Latest in Lettings Issue 4
SELF REGULATION -v- LICENCING
The Law Commission surprised landlords, letting agents and industry bodies such as ARLA and RICS by proposing a scheme of self regulation in a Consultation Paper .Encouraging Responsible Letting. (published July 2007 http://www.lawcom.gov.uk)
Set up in 1965 for the purpose of reforming the law; the Law Commission has a track record in recent years of studying the rental sector and issuing papers that call for significant changes in housing legislation. None of the proposals have yet been accepted by government but Gordon Brown.s housing initiatives may result in bulky papers being pulled out of Whitehall pigeon holes.
The proposed self regulation scheme suggests using existing or new industry organisations to regulate and monitor members under the overall supervision of the Office of Fair Trading who - as present - would use Trading Standards officers as the policemen on the beatuy.
The focus is on regulating landlords and letting agents. No one, except the occasional landlord, has thought of regulating tenants or insisting that they join a tenant organisation with teeth before signing a tenancy agreement. The choice of landlord and agent bodies that will regulate their members - including the new ones not yet formed - is surprising and unusually wide.
If the proposals become law, every landlord owning residential property to let would be required to be a member of one of the following:
- An existing or new landlord association (the Commission estimates that currently only 2.2% of landlords are members of SLAs . Small Landlords Associations)
- An existing or new local authority organised accreditation schemes (see www.anuk.org only a minority of landlords are members)
- An existing or new letting agents association such as ARLA, NAEA etc. Although the Tenants Deposits Schemes have given membership a boost, but more than 60% of all agents letting residential property still have no affiliation with a regulatory body.
- An organisation dealing with individual sectors, e.g. student lettings, often sponsored or run by universities.
The Commission considers that membership should be encouraged by offering landlords a range of benefits (Consultation paper p.73). Many of these benefits are on letting agents. and landlords. wish lists, such as improved access to improvement grants, exemption from selective or mandatory licensing of HMOs, and reformed tax treatment that would view the letting of homes as a business rather than a form of investment income. It is hard to see government backing away from recent legislation, reducing the tax take, or handing out money for property improvement, but we live in hopes!
The history of self regulation in the UK is not encouraging. The BMA (British Medical Association) has often been criticised, justly or unjustly in the press. Suggestions have been made that the Law Society should be replaced by a new independent body because of the lengthy delay in dealing with complaints against solicitors.
Passing new laws and regulations is one thing . enforcing them is a different story. Will SLAs and the likes of ARLA be able to cope with a massive increase in applications for membership? How will they scrutinise applicants, enforce standards of conduct or deal with complaints?
Local authorities already have a wide range of powers to deal with problems created by poor landlords, but these powers are rarely used. Similarly, agents who disappear with tenants. deposits and landlords. rents are seldom prosecuted. The police refer to such events as a civil matter, although this is not the case, tenants are left to take their chances in the Courts.
Surely it would be simpler to licence letting agents, and consider licensing landlords, setting standards of conduct and performance which if not met would result in one simple sanction . withdrawal of the licence.