The foundations for regulation of the PRS in Wales

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One of the policy areas that the Whitehall government seems to think can safely be transferred to devolved governments is housing. Almost the first Act passed in the Scottish Parliament in 2001 was a Housing Act. Now the Welsh Assembly Government – with its expanded legislative powers - is going to do the same. And it’s an ambitious programme they have in mind, of direct relevance to all our members with offices in Wales. If the Welsh programme proves successful it may prove a precursor to further moves in England, Scotland, and Northern Ireland.

You can read the proposals set out in the White Paper Homes for Wales: A White Paper for Better Lives and Communities  here and submit comments and responses until 17 August 2012.

The paper covers the whole of the housing market – owner-occupation and the social rented sector as well as the private rented sector. Two major Bills are outlined: the first a Housing Act (to be published in October 2013), the second a Bill to reform tenure law  on lines recommended by the Law Commission in 2006. This blog entry focuses on the first of these.

Turn to chapter 6 (pages 47-52) and you will see the paper argues that the PRS is patchy. There are excellent landlords but there are also poor landlords; there are excellent agents but – particularly among the unregulated – there are poor practices and management; and the White Paper also acknowledges that not all tenants are perfect; there are also bad tenants. None of this will come as a surprise.

The White Paper concludes that: ‘The PRS is in need of a more modern and professional approach by landlords. It is too important a part of the housing system in Wales to be left to chance. The sector also needs to grow... Improving the sector’s image is essential to bringing in new landlords and new investors.’

In an important paragraph, the White Paper states:

‘Despite its increasing size, the importance of the [private rented] sector has not been recognised nationally. This Government recognises its importance and the bigger and better role it could play in meeting the increasing demand for housing by delivering well managed, well maintained and affordable housing, for both short and long-term tenants. It can become a very acceptable choice for a home, where arrangements work to the advantage of tenants, who wish to have a home in good condition and a good landlord. The same applies to landlords, who wish to have a sustainable tenancy that provides a steady income stream from their properties and good tenants.’

So this is the policy objective: take renting, particularly private renting, seriously.

To achieve this the Government intends to:

1. establish a national, mandatory, registration and accreditation scheme for private landlords, lettings and management agents based on agreed Codes of Practice.

All landlords and agents will be required to register; and within two years they will all be required to become accredited. However landlords will be able to opt out of the accreditation requirement if they decide to use an accredited letting or management agent.

The White Paper does not spell out the relationship between its accreditation scheme, and the requirements already imposed by bodies such as ARLA and RICS; it is not made clear whether accreditation standards will be lower than those required by those bodies. The only clue is that agents will be expected to adhere to a Code of Practice, which will be based on that being developed by the Property Ombudsman.

2. Require all tenants to have a copy of their tenancy agreement with information on their responsibilities to  look after the property.

Those already members of professional bodies will want to make sure that their existing qualifications are sufficient to satisfy the criteria for accreditation. The Government’s timetable suggests that there will be opportunities for Welsh members to engage in the shaping of the detailed proposals. This might be at least the first step towards the compulsory regulation of letting agents for which ARLA and RICS have been calling for many years.

Posted by Prof Martin Partington QC on 30 May 2012

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