In January 2014, our current Prime Minister made a very exciting and reassuring announcement. According to the government’s .GOV website, Mr Cameron stated: “I have insisted on slashing needless regulation. We will be the first government in modern history to have reduced – rather than increased – domestic business regulation.” And it wasn’t just business legislation that was going to be affected. Alongside this initiative, branded the ‘Red Tape Challenge’, the property industry would also benefit.
In order to tackle problems that were occurring in the new build market, caused by huge amounts of increased rules and regulations, the Government also promised to “help house builders by cutting down 100 overlapping and confusing standards applied to new homes to less than 10.” It was hoped that the promised reforms would take £500 off the cost of each new home.
However, the Private Rented Sector doesn’t seem to have featured in the Red Tape Challenge. In fact, when the recent ‘Deregulation Bill’, intended to “make provision for the reduction of burdens” from legislation, came to be passed as an Act, quite the reverse happened. From a PRS perspective, the Bill added new burdens for landlords in England, including increased restrictions on serving a Section 21 notice, making landlords (or their managing agents) legally obliged to respond to tenants’ requests for repairs, and ensuring tenants have been provided with ‘prescribed information’, such as the ‘How to Rent’ guide.
So why has the PRS attracted a huge increase in legislation while other sectors have benefited from a reduction? The main reason seems to be that the market has grown very quickly, from just 9.9% of English households in 1999 to 17.4% in 2011/12. The PRS now houses not only students and people needing temporary accommodation, but also families. And with little social housing available, increasing numbers of PRS tenants are socially vulnerable and low paid, relying on housing benefits at the cost of the taxpayer.
Compounding the situation is that alongside this growth and change in tenants, there has been little enforcement of existing regulations, so unscrupulous landlords and letting agents have been getting away with treating tenants badly. As a result, there has been a noticeable increase in complaints to the likes of Shelter and increased pressure on and concern from politicians.
The culmination of all this led to an inquiry by an ‘All Party Parliamentary Group for the Private Rented Sector’, the results of which were published in June 2014.
The report reviewed everything, from simplifying regulation such as the Housing Health and Safety Rating System, to increasing it for agents and landlords via licensing and accreditation. It also covered landlords’ and tenants’ awareness of their rights and responsibilities, raising standards, eviction issues, HMOs and fees and charges. The report made a total of 43 recommendations, many of which have since been introduced.
While that might sound like a positive step in terms of ‘cleaning up’ the industry, the reality is that it has led to a minefield of lettings legislation. And a big issue is that because housing policy is now devolved to each country in the UK and each Local Authority is able to introduce their own local rules and regulations, such as licensing, any landlord operating in more than one country or authority faces an almost impossible task of keeping up with legislation by themselves – especially if they work full time.
And, sadly, all this complex legislation is unlikely to solve the problem it has been brought in to tackle. Without the one legal change the market really needs – proper regulation with enforcement– things won’t necessarily improve much for tenants. Landlords and letting agents will have to pass the increased costs they incur to the tenants where they can, meanwhile, unless there is a dramatic increase in investment in enforcement, the rogues will continue to be able to operate, undercutting decent landlords and agents on rents and prices and continuing not to provide the safe accommodation required.