Rant About Scottish Letting Regulation

by John Gell

15:29 PM, 13th September 2013
About 6 years ago

Rant About Scottish Letting Regulation

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Rant About Scottish Letting Regulation

As the Scottish Government gets set to embark on the regulation of letting agents – regulation which is badly needed in my view – I fear that my worst nightmare may be about to become true.

Why? Well, let’s look at what’s happened already with Scottish renting legislation.

Landlord Registration has for the most part been startlingly ineffective in raising standards. In fairness, that perhaps was not its prime purpose (having been introduced under anti-social behaviour legislation) but the fact that we now have a national database of private landlords should allow national and/or local government to target those landlords with awareness-raising advice, invite them to seminars and so on. Those unfortunate tenants who suffer at the hands of malicious or, more likely unaware, landlords need that to happen. I’m fairly sure there must still be many landlords who are not yet registered. The fact that Scottish Government hiked the penalty for non-registration up from £2,000 to £50,000 must surely indicate that registration is seen as important. The requirement to quote registration numbers in property advertisements seemed a pretty good way of bringing all landlords into the system. Yet, how many adverts still appear with no registration numbers? How many unregistered landlords have been fined?

No. I see poor practice flourish aplenty and registration requirement ignored. I see responsible landlords pay their dues while the irresponsible carry on regardless. I see local authority Landlord Registration teams funded by those responsible landlords and, it seems, doing not a great deal to bring all within the net.

Why not simply legislate to make it a requirement that for any individual to rent out a property he or she must either use a regulated agent (when that’s in place) or achieve accredited landlord status (or commit to a time-limited accreditation path)? Overnight, poorly performing landlords would be outlawed.

Look at Tenant Information Packs. Of course it’s good practice to pass incoming tenants information and advice relative to their tenancy and their new property. Responsible agents and landlords have been doing so for years as a matter of course. So surely it’s good that all now have to do so?

In theory, yes, but from our perspective as a letting agency we now find ourselves managing a parallel process issuing the mandatory Tenant Information Pack (TIP) alongside our own one, as the mandatory one is so stodgy as to be a turn-off to most tenants, contains errors, and imparts nothing of substance about the property. The effect of this has been to sap resources, particularly time – our scarcest resource – and so impact negatively on our finances. So a highly responsible agency, regulated by RICS and licenced by ARLA is being forced to go through an ineffective process which hampers business efficiency while less regulated or less responsible agents who decline to do so, or are even unaware perhaps that they need to, sail on in the same old way. How many letting agents have been taken to task for failing to issue a TIP? How many who fail to do so, use a low-fee basis as a means of attracting clients? The answers to those questions are unknown, but I’m pretty certain the first is zero or we’d have heard about it.

Simply Let pays about £2000 per year in professional membership subscriptions and regulation levies. We do that because we believe in high standards, and in demonstrating that we hold that belief. We undertake continuing professional development. We do so because we need to be fully informed in order to serve our clients well. We cannot give our landlord clients and their tenants the service they deserve on a low fee basis.

If a landlord’s agent fails to fulfil one of his client’s statutory obligations, it will be the landlord who is held responsible. Are all landlords aware of this? How many agents are playing fast and loose with their obligations to their clients? Again I don’t have an answer to that. If an agent lands a landlord in trouble as a result of negligence or incompetence does that landlord have recourse to a complaints redress mechanism? If that agent goes bust or even runs off with the cash is the landlord’s money safe? Does the agent have client money protection? Unlike estate agents selling houses, a fairly straightforward one-off task, letting agents have on-going management responsibilities which require detailed knowledge of complex housing law. Currently anyone can set up as a letting agent without any qualifications or training whatsoever and without any insurance or external monitoring and take on responsibility for managing clients’ major financial assets and ensuring tenants’ safety in the home.

You can see then why we favour regulation of letting agents. With a level playing field, landlords and tenants could go about selecting an agent knowing that all agents had the basics in place. Why then do I fear, as I said at the beginning of this blog, that my nightmare is about to be realised?

In my nightmare, responsible and already regulated agents found themselves obliged to register and of course to pay a recurring fee for doing so. In my nightmare less responsible agents continued to operate without appearing on the register. The third strand of my nightmare is that nothing much else happened.

It’s turned out like that with Landlord Registration so it’s perfectly possible that Letting Agent Regulation will go the same way.

Why not simply make it a requirement that in order for any letting agent to practice he or she must have in place:

  • A minimum level of relevant knowledge
  • Professional indemnity insurance
  • Client money protection
  • A complaints redress mechanism
  • Evidence of continuing professional development?

All are currently available to any responsible agent.

