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  • Property-a-holics

    New government paper published - includes landlord licensing and agents regulation

    This is a duplicaiton of my blog item which I wrote today about the new report just published)
    The government published a consultation paper yesterday in response to the recent Rugg Report and the other various reports that have been published over the past few years.
    Supporters of the Law Commissions long project and reports, will be pleased to see that this is acknowledged and referred to in the response which confirms that many of the Law Commission's ideas are being considered. However it also states that they do not think the time is right for the extensive changes in tenure proposed in the Renting Homes report.
    No doubt further comments on the paper will be made later, but on a preliminary reading, the following points stood out for me.
    The report acknowledges that most tenants are satisfied with their landlords and that the majority of landlords provide a good service. The main thrust of the proposals therefore are intended to support good landlords, improve standards generally across the sector, and drive out the persistent bad landlords.
    National Register
    The paper proposes a national register for landlords. This will be 'light touch' and mostly web based. Landlords will need to register their name and address, and details of their property holdings, and pay a small fee annually. They would then be given a number which would have to be used in all landlord related paperwork such as tenancy agreements, tax forms, benefit claims, and court proceedings etc. The register would be run by an independent organisation.
    The benefits of the register for government is that it would give them accurate statistics, and they could use it as a way of disseminating information to landlords (such as regarding energy efficiency standards). It would presumably also (although this is not specifically stated) help the revenue with tax collection.
    Landlords who fail to comply with the regulatory regime or where there are 'persistent abuses' will be removed from the register, be unable to let out property by themselves, and will probably be ineligible to receive housing benefit.
    Tenancy agreements
    They are considering introducing mandatory tenancy agreements, as suggested by the Law Commission, and are seeking views on how this should best be implemented.
    Rent Limit
    They propose increasing the limit above which tenancies are not longer ASTs to £100,000 pa (currently it is £25,000 pa)
    Regulation of letting agents
    The paper concludes that voluntary regulation of the letting agency sector has not worked, and propose full compulsory regulation of all letting agents. This would include
    • entry requirements
    • a code of practice
    • business and consumer protection (e.g. indemnity insurance, client protection schemes, complaints procedures)
    • monitoring of compliance by an independent body
    • enforcement powers and sanctions
    Dispute resolution, Courts, etc
    The Law Commissions proposals put forward in their Proportionate Dispute Resolution paper are being considered in conjunction with the Ministry of Justice.
    Encouragement of investment
    They are considering setting up a Private Rented Sector Initiate to encourage institutions to invest on a large scale and in the long term
    Support for tenants being evicted by landlords mortgagees
    They will be looking to change the law to ensure that tenants in this position are given at least two months notice to find alternative accommodation.
    Tax changes
    Significantly the report simply says that the treasury is aware of changes proposed (e.g. by the Rugg Report) to the tax system to support the private rented section, and will keep them under review. Which presumably means that nothing will happen.
    Local Authorities
    They discuss how local authorities can better engage with local landlords, perhaps by dealing with them through their small business unit rather than via environmental health, and by giving better training to staff. Many local authorities are of course already doing this sort of thing.
    Accreditation
    They would also like to build on the various current accreditation schemes for landlords, perhaps with a view to developing a national standard.
    There is a lot more in the report (which runs to 37 pages) but the above gives a flavour of what it says.
    The full report can be found here
    Tessa Shepperson
    Solicitor and editor of http://www.landlordlaw.co.uk and the Ecademy Landlord Law Club.
    I also write a blog at http://landlordlaw.blogspot.com and you can follow me on twitter.
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    Tessa Shepperon Landlord Law | Landlord Law Blog |

    Tessa,
    Thanks for the summary.
    My initial impression is the proposed changes seem pretty balanced. Maybe the registering of landlords is going to be a problem or maybe it was a minor change which might actually help the landlords.
    It is good to hear that the tenants are largely OK with the present AST model.
    I know at least one landlord who will definitely has issues with the raising of the Rent Limit. She operates without tenant deposits as she is over the current limit (higher end flats in London). While I do not see the tenant deposit requirements as a problem she is definitely of a different mind.
    The changes in the rules (if they go through) might push a few landlords out of the business so it could create buying opportunities.
    2 months notice to a tenant when their rights per the AST are being terminated by the superior position of the mortgage holder does not seem to be an onerous cost for lenders. It will just mean that the notices go out pretty quick once the lender has legal control.
    John Corey
    https://www.ChelseaPrivateEquity.com/blog
    https://www.twitter.com/john_corey
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

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