Lauded by the government as a way to tackle the rogues, the latest Rent Smart Wales figures show that just under 14,000 of a predicted 113,000 landlords have the necessary licence. Here RLA Wales senior policy officer Dorine Pannerale looks back at what has happened in the 12 months since the compliance deadline.
Welsh national landlord and agent licensing in Wales is celebrating its first year in force today.
The scheme, established in 2014 under the Housing (Wales) Act, requires all landlords letting property in Wales to register with Rent Smart Wales, the central administration authority in Cardiff.
Self-managing landlords and agents are also required to licence under the scheme.
National licensing was needed across Wales – according to the government – to root out rogue landlords, to professionalise the sector, and to improve standards.
Beginning of Enforcement
Cardiff Council oversees enforcement as the main administration authority, but it relies on the 22 local authorities across Wales to help police the scheme, as established by ‘memorandum of under- standing’ agreements (MOUs) signed between Rent Smart Wales and each local authority.
In a year of enforcement there have been a few notable cases of action taken against non-compliant landlords.
The first prosecution occurred in May against a Newport landlord who ended up facing a £4,400 bill for housing offences, including failing to comply with registration and licensing obligations.
In May, buy-to-let landlord Shelley Bailey of Eastwood Park, Wotton-Under- Edge, Gloucestershire, was fined £3,580 and faced a further £457 in court costs for failing to register her seven Cardiff properties and apply for a licence.
Rent Smart Wales first issued a £150 fixed penalty notice (FPN) for failing to comply, and then proceeded to take action at the Cardiff Magistrate’s Court when the FPN went ignored.
And in September, Cardiff landlord Rowjee Singh was fined £1,980 with an additional £577 in court costs for similar offences.
Failing to register and license are but two obligations placed on landlords by the Housing (Wales) Act 2014, and Rent Smart Wales is increasing its enforcement of the requirements across the board.
Landlords are required to keep their personal information up to date and inform Rent Smart Wales of any changes.
Neath landlord Richard Howells was found guilty in September for failure to register, license, and for failure to provide information about rental addresses under Section 37 of the Housing (Wales) Act.
For any piece of legislation to be effective, it must be adequately and properly enforced.
The above cases demonstrate promise, but so far enforcement of national licensing in Wales has been paltry at best.
For starters, an approved enforcement policy was not in place until six months after enforcement began.
The enforcement policy itself is anodyne and does not explicitly outline a graduated process that landlords can understand in terms of what potential actions might be taken against them for different offences.
However, by Rent Smart Wales’ own admission, landlords can expect to first receive a warning from Rent Smart Wales if and when they should learn about their non-compliance.
As outlined in the enforcement policy, Rent Smart Wales will exercise its regulatory activities in a way that is “proportionate, accountable, consistent, transparent, and targeted.”
If history is any guide, a fixed penalty notice will follow the written warning.
To date, Rent Smart Wales has issued 35 fixed penalty notices. If the matter is then not settled, to include the payment of the fine and the correction of the non- compliant behaviour, further action will be taken in the form of prosecution at the Crown Magistrate’s court.
Compliance vs. Enforcement
The need for enforcement activities depends on the degree of non- compliance. Looking at registration and licensing figures would seem to indicate the need for a much more stringent enforcement campaign.
At the end of August, Rent Smart Wales reported a total of 80,683 registered landlords out of a predicted 140,123 landlords.
Rent Smart Wales had predicted a total of 101,702 should be registered at about this time, so it is clear that, in terms of registration goals, the scheme is falling short.
Rent Smart Wales likes to quote “incomplete registrations” as a marker of the scheme’s effectiveness or potential effectiveness.
However, there are no controls instituted by Rent Smart Wales to account for fake user accounts. So that there are currently 10,787 incomplete accounts is by no means a good measure for understanding how efficiently landlords are contending with their regulatory requirements.
Licensing figures are also falling short of target. At the end of August, Rent Smart Wales reported 13,902 licensed landlords, with a further 8,582 awaiting application approval.
This is against a prediction of 113,026 landlords that must be licensed over a five-year period. Rent Smart Wales were hoping to capture 36,168 by the end of the second year of licensing, which is coming up soon.
Are landlords unaware of their obligations?
So what gives? Clearly something is not working as it should, as compliance levels are tragically low, two years after the scheme was launched.
National licensing so far has amounted to one thing: a colossal waste of resources, with little to show for all the money spent on the scheme that would “root out the rogues and improve the sector.”
Recent Freedom of Information data analysed by the RLA shows that the Welsh Government has given over £551,654.53 to local authorities in Wales to grow awareness of and help enforce the scheme.
The low licensing numbers indicate that this campaign is not working. Caerphilly Council reports it is not taking any enforcement action “due to lack of resources.”
Landlords awaiting application approvals are facing even longer delays, with an increase in the target “eight week wait” to an average 89 working days for a licence approval. FOI data shows that the longest a landlord waited for a licence application approval was 381 days – more than a year.
Increasing staff resources to contend with the increase in applications also seems to have had little impact, especially considering application approval wait times have increased despite the addition of extra staff.
At the end of December 2016, Rent Smart Wales reported a total of 57 employed staff, with an eye to increasing levels to 77 full time equivalents (FTE).
This is against the prediction of the 10 FTEs Welsh Government said would be needed to administer the national licensing scheme. This represents £1,277,635 spent on administrative costs since the scheme’s launch, versus the projected £250,000 for administrative costs.
Even landlords who make bona fide efforts to comply with their obligations are getting caught out in unforeseen ways.
Recently, a Cardiff landlord seeking possession of his property at tribunal watched dumbfounded as the judge retracted an agreement for possession because of an administrative problem with the property’s registration with Rent Smart Wales.
As far as the landlord was aware, he had fully complied with his legal obligation to register and licence.
Then there is the issue of the seemingly arbitrary nature of licence conditions, particularly those placed on overseas landlords.
Currently, landlords whose main residence is outside of mainland Britain are required to appoint a licensed agent or hire a licensed staff person to help with property management, regardless of how adroit they are in managing their own properties.
In addition to low compliance levels, what we are now beginning to witness is law-abiding landlords spending less time managing their property and more time managing constraints imposed on them by government bureaucracy.
At this one year anniversary there is little to celebrate, particularly for compliant landlords. There was no incentive for early compliance when the scheme launched, and as the last landlord case demon- strates, confusion about compliance came with a penalty.
Landlords who do comply are now not only diverting funds that might have been invested back into their properties to pay to become registered and licensed, they are also diverting a noteworthy amount of their time to navigating licensing rules.
In cases where landlords cannot deal with either constraint, they leave the market. Is this how Government envisaged the sector improving?
- Landlords are encouraged to check that their registration and licensing details are correct directly with Rent Smart Wales. This affords the most protection, particularly for those landlords with multiple registration and management arrangements.
- The RLA is an accredited Rent Smart Wales training provider. For more information and to book onto the RLA’s online Rent Smart Wales course click here.
- The RLA is hosting its first Future Renting Wales conference next month. The national one day conference for the private rented sector will offer everything PRS landlords need to know regarding how best to prepare themselves for the changes ahead. Speakers include Anne Rowland of Rent Smart Wales, as well as the new Minister for Housing and Regeneration in Wales, Rebecca Evans AM.Tickets are available at https://www.rla.org.uk/conference/future-renting-wales/ Search #FutureRenting17 for all the latest conference news.