February 19

Is this the future for buy-to-let landlords in the UK?

ARLA Propertymark’s CEO sets out his vision to the government

In a rapidly growing and evolving environment for the private rented sector, new laws, regulations, and frameworks are being examined by the government. The CLG has taken a lot of evidence, opinions, and insight from industry experts. On 29th January, it was the turn of ARLA Propertymark CEO David Cox to speak. He gave a damning report on governmental actions to date, and an inspiring vision for the future.
In this article, we summarise what Mr Cox said. You can watch the full session on this recording.

History shows that successive governments have failed to tackle problems in the PRS

David Cox highlighted the approach taken to the PRS by successive governments, calling it “a piecemeal approach”. Attempts at regulating the industry had resulted in a constant stream of changing laws, which agents struggle to keep up with.
He said that a better approach would be for the government to view the industry as a whole, rather than tackling individual problems by finding individual solutions. This would mean taking a coherent and strategic approach to the PRS.

The Draft Tenant Fees Bill is a step in the right direction

Mr Cox gave guarded welcome to the Draft Tenant Fees Bill. He said that the government should provide more clarity and legislative certainty to avoid a “PPI situation” in years to come. In particular, he highlighted the impact on agents with regards to:

  • Referencing
  • The Green Deal
  • Leaving a tenancy early
  • Deposit replacement insurance schemes

Government needs to reassess its impact assessment

Mr Cox said that the government has misjudged the impact of the Bill on agents. He told the committee that there is no way that agents can change their business models within the 20 hours suggested and that the government should revisit this area as familiarisation cost estimates were “woefully inaccurate”.

Licensing doesn’t work

Mr Cox was asked for his thoughts on licensing schemes. He provided a scathing summary of licensing as having “never worked, and it will never work”. In evidence of this opinion, he showed that:

  • In Croydon, only 10 licence applications were refused out of 30,000 applications. He asked, “Are they really suggesting that only 0.03% of properties were not up to standard?
  • In Newham, 140 officers have only managed 240 prosecutions per year from 47,000 properties – enforcement action of just 0.5%, and less than two prosecutions per officer per year.
  • In the whole of the UK, just 500 prosecutions have been made in a year. He questioned, “Is that a success?

Referencing such evidence, David Cox said it is clear that licensing schemes are not working, and that continuing down the licensing route would be “the biggest backwards step to improving the PRS in 20 years”.

If not licensed, then what?

Instead of licensing, Mr Cox said a more effective approach would be to have a regulatory framework with an overarching (and independent) regulator sitting above approved bodies such as ARLA Propertymark. These bodies would be responsible for accrediting agents and administering the scheme. He likened it to the way that the legal profession is currently regulated successfully.
He argued against the regulator taking on the responsibility for administration of the scheme, pointing to the experience of Rent Smart Wales as providing evidence of inefficiency and being non-cost-effective. He also said that England should look towards Scotland’s regulation system for lessons on effective regulation of the PRS.

And what about the balance between landlords and tenants?

In previous evidence, Shelter’s representative had argued that there was a power imbalance between landlords and tenants, weighted towards the landlord. Mr Cox disputed this and said that he felt the balance was about even. He doesn’t think more laws would help, reiterating that he feels that existing laws should be simplified and more greatly enforced, while simultaneously enabling greater tenant empowerment.
We hope that the CLG takes note of Mr Cox. Wise words indeed, and a vision for the future of the PRS that would make sense for all: government, local authorities, agents, landlords, and tenants.
To make sure your future as a landlord in the PRS is bright, contact one of the Ezytrac team today on+44  01522  503  717 .
Live with Passion,
Brett Alegre-Wood


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