The private rented sector involves the very basics of life: a tenant’s home and a landlord’s financial investment (and possibly pension plan). It is critical therefore that all who manage any part of that process, landlord or agent, have the knowledge and capability to undertake their role to a high standard and fulfil it in a professional manner. It is critical too that those who entrust their lot to an agent have the benefit of certain basic protections. So my plea to the Scottish Government, when it develops letting agent regulation, is to make it impossible for any agent who can’t deliver those five elements above to continue in practice. The country and its tenants deserve nothing less. Rant About Scottish Letting Regulation

John Gell MRICS



Comments

Mark Alexander

23:19 PM, 13th September 2013
About 6 years ago

Reply to the comment left by "John Gell" at "13/09/2013 - 21:53":

My personal view John is that no new regulation should be allowed unless it is proven absolutely that existing legislation can not be utilised to solve a problem.

If that had been the case 10 years ago we wouldn't have had HMO legislation, selective licensing or additional licensing here in England and Wales.

EHO's were empowered to deal with issues well before these new laws were introduced to deal with the following:-

1) Over-crowding
2) Fire hazards
3) Dangerous properties
4) Noise pollution and related disturbances

So what was the point?

It's a rhetorical question because we all know the answer don't we? as I said before, it was all about raising funds and nothing to do with raising standards, the latter was just the political spin the propaganda was was on to drum up support from the unaffected electorate.
.
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16:56 PM, 16th September 2013
About 6 years ago

Reply to the comment left by "Kirsty McGregor" at "13/09/2013 - 22:22":

I feel you are missing out the reasons behind the Landlord registration in that it was introduced to put the onus of responsibility for tenant's anti-social behaviour directly onto the Landlord, making sure they did not have any criminal records, drug dealing or money laundering backgrounds, It also allows the LA to control minimum standards.

The reistration has not failed due its principles but due to the lack of funding being made available to the LAs to police the legislation.

Agent registration will only work if the Agent has a formal qualification or association...if that was the case it would put 75% of the agents in scotland out of business.

Jay James

17:08 PM, 16th September 2013
About 6 years ago

why on earth should a housing provider be legally responsible for the conduct of a private individual? Surely the private individual should be legally responsible for their own conduct, with properly funded means to deal with their misconduct via police and courts.

18:20 PM, 16th September 2013
About 6 years ago

Reply to the comment left by "Jay Jay" at "16/09/2013 - 17:08":

Unforetunately some Landlords are happy to put anyone into their property irrespective of the consequences to neighbours etc. What would you say if an absent LL put a drug dealer or known thug into a property next to where you live? What would you say if LLs deliberately put anti social tenants into a property you owned to deliberately blight your property and force you to sell at a ridiculous price?

These are the real issues being dealt with by Landlord Registration.....there have been a few high profile press reports recently confirming that the authorities are closing in on these operators but like all things the problems will not be solved overnight.

Jay James

18:24 PM, 16th September 2013
About 6 years ago

alarmist opinions are made all the more suspect by hiding one’s id

Mark Alexander

18:25 PM, 16th September 2013
About 6 years ago

Reply to the comment left by "Jay Jay" at "16/09/2013 - 17:08":

It's just an excuse Jay Jay. Another case of the authorities passing the buck and claiming poverty. It's much the same as telling landlords we need to check that tenants have rights to reside. It's all becoming quite a ridiculous farce!

Jay James

18:29 PM, 16th September 2013
About 6 years ago

that sounds about right Mark. Your comment could be made about several areas of government.

Mark Alexander

18:37 PM, 16th September 2013
About 6 years ago

Reply to the comment left by " " at "16/09/2013 - 18:20":

Neil

I have never heard anything so ridiculous. It's a free Country, or at least it used to be!

None of us can stop anybody buying a property next door, let alone who they rent it to. Any of your neighbours could be drug dealers, pimps, party animals etc. Here in Norfolk we had the Lotto Lout. I'm sure you heard about him. He purchased a huge house together with the surrounding fields in a nice area . He then held drug fuelled parties and banger racing competitions 24 hours a day until he spent every penny of his millions and declared bankruptcy. The point is this, nobody told him where he could not buy so why should somebody tell landlords who they can rent to? For obvious reasons landlords will generally rent to the best tenants possible.

The authorities have all the data on criminals anyway, landlords do not. We pay our taxes so that authorities can uphold the law. For them to shirk their responsibilities and to pass them onto the PRS is despicable.

18:43 PM, 16th September 2013
About 6 years ago

Reply to the comment left by "Jay Jay" at "16/09/2013 - 18:24":

Jay Jay My full profile can be found on LinkedIn....my comments are based on the reality of operating a business in an area subject to these problems along with many other issues.

Mark Alexander

18:47 PM, 16th September 2013
About 6 years ago

Reply to the comment left by " " at "16/09/2013 - 18:43":

Neil

Your member profile has not been completed, hence not of your social networks are currently linked.

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