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Regulation of the Private Rented Sector letting tenants down

RLA
Written by RLA

Tenants and landlords are paying the price of the rising tide of regulation in the private sector – while rogue landlords get away with poor practice, according to a new report launched today…

Tenants and landlords are paying the price of the rising tide of regulation in the private sector – while rogue landlords get away with poor practice, according to a new report launched today.

The study by Michael Ball, Professor of Urban and Property Economics at the University of Reading’s Henley Business School, says costly and complex regulatory systems are pushing up rents and preventing more investment in the private rented sector at a time when it needs to expand to help tackle the housing crisis.

View/download: “The impact of regulation on the private rented sector”

The impact of regulation on the private rented sector, commissioned by the Residential Landlords Association, says:

  • The worst landlords are unlikely to co-operate with current legislation as they are simply “unfazed” by the prospect of facing punishment.
  • Landlords surveyed for the report support regulation to drive out rogue operators. But they find the current system unfair and burdensome and say it doesn’t help them deal with problem tenants.
  • Tenancy deposit schemes are poor value for money- costing the sector more than £275a year in fees and administration, when only £7m is returned to tenants annually in deposits judged to have been unreasonably withheld.
  • Landlord registration schemes are costly and ineffective. The worst landlords avoid the schemes- with better landlords picking up the costs.
  • The poorest tenants and the most affordable properties are the worst affected by the costs of regulation.

“Further major private investment in rental housing is needed in the face of the UK’s growing housing crisis.” Professor Ball says. “But it is likely to be held back by a failure to recognise the negative consequences of the way in which state regulation currently engages with the private rented sector.”

“Regulation has a perverse effect of raising better landlords’ costs but not those of poor ones, because unscrupulous landlords continue to ignore legislation and so face no costs of it,” he says. “Therefore, paradoxically, regulation can worsen the position of better landlords and thereby leave more of the market to bad ones.”

The report recommends an extensive cost benefit review of all current and future regulation to encourage more investment in the sector.In response to the report, the Chairman of the Residential Landlords Association, Alan Ward, said:

“I would urge the government and opposition to listen to Professor Ball’s findings. Given that there are over 400 different regulations applying to the private rented sector, a cost benefit review of all of them is needed to ensure that we have effective regulation which is not placing an unnecessary cost burden on landlords and tenants.

“At the local level, a system of co-regulation would enable landlords to join an industry-led accreditation scheme that would use strong sanctions such as independent property inspections as a measure of deterrence against poor practice.  This would give councils the freedom to target non-members who do not act within the remits of the law.”

RLA Chairman reflects on response to latest report

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RLA

RLA

The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

11 Comments

  • You must think we’re stupid. If there was less regulation more people would die each year in overcrowded HMOs. That you would trade the lives of your Tennant’s, your customers, for a lower regulation burden, for an easier life is disgusting.

  • Hello Character Assassin, thank you for your comment.

    Obviously, we disagree with you. While it is unfortunately the case that there are criminal landlords who take advantage of tenants and provide substandard accommodation there are many more professional landlords who are committed to good standards and regulatory compliance. The main thrust of our argument is that with so many regulations already in place (in the region of 400 regulation already in place in the housing sector) these criminal landlords continue unabated. The RLA want tenants to be able to KNOW who the good landlords are – through accreditation and CPD – so that the criminals have a smaller and smaller pool to draw from until they are taken out the industry entirely. Regulation often give landlords more economic burdens which may ultimately fall to tenants. From our point of view, accreditation and self-regulation is far more preferable and direct than reactionary regulation.

  • It is amasing we were just descussing this very subject, then i read this report.
    We are doing well out of the new regulations as we have started a new business for landlords with only one or two properties who can not afford to keep up with all the regulations and are fed up with large agents taking a large proportion of their money.
    The reason we have done this is we are private landlords who treat our tenants well and the properties are extremly well maintained we can only charge the same rent as the big and the bad landlords, whose properties are not fit for purpose. We hope with all the small landlords that we can up the level. The new bedroom tax has played right into the bad landlords hands.
    Example a new Agent opened opposite to our main property, one of out tenants went to look at a property of theres as she was having money problems, when i found out i went to look at the property to see how the difference in rent came from, i was totally shocked with the property yes it was clean but very small (they had taken a sudio flat put in a wall and called it a one bed flat) but my tenant felt she would have to take something like that. I am pleased to say that she will not be moving as we have negociated a smaller rent short term until she is clear of her problem. Being a smaller business we can do that, and offer a personal service.
    So Charater Assassin i reconise the rules are there for everybodies safety but most play into the worse side of the market and it is difficult to beat them as they have the govenments help.

