The Changing Face Of The Sector
Comment by Mark Daruvalla, MD of CFP Software
The dramatic increase in landlords over last decade has meant that there are many more inexperienced landlords. There are currently no present guidelines and no legal requirement in England and Wales for landlords to be registered before letting out their property. Although there are several organisations, such as the National Association of Landlords, that offer support and guidance, many landlords are not even aware of their existence.
Following the publication of the Carsberg and Rugg Reports in 2008, changes in the residential lettings sector have been anticipated. These reports proposed a registration scheme for landlords, alongside compulsory regulations to govern letting and management agents, overseen by an independent body.
Scotland introduced a Landlord Registration Scheme in 2006, whereby landlords were required to register with their local authority and provide compulsory information, such as all the names they have ever been know by, address and previous addresses from the past 5 years, date of birth, joint or company details if applicable, telephone numbers, email addresses and the addresses of all properties they own. If the landlord uses an agent to let their properties, then the agent must also be registered too. The landlord must also confirm their eligibility to a fit and proper person to let.
This scheme was reviewed by Shelter in April 2009, who found that ‘...there were a number of examples of ways in which landlord registration had been used as impetus for improving private renting, however there were also many concerns.’ They concluded that “...landlord registration is not yet fulfilling the expectations placed upon it; indeed, that it may not be able to do so.’
It would be hoped that the scheme to be introduced in England and Wales learns from the shortcomings of the Scottish scheme. The positive aspects of the scheme, such as advise and training for landlords, needs to be available from the outset, so that the benefits can be seen by the landlords to encourage co-operation.
Unfortunately, many landlords will see the scheme as a ploy by the Government to ensure effective tax collection and therefore tax incentives for repairs/maintenance may encourage a more positive response.
The Rugg Report clearly found that the vast majority of landlords offer good accommodation and good service to their tenants, therefore the Government needs to be clear on its objective for registering landlords. Those that are affected by this scheme need to fully understand that the benefits will be for those landlords who operate conscientiously and those who have provided poor accommodation must clearly recognise what is unacceptable and will not be tolerated.
It is proposed that the scheme will be run nationally by an independent organisation and that an annual subscription will be levied to cover administration. A registration number would be issued to landlords to be included on documentation such as tenancy agreements and claims made for housing benefit.
In the event that a landlord failed to comply with regulations, the independent body could remove the registration number and take control of the management of the landlords’ properties, although this is a point that the Government is currently seeking further comment on.
Further measurements that the Government highlighted including introducing an improved complaints and redress procedure for tenants with a mechanism so tenants were able to register official complaints about poor quality landlords; greater Local Authority support for good landlords by setting up ‘local lettings agencies; and to better facilitate tenancies in the private rental sector for those in housing need, including housing benefit recipients.
The Government also said it plans to change the law to ensure that tenants have a minimum two months’ notice if they have to leave their home because their landlord has been repossessed, which I believe is vital in the current climate.
However, I believe that any new scheme needs to do more to encourage smaller landlords to enter the market, so that portfolios can be developed. Hand in hand with these measures, such as reducing Stamp Duty and CGT, there needs to be a tightening up of controls to ensure professional standards of property management are maintained by all property agents.
I also agree that managing agents should be subject to mandatory regulation to raise standards and benchmark good practice. The latter point on good practice has influenced the development of our software packages since day one, some 20 years ago. We have recently invested considerable resource in gaining accreditation for our software from The Institute of Chartered Accountants in England and Wales and we work closely with other regulatory bodies to ensure everything that can be done is done in our software, to promote best practice among property managers.
In conclusion I would say that all of the major points of the Carsberg Review and Rugg Report have been well received by the Government, with an admission that our sector continues to grow in importance and value for the general public.
I am delighted to see a debate starting around the regulation of lettings agents, which will ultimately protect the reputation of good agents, as well as the rights of tenants.
I hope that the debate grows, with feedback and input from key industry bodies and players to ensure a workable, successful format for the future.
CFP Software, owned by GMG Property Services, specialise in supplying only the best lettings, property management, accounting and estate agency software. CFP software is used by over 2,000 property managers, letting agents and estate agents across the UK, with over 9,000 user licenses, making CFP the market leader in its field.