Wales' Housing Law revolution: what it means for the private rented sector

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Housing law in Wales is undergoing major change. The Housing (Wales) Bill 2014 is currently before the Welsh Assembly. It contains a lot of provisions that will mainly affect local authorities and housing associations.

But the private rented sector - agents and landlords - are directly affected as well. What is in store?
The big ticket item is the introduction of compulsory registration and licensing of agents and landlords.

Proposals to regulate letting agents who are not members of one of the recognised professional organisations, such as ARLA or RICS, have been around for many years. For example, ARLA and RICS members are required to keep client money in ring fenced client accounts and to take out Client Money Protection (CMP) insurance. ARLA and RICS have long argued that;

• unregulated agents have an unfair commercial advantage, because the overheads of the unregulated are lower than those of regulated agents;
• unregulated agents can damage the general reputation of lettings agents by taking questions of consumer protection less seriously and generally acting less professionally than those in the regulated sector.

The Housing (Wales) Bill will create a scheme of registration and licensing. It will be operated by Cardiff City Council on behalf of all the local authorities in Wales. It is based on the existing voluntary accreditation scheme that is already in place. The local authorities will retain the responsibility for enforcement of the scheme.

The scheme will involve a two stage process: registration and licensing. After an agent has registered, the process of becoming licensed will start.  This will involve agents becoming a member of an approved body and ensuring that at least two thirds of staff who are directly involved in the lettings and management of residential properties achieve accreditation.

Accreditation is obtained after successfully completing approved training provision. Accreditation courses will be run by the scheme itself, though other providers - such as ARLA or the Residential Landlords Association  - are likely to  be authorised to provide relevant training as well.
Somewhat similar provisions will apply to landlords. However, landlords will be exempt from these requirements if they use an accredited lettings agent to manage their lettings.

As regards enforcement, primary responsibility for this will lie with local authorities. At present a number of different measures are in contemplation:
• criminal proceedings;
• civil penalties;
• preventing landlords receiving rent through 'rent stop orders';
• making it harder for landlords to regain possession.

Further, local authorities will be allowed to share information concerning council tax and housing benefit to assist in identifying landlords for the registration and licensing of landlords.

While the details are not yet settled, it is clear that the Welsh Government intends that these provisions should be taken seriously.

Although the new scheme won't be up and running until 2015 (April is thought to be the start date), I think agents and landlords should start to consider how they are going to react to these development. I suggest:

• agents already regulated should consider how they can market their services to landlords to make clear the advantages of using regulated agents;
• agents not already regulated need to think about which regulatory scheme is best for them;
• landlord representational bodies, such as the Residential Landlords Association, should be considering how they can best provide help to private landlords for whom this will come as a great shock.

The Welsh Assembly has just been considering large numbers of amendments to the Bill. When the final details are clear, we will provide you with further information.

And two final points:

  1. Agents and landlords who do business in both Wales and England will realise that, unless and until the Westminster government adopts a similar scheme, their lives will become a lot more complicated.
  2. This is not the end of the Housing Law revolution in Wales. A Renting Homes (Wales) Bill, based on recommendations from the Law Commission, is promised for 2015.

We will keep you posted.

Martin Partington, Chair TDS Board

Posted by Martin Partington, Chair TDS on 23 May 2014

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