  • And only yesterday morning I saw an article on the TV news about local authorities wanting more regulations to allow them to deal with bad properties. Of course, the TV report had clips of some shocking properties – really bad mould and so on – which really shouldn’t be allowed, and for which LAs ALREADY HAVE the means to deal with.

    Yet again, the authorities (whichever they are, and whatever problem it may be) fail to use the powers they already have, and ask for more powers.

    And in reply to Character Assassin, the authorities can ALREADY deal with this. They don’t need any additional power, there is no need to impose more regulation, so your anger should be targeted at those in authority who fail to do anything about it – probably citing “it’s too hard” under the current rules. That’s half the problem, people (usually officialdom) want easy solutions that don’t involve them in any work – but which push the work (and costs) out to others.

  • I’m intrigued and somewhat concerned at this and as I work within the housing sector as an enforcement officer I would like to know the 400 regulations that you mention. Having spoken to my colleagues and looked through all the statutory and supplimentary regulations etc etc, we can only come up with between 8 and 10 that would in reality affect day to day dealings at the coal face.

    When we arrive at a property, single dwelling or HMO, poor condition or reasonable condition, none of us dig deep into our memories to look through 400 regs. We would be there all day. There are only a handful of regs that have immediate impact and the remainder are out of date and lost in time with only minor relevance to todays dealings. I’ve been in this type of job for over 30 years and am a qualified building surveyor and not an EHO. My technical understanding of landlord and tenant law is pretty much second to none and my practical skills the same. Its a shame I can’t say the same about most EHO’s I’ve dealt with over this period as being a landlord of varying sizes of portfolios I’ve been frightened that such people have been let loose on the sector.

    This latter point is important. Some Councils have serious issues with housing and poor officers (some very lazy and typical of the stereotype we all know and love) don’t deliver consistant standards throughout the UK. This in turn lets all manner of rogue landlords through the net which in turn causes the Government to set legislation. A sticking plaster over the wound so to speak. We then suffer because of this or not as good landlords find it easy to comply with the regs and manage their properties. Idiot/rogue landlords don’t care and this covers private landlords as well as agents.

    Far better to regulate the whole sector and have licenses to operate as a landlord or agent together with registered proeprties with each local authority and a very small fee to cover them. The fee would pay for the housing officers posts instead of the tax payer and the remaining funds could be ploughed into eduacting officers and landlords who are licensed and have their input into how the sector and its regs develops.

  • I see a list of 107 regs (if I’ve counted properly) that contain upto 400 bits of legislative requirements. Most of the regs are peripheral and most definitely have not in any way pushed the cost of rents up in any shape or form. Many are enforced by many different bodies and/or the courts and/or both and do not directly burden rents.
    Residential Social Landlords (RSL’s) have to comply with the same stuff and they run successful businesses in most cases although on the whole, being charitable institutions or similar, they’re not allowed to profit (loosely applied term) and must recycle all rents (technically profit) back into their stock etc. and their inflated wage packets. I accept they are not the best example and leave a lot to be desired in many areas but essentially they have a business model albeit they didn’t have to pay for their properties as they are mostly ALMO’s these days and were handed them by the local council to manage. Rising rents are still down to greedy landlords and agents in my opinion. I’ve had tenants in my properties for decades because I have a decent semi-personal relationship with them, I don’t charge so called market rents and my profit/gain far outways my mortgage payments so I always have a decent amount of ready funds to tackle any unforeseen defects etc. I can’t remember the last time I had a void and in fact get lots of prospective tenants asking if I have anywhere for them to live. My brother and his wife run a very successful letting agency on this type of model and their landlords use the same methods and all have a very nice lifestyle on the back of it.
    So, the original statement I feel is a bit misleading from where I stand and not strictly a decent argument. Rent control for specific sized and configured properties would be a good tool but where do you start and yes, its another piece of legislation. Almagamation of all legislation should be conducted but then the result would be a beast! As I’ve already mentioned in a previous post that its probably far better to regulate it from top to bottom is the way many people think it should be. After all, housing has the biggest impact on everyone’s life and outlook on life and the poor housing and landlords/agents have been linked to anti-social behaviour and the knock on effect of poor community etc etc. Where do you stop? Regulate it properly and hammer those that don’t comply. The good landlords (like good drivers) will not be affected and will see their small yearly license fee go to good use. There’s more to this than meets the eye but for soemthing so big I’m amazed its where it is at the moment. One massive tool that would help many, not only tenants but local authority officers that the RLA should campaign for is the changing of the housing benefit regs so that nothing can be claimed until a housing officer has visited the property to check whether its in good repair and given the go ahead for it to be paid. This simple change would cut out so many idiot landlords and agents in one single blow it would send shockwaves through the sector. There could even be a small charge levied for the privilege of say £10 or £20 each new benefit claim by the landlord for reasonable officers time. This could be ploughed back into education for landlords/agents as in my experience, hardly any of them know or understand any of the legislative regulations.

