In his first major speech of 2013, given to the Fabian Society, Labour leader Ed Miliband spoke of the need to crackdown on rogue landlords who are ripping off tenants and providing sub-standard housing.
He said, “Britain is in danger of having two nations divided between those who own their own homes and those who rent. If we are going to build One Nation, people who rent their homes should have rights and protections as well.
“That’s about rooting out the rogue landlords. Stopping families being ripped off by letting agents. And giving new security to families who rent.
“So we will introduce a national register of landlords, to give greater powers for local authorities to root out and strike off rogue landlords. We will end the confusing, inconsistent fees and charges in the private rented sector.
“And we will seek to give greater security to families who rent and remove the barriers that stand in the way of longer term tenancies.”
In addition to Miliband’s speech, Baroness Hayter tabled a proposal in the House of Lords that would make letting agents as accountable as estate agents in the eyes of the law.
When last in government, the Labour Party had been committed to the idea of regulating the private rented sector, although no action was ever taken to see this through. The idea appeared to have been dropped last year when shadow housing minister Jack Dromney rejected regulation.
Miliband was very clear in his speech, however, making it likely to reappear as a pledge on their manifesto for the 2015 election.
The Residential Landlords Association has long supported the regulation of letting agents, but has strong reservations regarding the proposed registration of all private landlords, considering the idea expensive and unworkable.
Alan Ward, chairman of the RLA, said, “When in office, Labour estimated the cost of a national register of landlords to be £300m and its own impact assessment described full licensing as onerous, difficult to enforce and costly.
“Imposing such a charge on the private rented sector would amount to a further tax on landlords and tenants when we need more homes, and people across the country are feeling squeezed.
“According to figures from Shelter, just 487 landlords in England were prosecuted last year – a figure that is remarkably low out of an estimated 1.2m landlords in total.
“This is despite there being 100 individual pieces of legislation and regulations containing around 400 individual measures affecting the sector.
“The problem is not a lack of powers, but the willingness and ability of local authorities to enforce their existing powers whilst under financial pressure.
“The RLA is calling on all parties to support local authorities to improve the skills available to environmental health officers to more swiftly bring prosecutions against the minority of criminal landlords who bring misery to tenants’ lives. Accreditation schemes would enable councils to better target those who operate under the radar.
“Whilst we support Ed Miliband’s calls for the regulation of lettings agents, which would be good for landlords and tenants alike, it is scaremongering to talk of families being kicked out with two months’ notice. A landlord would rather have a reliable tenant paying rent than face the costs of finding new tenants.”
Another current issue in the lettings industry is the matter of licensing, which has been enforced in Scotland, is being trialled by Newham Council, and is soon to be launched by Liverpool City Council.
Stuart White, of Century 21, a Scottish letting agency, has spoken out in warning to English letting agents about what to expect if blanket licensing, and fees to tenants, such as referencing and inventories, are banned.
According to White, every Scottish landlord must register every property they rent out at the rate of £55 for the first, and £11 for each additional property. Letting agents too must pay out £55 to every council in whose area the agent manages a rental property, regardless of whether there is only one or many. All registrations must be renewed after three years.
He describes the benefits of licensing as being very limited, and is scathing in regard to its operation. He said, “I have never come across a single landlord whose application has been rejected. Nor have I come across a rogue landlord being expelled from the register. It predominantly seems like a money-making exercise.”
Another concern he highlights is the way licensing makes landlords and letting agents responsible for the behaviour of their tenants. He said, “It is absolutely outrageous the way this is abused by some councils, and they are simply making landlords and letting agents do their work for them.”
As for the banning of fees to tenants in Scotland, and Shelter’s campaign to see this ban across the whole of the UK, he said, “I used to donate annually to Shelter, but I will never give them another penny while they remain on this path of attacking every single letting agent in the UK and I am sure other industry businesses will have the same opinion and have already re-routed their financial support to other causes.
“Millions of people would find themselves homeless were it not for the private rented sector, so to go to war with a whole industry is ill thought out. Surely, it is better to work with an industry to drive up standards.
“Following a recent ‘clarification’ the by the Scottish Government, it is said that nobody can charge anything apart from rent and a deposit for the setting up, maintaining or ending of a tenancy. Apart from the issue about reference fees, does this mean that no charge can be made for late rental payments? Damage to a property? Payments made by credit card? To name but a few instances where a tenant should legitimately be bearing the cost of their actions?
“Personally, I am astonished if the law really intended to state that a commercial business trying to cover its costs and losses for a landlord are acting illegally?”
Robert Nichols, director of Edmund Cude, has also spoken out against blanket licensing, expressing concern over Liverpool City Council’s decision to launch its own licensing scheme before seeing the results of the Newham licensing trial, suggesting that they are setting both themselves and the tenants up for a bureaucratic nightmare. He said, “The scheme itself is deeply flawed. It’s not yet clear as to whether or not the landlord licensing scheme will lead to an exodus of landlords from the borough – only time will tell. However, by burdening landlords with an extra piece of bureaucracy, Newham Council risks de-incentivising landlords from operating in the area. ”
All this comes at a time when the private rental sector plays an invaluable role in reducing the national housing deficit and we should be doing all we can to encourage, not inhibit, landlords.”
Newham Council estimates it will cost £329,000 in the first year to promote and implement the scheme, including IT systems and recruiting additional teams of temps, although it is unknown whether they have the manpower to deal with all the applications, or how long the process will take.