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Government review of Regulation and redress in the UK housing market

The Government have now published the above named review (conducted by Heriot-Watt University) of the regulation of the UK rented housing market. The report highlights the yawning discrepancies in regulation between the public and private rented sectors and details the comparatively few rights of redress which a private tenant enjoys, compared with his social housing counterpart.

Some moves have now been made to protect private sector tenants - for example the introduction of the Tenancy Deposit Scheme in April 2007 and the introduction of licensing of Houses in Multiple Occupation in April 2006. However, there is still no obligation on private landlords to be licensed, despite existing Law Commission recommendations in a 2006 report that compulsory regulation be introduced.

According to a Citizens Advice Bureau's report carried out in 2007, private tenants are often unwilling to complain formally about landlords for fear of eviction, and as a result of this could be suffering a lower standard of living compared to public sector tenant. More worryingly, however, is the fact that the same report found that complaints to the CAB about private landlords substantially outweighed those relating to social lettings. The Office of Fair Trading's statistics also corroborate this since they show that the majority of complaints from consumers in relation to landlord/tenant disputes are from the private rented sector.

The most common types of private sector complaints relate to rents/charges, disrepair and security issues, and threatened eviction. Other issues were the non return of deposits or rent receipts, landlord entering without warning or permission, and harassment by the landlord. This is clearly at odds with the fact that this is the least regulated sector and one which often offers an inferior standard of housing stock to be let out, in most cases, under Assured Shorthold Tenancies offering relatively little security of tenure.

New Government Report recommendations:

  1. That letting and managing agents in the private rented sector be regulated in the same way as estate agents are now currently required to be by law. In addition the report proposes that the principal professional in any lettings/managing agency branch have an accredited advance qualification. At present, anybody can open a managing/letting agency.
  2. The simplification of regulation of landlords. Landlords should enter into self-enforced regulation under which they enter a professional association of landlords (for example the National Landlords Association) or an accreditation scheme or alternatively employ a letting agency belonging to a recognised body. Schemes/associations should meet criteria which includes a code of practice with a redress policy, regular auditing, transparency and recognition by the OFT.
  3. Improved transparency and more accountability by publishing names of management and letting agencies/firms that have been complained about.
  4. Assured shorthold tenants should remain secure whilst they seek redress against a landlord against whom they have a grievance, to avoid retaliatory eviction.
  5. The appointment of a housing market Ombudsman is not recommended. Instead, emphasis is placed on the need to simplify the current state of affairs and fill in the gaps relating to complaints procedures and remedies, with one complaints scheme for each division of the housing sector. For instance, tenants of landlords would have a distinct scheme under which to seek redress. This would simplify the current complex arrangements, improve accountability, and probably reduce costs.

Conclusion

At present, the report is very fresh and it is not known how widely its findings and recommendations will impact on the regulation of the private rented sector. What is clear, however, is that the Private Rented Sector is currently very much in the spotlight. This report comes relatively swiftly after the Law Commission's report, as well as independent reviews into Private Sector tenancies, including the University of York's report from October 2008 (the Rugg Report). Private sector landlords and tenants should probably expect to see at least some of the changes recommended by the report translated into practice in the short to mid term future. Even if changes are implemented on a voluntary basis those landlords that do not join schemes may find themselves in the wilderness as tenants seek out instead those who are not frightened of transparency and accountability