort.

Mr Prisk’s support of the idea of mandatory licensing for the letting agent industry became public knowledge last week when during a House of Commons debate on housing, Labour MP Ian Mearns, speaking to shadow housing minister Jack Dromey, is reported to have said “Is my Hon. Friend aware that he has an ally in the new minister for housing on the regulation of the private sector? In 2007, he tried to introduce a clause into a Bill that would have regulated private letting agents.”

Mr Dromey replied: “It is welcome that the new minister for housing has taken that position. Perhaps he will follow that through in government.”

Award Winning Property Management Services

Award Winning Property Management Services

John Paul, Managing Director of award winning Castledene Property Management said “Good letting and property management agents should have nothing to fear, as they operate within the guidelines set by ARLA (Association of Residential Letting Agents), the Property Ombudsman and The National Association of Letting Agents (NALS). Further regulation of the lettings industry coupled with the Government’s welfare reforms could have an adverse effect on the UK Buy-To-Let market as a whole and unless landlords are using agents who are clued up on the proposed changes to housing benefit then we could see thousands of landlords going out of business before the end of 2013”.

Ian Potter, operations manager at ARLA, said: “It’s vital that consumers have full confidence in lettings agents, and the industry must respond to their concerns about bad practice. That’s why in the absence of regulation, we developed our own licensing scheme. All licensed ARLA member letting agents must be covered by a client money protection scheme and hold professional indemnity insurance – which means consumers are protected against negligence. They must follow our strict codes of conduct and have a certain level of training. Ultimately this means that, should something go wrong, there are protection mechanisms in place. We would therefore always advise that consumers use an ARLA-licensed lettings agent. This means that, should a landlord or tenant feel the fees were unclear, they can lodge a complaint with ARLA or utilise the Ombudsman Scheme membership, which all ARLA licensed agents are required to hold.”

Previously, the former Housing Minister Grant Shapps, had promised that landlords and letting agents would not be subject to greater regulation because it would introduce too much additional red tape. Speaking in parliament in September 2010, Mr Shapps rejected the regulations proposed by the Rugg Review, stating: “With the vast majority of England’s 3 million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords. So I make a promise to good landlords across the country: the government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.”

However, now that Mr Shapps has been made Conservative party chairman and the subsequent appointment of Mr Prisk as UK Housing minister, further regulation of the industry has become widely feared, with some property professionals voicing concerns about the amount of red tape they would have to get through just to get a tenancy to commence.

Will UK Government act to end the bad practices of rogue landlords?

Legislation is needed to eliminate rogue landlords

With various UK landlord associations, official trade bodies and voluntary charitable agencies all lobbying government and campaigning to stamp out rogue landlords in the UK Private Rented Sector, the government have finally decided to take action.

The coalition Government’s Housing minister, Grant Shapps has revealed that he will be issuing guidance about rogue landlords following talks with interested parties.

The statement could have sent chills down the spines of many underperforming landlords and earned the government a huge chunk of industry respect; however it turned out to be a bit of a damp squib.

In response to a question from Labour MP for Coventry, Jim Cunningham, in the House of Commons, Mr Shapps said: “I have just held a meeting with the interested parties about rogue landlords. They are a matter of considerable concern, and I will be pulling together all the powers and issuing a booklet on that shortly.”

Are the government just paying lip service to landlord associations or will they ever issue legislation to encourage a strict code of conduct among UK landlords?

Shapps denied removing any of the protections from landlords or tenants in the UK private rented sector, saying: “It is worth remembering that actual measures consistently show that people are happier in the private rented sector than in the social sector, which might surprise him. I can also tell him that 90% of tenancies are ended by the tenant, not by the landlord.”

Shapps also said that the number of non-decent homes in the UK private rented sector has fallen from 47% in 2006 to 37%.

