In 2014 a lot of reports were issued which were very critical of the Private Rented Sector. The sector was accused of raising rents so they were ‘spiralling out of control’, offering properties which were in poor condition, evicting tenants ‘on a whim’ and carrying out ‘revenge’ or ‘retaliatory evictions’ on tenants who dared ask for property improvements. Letting agents were accused of overcharging tenants fees to find a property and renewals.
But much of this rhetoric ignored the excellence that exists in the sector. Concentrating solely on criticising the PRS has, in my view, left many tenants with the belief that all landlords and letting agents are bad, charge too much money and rent poor properties. This means tenants aren’t encouraged to look for the ‘excellence’ that exists, and are more ready to accept poor service, high charges and properties in bad condition. They shouldn’t.
If we really want to see a mature and successful PRS, we need to learn and encourage the excellence in the sector; to consider the dangers of a lack of regulation and make sure existing rules and regulations are actually enforced to limit the impact rogues and criminals have. Finally, as an industry we need to help the media and the government/local authorities deliver better tenant and landlord education.
To help deliver the three ‘Es’ of ‘excellence’, ‘enforcement’ and ‘education’, the report led to 10 changes being suggested, many of them easy to implement.
Driving excellence, enforcement and education in the PRS...
Currently there are over 100 rules and regulations a property has to abide by to be legally let. When you combine these with tenant rights and responsibilities, letting is a complex business.
We need to boil these rules down to 15 clear, easy to understand checks, making sure the rules on electrical checks, for example, are much clearer. Secondly, it seems crazy that lenders, insurance companies and the current political parties don’t insist that all agents have client money protection and this should be made compulsory.
The report looks at what’s been happening to rents and it’s clear they increase, but over time, at around 2% a year –less than inflation. The introduction of rent controls (proposed by Labour) could therefore end up increasing rents far more than they do naturally and could prevent interested institutional investors from investing in the UK – both of which would be disastrous, unintended consequences for tenants, so rents need to be free of controls.
Finally, the current taxation system for landlords doesn’t always encourage landlords to make major improvements while letting so, to help improve property conditions, it would be wise to have a taxation system which treats rented properties as businesses.
Enforcement though is at the crux of delivering a mature and successful PRS that takes care of tenants, while working for good agents and landlords. One major problem in the sector is enforcement officers don’t know where rental properties are. The Residential Landlord Association (RLA) suggested an easy way to find out: a tick box on council tax forms for tenants to say a property is rented. So whether the landlord wants to tell authorities they own a property or not, this helps identify rented properties cost-effectively through an existing system.
And, with this in mind, it is vital that all landlords and letting agents adhere to the same standard of excellence achieved within the self-regulated sector. Imagine using an unregulated NHS or schools which had no formal checks? This would be considered an outrage! One thing we have particularly learned from Newham’s rental enforcement policy is it does work. They have achieved great success and it’s essential we learn from this and implement it across other local authorities and make sure all agents and landlords sign up to a PRS code, such as the London Rental Standard - which is placed on the statute books.
Finally, my company mantra: Property Education. I have spent years trying to help and encourage the industry, media and government to better educate consumers on the market and carrying out property projects. I self-funded propertychecklists.co.uk which is a free service to consumers to find out anything from how to hang a door, invest in buy to let or even build their own home. This is being supported by the ‘good guys’ in the industry.
Another great example is the new ‘How to Rent’ guide produced by an excellent team DCLG put together. If you don’t use it already for your tenants and landlords, please do so. You can find the document on the .gov site
Last but not least, with the huge pace of change on letting, business and consumer law, we need mandatory CPD training for all involved in the PRS. This shouldn’t just apply to letting agents and landlords, but also lenders and insurers, charities and housing associations who work in the private sector.
I hope you find the report useful and, if there is anything else you think should be added or highlighted, do let me know - as it would be good to update the report and recommendations as the market moves, hopefully, forward.
For more information and the full report, visit: designsonproperty.co.uk/articles/Private-Rented-Sector-360-Degrees-Kate-Faulkner