Thursday, May 14, 2009

The Rugg Report – the governments response

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

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The government published a consultation paper yesterday in response to the recent Rugg Report and the other various reports that have been published over the past few years.

Supporters of the Law Commissions long project and reports, will be pleased to see that this is acknowledged and referred to in the response which confirms that many of the Law Commission’s ideas are being considered. However it also states that they do not think the time is right for the extensive changes in tenure proposed in the Renting Homes report.

No doubt further comments on the paper will be made later, but on a preliminary reading, the following points stood out for me.

The report acknowledges that most tenants are satisfied with their landlords and that the majority of landlords provide a good service. The main thrust of the proposals therefore are intended to support good landlords, improve standards generally across the sector, and drive out the persistent bad landlords.

National Register
The paper proposes a national register for landlords. This will be 'light touch' and mostly web based. Landlords will need to register their name and address, and details of their property holdings, and pay a small fee annually. They would then be given a number which would have to be used in all landlord related paperwork such as tenancy agreements, tax forms, benefit claims, and court proceedings etc. The register would be run by an independent organisation.

The benefits of the register for government is that it would give them accurate statistics, and they could use it as a way of disseminating information to landlords (such as regarding energy efficiency standards). It would presumably also (although this is not specifically stated) help the revenue with tax collection.

Landlords who fail to comply with the regulatory regime or where there are 'persistent abuses' will be removed from the register, be unable to let out property by themselves, and will probably be ineligible to receive housing benefit.

Tenancy agreements
They are considering introducing mandatory tenancy agreements, as suggested by the Law Commission, and are seeking views on how this should best be implemented.

Rent Limit
They propose increasing the limit above which tenancies are not longer ASTs to £100,000 pa (currently it is £25,000 pa)

Regulation of letting agents
The paper concludes that voluntary regulation of the letting agency sector has not worked, and propose full compulsory regulation of all letting agents. This would include

  • entry requirements
  • a code of practice
  • business and consumer protection (e.g. indemnity insurance, client protection schemes, complaints procedures)
  • monitoring of compliance by an independent body
  • enforcement powers and sanctions
Dispute resolution, Courts, etc
The Law Commissions proposals put forward in their Proportionate Dispute Resolution paper are being considered in conjunction with the Ministry of Justice.

Encouragement of investment
They are considering setting up a Private Rented Sector Initiate to encourage institutions to invest on a large scale and in the long term

Support for tenants being evicted by landlords mortgagees
They will be looking to change the law to ensure that tenants in this position are given at least two months notice to find alternative accommodation.

Tax changes
Significantly the report simply says that the treasury is aware of changes proposed (e.g. by the Rugg Report) to the tax system to support the private rented section, and will keep them under review. Which presumably means that nothing will happen.

Local Authorities
They discuss how local authorities can better engage with local landlords, perhaps by dealing with them through their small business unit rather than via environmental health, and by giving better training to staff. Many local authorities are of course already doing this sort of thing.

Accreditation
They would also like to build on the various current accreditation schemes for landlords, perhaps with a view to developing a national standard.

There is a lot more in the report (which runs to 37 pages) but the above gives a flavour of what it says.

The full report can be found here

The paper is also a consultation and various questions are asked at various stages for feedback on particular points. These should be submitted to the department by Friday 7 August. Note that I hope to be able to set up one of my online answer forms for this shortly, so watch this space.

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3 comments:

Anonymous said...

Only reason why government wants landlord to register is to make sure they pay tax not for other reason.
I think people or landlords should stop letting any propert if this govermnet so concern they can provide housing. Of course fiddling MP expenses need to be paid thefore taxman need more money to pay dishonest MP.
I am glad I am not in letting property business. It puts of this so many regulations to landlords.

Howard said...

The private rental sector is full of landlords who do not care about the adverse impact their properties can have on neighbourhoods.

Furthermore, many tenants, especially students and "young professionals" do not care about the exterior state of their dwellings which become blots on the landscape. Such properties are also a magnet for burglars who see the obvious signs of multiple occupancy and know that there will be multiple rich pickings inside.

Letting agencies perform merely a tenant finding service and fail to manage properties on their books.

It is easy therefore to distinguish the rented property from the owner occupied. A rented property is likely to have multiple vehicles, carelessly parked, front gardens untended, dustbins permanently on display etc. Conversely, owner occupied properties tend to present a neat and tidy appearance to the world.

It is high time that errant landlords and tenants were forced to ensure that properties did not not have adverse impacts on the residential environment. Legislation that places greater control on this area which has mushroomed because of the buy-to-let boom is therefore to be welcomed. It should for example enable those who have a need to know, to find out where landlords actually live. I believe this can in some cases be surprisingly difficult currently.

RHG said...

Much is said about the few landlords who fail to provide secure, safe and adequate tenanted properties, the majority of landlords are conscientious, after all a badly maintained property is a faster depreciating asset than a well maintained one. There are substantial penalties available to the government to punish errant landlords and councils have formidable powers to ensure that landlords do not let out unsafe or unhealthy properties.

I do believe that yet again the legislation is perhaps slewed towards making it easier for the revenue to collect taxes, as with so many government initiatives the true intention is masked behind a screen pertaining to ensure that tenents are kept safe from unscrupulous Rachmann like figures.

I would be a little more impressed if the government made it less easy for the unscrupulous tennent to evade rent, to destroy and damage property and to use legislation to obtain free accomodation.

Just as the majority of landlords do take care of their tenants requirements, the majority of tenants care for their rented property. The law however is weighted substantially towards allowing the percentage of tenants who disregard the details of the tenancy agreements and treat the legal contract as a one way piece of legislation.

It is possible to evict tenants, but it does take a long time, in the menatime the tenant can avoid paying the rent, they can cause serious damage to a property and many landlords can be left many thousands of pounds out of pocket, the law does little to really help the landlord in such a case.