Labour’s shadow housing minister, Jack Dromey took Mr Shapps to task about his previous claims in the House of Commons on private rents supposedly falling in response to caps to housing benefit. – Read the full story here

Mr Dromey said: “Both the housing minister and the Prime Minister, out of touch with reality, have asserted on the floor of the House of Commons that rents are falling in the private rented sector. An analysis conducted by the House of Commons Library reveals that in 90% of local authorities in England, in all nine regions, rents are rising or staying the same. Will the housing minister now admit to the 1.1 Million families struggling to pay their rent that he got it wrong?”

Shapps admitted to having used the survey by LSL, (The parent company of estate agency chains Your Move and Reeds Rains), but said it had not been wrong to say rents are going down. He said: “The LSL survey shows that in the three months through to January, rents actually fell, but we do not have to believe LSL. There was rightly some scepticism there – LSL measures only buy-to-let – so let us instead look at the absolutely authoritative figures recently produced by the English Housing Survey, which show that in real terms, rents have fallen in the past year.”

Despite the exorbitant claims about lower LHA rents and the acceptance of them by private rented sector, (PRS), landlords made by the coalition government Prime Minister David Cameron in Parliament on January 11th. Only a handful of landlords with tenants on Local Housing Allowance are actually accepting lower rents in exchange for getting rent paid to them directly.

The claim by the Prime Minister David Cameron that private rents are falling as a result of welfare reforms was wrong!

Mr Cameron had claimed in Parliament on January 11th 2012 that: “rent levels have come down, so we have stopped ripping off the taxpayer”. Apparently he was quoting rental data from LSL Property Services, which had only been quoting falling private sector rents.

The data published by LSL Property Services does not take into account LHA rents.

In an attempt to get landlords to lower rents, councils have temporary powers to pay landlords, rather than tenants, the LHA in exchange for lowered rents.

A later statement from 10 Downing St said: “Private landlords were reducing rents – lessening the impact of benefit cuts – in return for local housing allowance being paid directly to them.

The prime minister made his wildly inaccurate claim in the middle of the Welfare Reform Bill’s rough ride through the House of Lords at a time when his government was desperately seeking to convince peers that the package of reforms would not increase homelessness as tenants would be left struggling to meet their rents under the new benefit caps.

Mr Cameron’s claims that private rents are falling as a result of the governments welfare reforms were difficult to swallow for a number of property professionals, prompting one magazine to take action.

The same data was quoted again on 30th January 2012 by Housing minister Grant Shapps, who seized on the same survey by estate agency LSL Property Services, citing it as the evidence Mr Cameron had used to support his claims.

The survey did indeed show rents fell by 0.8% in December – the second successive monthly fall.

However, if the data is examined correctly, the figures reveal the seasonal drop in private sector rents before Christmas was actually less than the 2.3% drop in December 2010 and rents overall had actually risen 4% year-on-year.

The magazine Inside Housing, used the Freedom of Information Act to request information on LHA rents from the Department of Work and Pensions (DWP), and every local authority in England following Mr Cameron’s claim in the House of Commons.

204 local authorities responded, with only 36 reporting any rent reductions in return for direct payment of LHA. Of the 36, 12 reported a combined total of 65 landlords cutting rents, an average of fewer than six landlords in each area.

The DWP says it has ‘no data records’ of how many landlords have reduced rents, but it has collected ‘anecdotal evidence’ from around 80 councils.

It states: ‘The majority have reported that they have used the new safeguard to help claimants negotiate down rents and all plan to use it during 2012 as transitional (payment) protection runs out.

The Inside Housing survey suggests that most PRS landlords are not even remotely tempted to accept lower rental payments for their properties, either directly from local authorities or not.

The National Landlords Association (NLA) and the Residential Landlords Association (RLA) have each disputed the claim rents are falling and believe landlords are more likely to reduce the number of tenancies let to benefit recipients, warning that landlords would rather re-let their properties at the full market price to working tenants, and are able to do so in the current climate of high rental demand.

Labour’s shadow housing minister, Jack Dromey, has already written to number 10 about the issue but received no response and will raise the matter in parliament demanding that Mr Cameron corrects his statement or justifies it.

Mr Dromey said: “Now we know the truth. The nationwide Inside Housing story exposes the reality of rising rents in most areas of the country and explodes the myth that rents are falling”.

 

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