Calls for greater PRS regulation rejected
October 26, 2012
Recently the government again ruled out a move to increase regulation of the Private Rented Sector (PRS), rejecting calls for more legislation to regulate landlords and letting agents. The previous Government had been looking to introduce some form of licensing but the current coalition, after conducting its own research, believes that the industry can regulate itself.
They claim that regulation of the PRS is not necessary due to the sufficient number of voluntary bodies operating within the sector, all of which require members to have signed up to a variety of schemes and codes of best practice that provide greater protection for tenants and landlords.
The problem that arises with self regulation is that good agents will obviously opt in but less professional companies will carry on regardless. Also it is difficult for these bodies to keep a check on all members to make sure they are adhering to the professional standards and best practice required for membership. Another issue is that if consumers are unaware that these bodies exist, as well as what they mean and offer, then membership with them can become devalued.
Baroness Hanham, the Parliamentary Under-Secretary of State, Department for Communities and Local Government, stated that tenants and landlords can get redress, if they fall victim to rogue letting agents, by reporting to their local trading standards officer or to the Office of Fair Trading – which has both civil and criminal enforcement powers. Another option available to those who feel they have suffered at the hands of an unscrupulousness party is the The Property Ombudsman Service (TPOS). The Property Ombudsman provides a free, fair and independent service for dealing with unresolved disputes between agents (who are members) and consumers (who can be landlords or tenants of residential property in the UK). The Ombudsman is totally independent of agents and reports directly to the TPO Council providing a fair and impartial service.
The government’s stance on the matter is that additional regulation of the PRS would push up rents as the cost of regulation would be passed on to the tenants through increased rent.
However, not everyone agrees with the Government’s stance on regulation and a number of borough councils have introduced licensing schemes of their own in a bid to regulate the PRS. An example of this would be in the London Borough of Newham where legislation has been created to license landlords and letting agents. It is intended that the revenue generated by licensing will be used to fund measures to focus on the worst offending landlords and letting agents. Only time will tell if this scheme will be worth while.
Better understanding of the actual cost and impact of increased regulation is needed before any large scale initiatives are rolled out. Another factor to research is whether tenants feel they need this extra protection, especially if it will mean an increase in their outgoings.