Posted by: Colin Wiles15/05/2012
Recent revelations in The Guardian and elsewhere about people living in sheds and a walk-in freezer (a phenomenon that is bound to increase as the housing crisis deepens) are building up pressure on the government to regulate the private rented sector.
The government is resistant to any notion of added regulation, fearing that it will drive landlords out of the rental market: “Over-regulation would reduce the number of properties to rent and wouldn’t help tenants or landlords” says the CLG. The government seems to believe that existing voluntary schemes are sufficient. They are not, and the clamour for regulation is bound to increase as further revelations about the seedy recesses of the private rental sector emerge.
Trade bodies within the sector want regulation, tenants want it and the public will increasingly want it when they see the scale of the problem. Last November I wrote here that we are creating a housing underclass and that we would see more of this kind of thing in the future. As Hannah Fearn in The Guardian points out, “money always follows a market”. The raising of the room rate to 35 and other changes to the benefits system are bound to increase the pressure on the lower reaches of the private rented sector. My prediction is that an individual will shortly emerge to replace Peter Rachman in public mythology as the slum landlord of our times.
The key requirement is that any system of regulation or licensing should be simple, subtle, supported by both tenants and a majority of landlords and easy to administer. It should not penalise the vast majority of good landlords for the sake of a few rogue elements. I was lying awake in the night and it came to me that local authorities already operate a number of licensing schemes that are simple, easy to understand, self-funding and have widespread public support. The system for licensed premises is an example.
It is illegal to sell alcohol in this country without a licence. You need both a personal licence and a premises licence that have to be displayed prominently in the property. The individual licensee has to be of good character. In England there are around 166,000 licensed premises and fees range from £100 to £635 for a new application and between £70 and £350 for the annual renewal of the licence. The beauty of this system is its simplicity. Everyone understands the notion of licensed premises and licences are usually renewed without any fuss. It is only where there have been complaints from neighbours or the police that licensing authorities will consider non-renewal of a licence to drive out the rogue elements. Is there any reason why the same principles could not be applied to the rental market?
Imagine a similar scheme applied to the private rented sector. The licensee would either be the landlord or a reputable letting agent who would be required to meet basic requirements relating to decent standards, deposits, safety and tenancy management. An annual fee of £100 (a mere £2 a week on the rent) would yield an income of around £400 million across England. That’s an average of over £1 million for every local authority – enough to fund a significant team of licensing and enforcement staff. Every self-contained let property would have to display a licence and tenants would have the comfort of protection under the scheme. As with licensed premises, the vast majority of licensing activity would focus on rogue landlords, following up complaints from neighbours and others, whilst the vast majority of properties would see their licences renewed annually without any fuss. Of course, it could lead to a slight reduction in the number of properties available across the country as sheds and other illegal and unsatisfactory premises were driven out of the sector, but that is a good thing surely? Conversely, it could also attract new landlords who were attracted by the simplicity and reliability of the scheme.
I can’t see any flaws with this system. Can you?
From Inside out
An independent look at the housing sector and beyond from Colin Wiles