Government Announces Regulation of PRS

DEPARTMENT FOR COMMUNITIES AND LOCAL GOVERNMENT

Housing: Private rented sector
The Minister for Housing and Planning (Rt. Hon. John Healey): I am today publishing a policy statement, “The Private Rented Sector: Professionalism and Quality: consultation responses and next steps”. This sets out a summary of responses to our consultation document, “The Private Rented Sector: Professionalism and Quality – the Government response to the Rugg Review”, published on 13 May and reported to the House by my Rt. Hon. Friend for Derby South, the then Minister for Housing [Hansard column 50 WS].  The document that I am publishing today sets out Government’s plans following the responses to that consultation. Copies have been placed in the Library of the House.

The Government wants to see a private rented sector which offers high-quality accommodation, and in which tenants can make choices based on clear information about their options, their rights, and their responsibilities. We also want to ensure tenants know where to turn if things go wrong.  At the same time, Government wants to increase professionalism in the private rented sector – supporting good landlords and agents, whilst driving out the worst practices of the sector that fail tenants and damage its reputation.

Alongside our longer-term plans for legislation to improve standards , today’s document sets out our proposals to provide better help and support to tenants now. This includes a commitment to set up, by the Summer of this year, a dedicated helpline for private sector tenants working with voluntary sector agencies, and an online consumer feedback website working with Consumer Focus.

Our consultation document, published in May 2008, sets out a range of proposals to support a higher-quality, more professional sector, whilst minimising the regulatory burden on good landlords and agents. The proposals included a national register of landlords for England; full regulation for private sector letting and managing agents; and encouragement to local authorities to create ‘local lettings agencies’.

Consultation responses were strongly supportive of the proposals, although there were some concerns about specific details, and about implementation. Alongside the formal consultation, Government worked with a wide range of organisations on the development of detailed policy to underpin the proposals.

Our statement today reflects those consultation responses and the contribution of these work groups. It confirms the issues on which our intentions are now firm, as well as the detailed issues on which there is further work to do with interested stakeholders. In particular the statement includes commitments to:

• Establish a national register of landlords, to protect tenants and support local authority enforcement activity. We will carry out further detailed work with stakeholders to assess whether the register could also be used (either from the outset, or in the future) to apply registration conditions on persistently poor landlords.
• Introduce full regulation of letting and managing agents. We will carry out further detailed work with stakeholders on the exact form of regulation, and whether it is led by an independent regulator, or by industry bodies.
• Require all tenancies to take the form of a written agreement.
• Increase the limit for Assured Shorthold Tenancies from £25,000 a year to £100,000. This will reduce the number of tenants (up to 150,000 at present) who do not currently have the protection of an Assured Shorthold Tenancy, and associated protections – such as the requirement to protect a tenant’s deposit.

We remain committed to legislating at the earliest opportunity on these commitments to increase the protection and practical help available to tenants in the private rented sector.

These measures are complemented by the Government consultation, published by the Treasury – “Investing in the UK Private Rented Sector” – also published today, which considers whether there are any substantive barriers to investment in the sector by individuals and institutions. Taken together, steps to raise quality and identify any barriers to investment should reinforce each other and create a better private rented sector that can become the tenure of choice for a wider range of people.

Press release

Ian Potter, ARLA Operations Manager, responded: “This is a long overdue response.  14% of the population now live in private rented accommodation, and the sector looks set to grow significantly as it becomes more difficult to get a foot on the housing ladder.  There is even greater need for a register of landlords, full regulation of agents, and changes to the AST.

“Therefore we support the Government in its move towards full regulation of agents, and anticipate working with the Minister and his team on how this will be put into practice.  There is still concern that the CLG is still undecided as to who is going enforce this regulation – a detail that will not be overlooked by the industry.  Will it consist of independent regulation by industry boards? We are still waiting to learn more.

“The Government must now work to convincing the consumer that the PRS is a viable housing choice and one in which they can have confidence.  The increase in ASTs is a good step to take but we need further details from the treasury consultation on investment in the PRS and how it can grow to accommodate demand.

“The positive reaction of the public to ARLA’s licensing scheme for letting agents has proven the model for self-regulation in the industry.  We hope that the Government chooses to use this model in its own scheme for the regulation of letting agents and landlords.

“I can say with confidence that those living in rented accommodation are more concerned about the roof over their heads then political posturing, and it is of paramount importance that these measures are not lost in or around the election.”