Conservative Plans for the Private Rented Sector

David Lawrenson of LettingFocus says the Conservatives actually have some good ideas for the private rented sector whilst Labour’s plans are doomed to fail.

First, he looks at what the Conservatives are proposing.

Housing Court

So, now we know what the Conservatives would like to do next with the private rented sector – and actually it’s rather sensible. (Maybe the government has concluded that buy to let landlords have suffered enough under the tax onslaughts George Osborne unleashed on them?)

I really like their idea of creating a dedicated Housing Court. This is a great proposal and one that we have called for in the past. This would solve one of the biggest challenges in the private rented sector (PRS) facing both landlords and tenants – which is the delays in our already overstretched courts, where it takes far too long to get a court hearing date and there are stories of cases being adjourned, sometimes for months. As the Secretary of State said, it would provide “faster, more effective justice” and hopefully put an end to ludicrously protracted disputes.

Landlords Redress Scheme

I also like the Tory idea of a compulsory registration scheme for all landlords along with a redress scheme. This will ensure all tenants have a route for resolving issues much quicker. The reality is that letting residential property these days requires landlords to have a lot of knowledge – and the fact is that there is a small but very irritating minority of landlord-dabblers who don’t have a clue what their legal responsibilities are. They give good, responsible landlords a bad name and should not be in the business.

The idea of a “light touch” compulsory registration scheme for landlords was actually promoted back in 2008 in the “Rugg Review” – a report that was commissioned by the then Labour Government and which was applauded by most people interested in our sector. As long as it is easy and low cost to join, (and hopefully slightly easier than the Rent Smart scheme which is now live in Wales), and providing there is also strong action against landlords who refuse to join along with an adequate level of promotion for such  a scheme, then I am very much in favour of this idea.

It makes sense because often tenants don’t always, (at least under current systems), have a clear route for redress, which not only breeds resentment, but which can leave renters living in inadequate and sometimes unsafe accommodation. Of course, tenants already have a right to compel a landlord to carry out repairs, under the “Fitness for Human Habitation’ Bill” so legislation would need to make sure it did not “double up” and was effective. But all in all, not a bad idea.

Regulation of Letting Agents

This is something that has been recommended by key players in the lettings industry, including the National Approved Letting Scheme (NALS), as a way of raising standards in the sector. This change could offer more meaningful protection but we would be interested to see the detail.

Letting agents are already covered by an ombudsman scheme so we wait to see exactly what the regulation would mean in practice, but the fact remains there are too many duff letting agencies out there – again undermining the sector as a whole, so anything to raise standards sounds good.

Longer Tenancies

This one is a bit of an oddity. The government plan is to give incentives to landlords to offer 12-month tenancies, though what the incentives will look like remains unclear.

Given that the majority of tenants have 12-month contracts already, it isn’t clear why the government plans to incentivise something the market is already delivering.

Also, most 6 or 12 month initial fixed term tenancies are extended well over the 12-month period, with actual tenancies running for around three years on average, with the vast majority being ended by the tenant, not the landlord.

In the previous housing white paper which was focussed on incentivising Build-to-Rent, institutional investors were somehow to be encouraged to offer tenancies of three years to all tenants, so maybe this will be quietly dropped. (Three year tenancies are not an option for buy to let landlords with mortgages as most mortgage lenders don’t allow them to issue over a two-year tenancy fixed term and many do not even allow anything over a one-year fixed term!).

For those landlords who don’t have a mortgage and can therefore issue longer tenancies, if the housing court could be a route to much faster repossession for excessive non-payment of rent / antisocial behaviour, I am sure that far more landlords would issue longer term tenancies than is currently the case.

All in all, a good set of ideas from the Conservatives.

Labour, of course, just offers rent controls as a solution. My comments from a blog from 16 months ago are still valid in this regard:

Rent Controls in London

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We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. David Lawrenson, founder of LettingFocus, also writes for property portals, speaks at property events and is regularly quoted by the media.

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