  • And then bring that idiot milliband into the equation and his current thoughts on rent controls and long term leases
    Government interference is never a solution to the free market and as many have pointed out regulations only affect the honest and responsible,not the shady types
    So what a waste of space to regulate

  • The saying “The proof of the pudding is in the eating” seems very apt for housing regulations. The saying basically means that the quality of something is uncertain until it has been tested. Now we are ten years on from the introduction of the 2004 Housing Act with a raft of housing measures, including safety legislation, in the Private Rented Sector it would be most interesting to see how the relevant accident rates and death rates have been reduced compared to previous years. Is this data available as I would like to know.

    Last week the BBC reported in London on the increase in cases of workers having to find “alternative” forms of accommodation by sleeping in a variety of wholly unsuitable places such as shop store rooms, warehouses and factories due to the cost of accommodation in London. I am not surprised by these findings which has been as a direct result of the 2004 Housing Act by bringing in the regulation of HMOs and regulating room sizes. A room I lived in as a student in London has been deemed to be too small in a HMO I own. The removal of rooms from the housing stock available for rent has the effect of increasing demand and raising rent especially for those who want a smaller than average room at a reduced rent. That choice has been removed by the Housing Act to the very people it was supposed to help driving them to have to find alternative accommodation which is far worse for them.

    I agree with Character Assassin that overcrowding in houses and HMOs is an issue when I have seen up to 4 families crammed into a 5 bedroom house. As an ex-fire fighter I could see it as a disaster waiting to happen but 6 individuals in a 6 bedroom house was fine when I lived there and continued to share after I started work till I could afford a place of my own. We had a great time and shared the electric, gas, phone and rates amongst 5 as opposed to 5. This now adds more of a financial burden to house sharers.

    More badly thought out and untested regulation just adds more costs and reduces accommodation available to renters leading to rent increases.

    Prior to 2004 I had rented from other landlords for 8 years as I worked around the country and chose my accommodation based on location and price in a market fairly free from regulation. Now I have difficulty in renting a room at a time whilst working in another city due to housing regulations.

  • I am a small landlord with two good semi property’s that I rent out so my comments come from a small amount of experience, 3 years in fact. What do I think about the current and proposed regulations?

    As a metaphor lets use driving offences, an uninsured driver without a license is caught speeding and driving dangerously, he is stopped the old car with no value is scrapped and he goes to court and receives a 12 month driving ban a small fine and has to retake his test, or take it for the first time. Invariable the fine is less than the cost of insurance, he is not affected by the driving ban because he is not interested in obeying the law and the loss of such a cheap car is nothing to him. What have we learnt from this? Only the good drivers are affected by the current form of regulation, the bad ones are completely disinterested because the penalties are far too low. The same applies to the housing sector at the moment, only a good landlord views the regulations and would follow them. If you wilfully flout the law, and I’m not talking about an honest mistake, the punishment has to be harder and the law should treat landlords and tenants equally. In short redraft the legislation to discriminate against rogue landlords and encourage decent landlords, also kerb roguish agents.

  • Hi,

    Some Councils have serious issues with housing and poor officers don’t deliver consistent standards throughout UK. This in turn lets all manner of rogue landlords through the net which in turn causes the Government to set legislation. A sticking plaster over the wound so to speak. We then suffer because of this or not as good landlords find it easy to comply with the regs and manage their properties.

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