The cost of compliance for the Private Rented Sector
September 18, 2012
“I make a promise to good landlords across the country: the Government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.”
With these words, just weeks after he took office, Housing Minister Grant Shapps announced his intention to scrap plans for a national register of landlords and compulsory written tenancies. In the first instance removing an expensive piece of window dressing and the second a largely irrelevant gesture. He argued it was time for councils to make better use of the powers they already have to drive up standards and root out criminal landlords.
Just over two years on, and while central Government has largely stayed true to its word, research by the Residential Landlords Association (RLA) has identified over 100 individual pieces of legislation and regulation containing around 400 measures affecting the Private Rented Sector. Since the 2004 Housing Act there have been no fewer than 22 additional measures, surely enough to satisfy any local politician.
Yet despite the Whitehall rhetoric, Ministers’ zeal for localism has lead to an explosion of council imposed heavy handedness, at odds with the desire to reduce regulation. Over 30 local authorities have opted to use Article 4 Directions, restricting the growth of shared housing mostly affecting students and young people seeking inexpensive and friendly homes.These decisions are often in response to concerns from vocal minorities, not about the existence of these types of houses, but the behaviour of the tenants inside. Local authorities are using planning powers as a tool of social engineering.
Meanwhile, almost 20 councils, led by the London Borough of Newham have opted to introduce selective licensing schemes that ultimately will see good landlords picking up the bill for registration, whilst criminal landlords carry on regardless. And the cost? As much as £1,000 a year – or on average 17% of rents. As Professor Michael Ball of Reading University has clearly concluded in a report for the RLA, the costs associated with complying with this myriad of regulations and navigating the sea of legislation gets passed on to the tenants in the form of higher rents.
The RLA objects not to regulation, but to the misconception that more regulation equals better regulation. Shelter have established that there were just 270 landlord prosecutions last year. With declining numbers of Environmental Health Officers asked to enforce yet more regulation how much worse will it get?
With the vast majority of landlords providing a decent service and accommodation to their tenants it’s time we got smarter regulation, the kind that enables local authorities to ruthlessly pursue criminal landlords providing dangerous accommodation. It cannot be right that councils expend so much energy regulating compliant landlords who are easy to find, leaving the criminal elements to go unchecked.
Any move to raise the regulatory bar by local authorities in particular, whilst grabbing cheap headlines will serve only to cause more misery for tenants, leaving them with few, if any, genuine choices over their housing options. The fact that debate over the Private Rented Sector seems to be on a continuous loop around what new ways can be found to regulate it is a sign of failure.
As a sector and a country we need to get smarter – tackling genuine criminal landlords who bring us all into disrepute whilst providing the vast majority of decent landlords the space, opportunity and support to provide the new housing that they country needs.
In its Housing Strategy published almost a year ago, Ministers declared that “The Government is committed to supporting growth and innovation by avoiding unnecessary regulatory burdens on landlords.” A welcome sentiment, though one not shared by local authorities; paradoxically, the very same councils now seeking homes from PRS landlords to enable them to house the homeless.
Amid the continued push for localism it’s time UK councils heeded Whitehall’s advice and let the private rented sector get on with the business of housing the many people struggling to obtain a roof over their heads.
Chairman of Residential Landlords Association (RLA)