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November 6

2017
by mydeposits
A Profession at last? – A view from Sean Hooker

Recent announcements look set to shake things up in the private rented sector with compulsory landlord redress and letting agent regulation at the forefront. Head of Redress at the Property Redress Scheme, Sean Hooker, discusses his opinions on the recent announcements made by Sajid Javid, and how he believes this will influence the sector in the future.

 

Politics never fails to surprise me and the latest announcement by the Government is no exception. In a keynote speech, a perspiring Minister for Communities and Local Government announced a raft of policy initiatives in an attempt to reclaim the initiative on the private rented sector.

Following the Westminster Hall debate which I covered in my last blog, things have moved on apace. The landscape has rapidly moved from a debate on the banning of fees to now – possibly – a more strategic approach to professionalise the industry. As I said in my piece last month, I very much felt that Kevin Hollinrake was on the right track and as a respected person in the industry with a record of working and delivering a successful lettings business, the Government would be foolish to ignore his contribution. It is also clear that following the successful collaboration between the sector and Government, to get Client Money Protection and maybe as a move to rebuild the trust between the two, following the fee ban announcement, the Government appear to finally have conceded that journey to regulation is now essential.

 

Levelling the playing field

The key element of the announcement (and please note the detail is very sketchy) was the revelation that redress is to become mandatory for all landlords. I have advocated this for a while now but did not think it would gather credence with the Government so quickly after Housing Minister Alok Sharma promised to look at the idea after the Hollinrake debate.

There will also be compulsory regulation of all letting agents and they will have to demonstrate that they are fit and proper but also complete some mandatory training and qualification to demonstrate that they are competent to do the job. Effectively this is light touch regulation and between these two initiatives, there will be the requirement for practically all parts of the sector to be registered in some shape or form. Again a welcome surprise.

Agents must now see the opportunity for the industry to be seen as, and to become a true profession and for the consumer to be assured that they will be dealing with qualified and regulated companies who they can trust.

If the industry can succeed in implementing a new professional image, agents can mitigate the potential impact of the tenant fees ban by providing the essential compliance services that individual landlords may struggle to provide if they opt for self-managed.

Redress for landlords will require them to ensure they have robust processes in place, such as adequate referencing and right to rent, all the relevant safety checks, a good inventory and an effective process to deal with repairs and a complaints process. Cutting any corners to save money could come back to bite them when their tenants are awarded compensation by the redress schemes.

 

Take back Control of the industry’s future

Agents can therefore legitimately capitalise on these new opportunities and secure more instructions if they embrace the compliance regime. The advent of compulsory regulation will also mean it will be more difficult for rogue agents to flourish in the market. Illegitimate firms who can now enter the market with no impunity, aggressively undercutting their competition and exploiting their landlords, will find it more difficult to operate. Individuals and companies who deliberately phoenix themselves leaving a trail of debt and misery should find the landscape more hostile to their practices and those companies who fail to provide the services they contract to and just take the money and not do the job, should be weeded out. A broken market can take back control of its own destiny. 

 

Working together

It is vital that the industry continue to work with Government to make this succeed. We must ensure that the proposals are right for the whole market but seek to maintain the free market without unnecessary red tape. This will mean a simple, affordable system is put in place with effective enforcement to ensure a level playing field and maximum compliance. A review of local licencing schemes may also be necessary to ensure that agents and landlords are not faced with duplicate costs and bureaucracy. The consumer (tenant and landlord) must have a simple and straightforward way of engaging and being informed about the system. These are the challenges but they are greatly outweighed by the industry’s new potential.

The emphasis on alternative dispute resolution is very welcomed and, as someone with a long-standing passion for collaborative methods to resolve disputes rather than the heavy hand of the law, I know the benefits of this approach in terms of time and cost to all parties. I also very much applaud the recognition that a tenant should enjoy the same rights regardless of the tenure they are engaged in. To echo the minister, everyone should feel that their home is their home and they should have the same rights and protections, whether they rent through a landlord or an agent.


Putting the customer first

There is the opportunity for a strategic approach to the whole consumer experience. The cradle to grave approach which I have long promoted would mean that there will be the opportunity to provide a coherent system for putting things right when things go wrong. Prospective tenants, consumer landlords, those who take a tenancy deposit and those who do not, can now enjoy the same access to a restorative process. Standards should rise and the market should thrive.

The Government are also looking to bring a joined-up approach to the legal system and I look forward to what they can do with the court system. The idea of a new Housing Court that possibly replaces, incorporates or enhances the Property Tribunal has merit and could be an effective solution to providing justice when alternative methods are exhausted.

The other initiative announced by the Minister was a further hint, that the encouragement of longer-term tenancies is a priority. His reference to an announcement in the Budget for incentives to promote these could refer to tax advantages and these could go some way to mitigating the tax effects resulting from the stamp duty and wear and tear allowances that will impact a good number of landlords. A carrot to a sector that feels under siege? We will wait and see.

 

How long and how prepared?

In terms of the future and of the timing for all this to come to pass? Who knows! My gut feeling is that the Government will want to act as quickly as possible. It needs to court the younger voter and counteract the popular appeal of the opposition to this cohort. The policies they are looking at are likely to be supported by the opposition parties so could progress through Parliament relatively quickly. They appear, this time, to want to engage with the sector at an early stage and ensure the measures are broadly acceptable to the bodies and organisations who influence the industry. Of course, this positive start could go awry but here is hoping!

On this basis, therefore, we could see an introduction to these measures in the next year to eighteen months and, like the tenant fee ban, both agents and landlords should prepare. We at The Property Redress Scheme have been planning for these changes for a while. Since the scheme started in 2014, we have been open to landlords joining on a voluntary basis. Those who have, have enjoyed property professional status and the benefit of differentiating themselves from other landlords. We are also looking at offering a membership that agents can offer to their landlords, whether they are offering ‘let only’ or ‘just rent’ collection. This will allow them to offer redress to the tenants they manage. We have engaged with Citizens Advice Bureau to look at whether we can offer redress where the tenant has a dispute that falls under their right to repair and the onus is on the landlord to deliver and not their agent. These initiatives will be rolled out shortly allowing landlords to get ahead of the curve.

Overall the announcement should be seen by the industry as a victory and a huge step forward towards the professional status many in the industry fully deserve. Of course there will be concerns of costs and compliance and enforcement is key, however, the alternative is an increasingly dysfunctional sector that rewards the rogues and stifles those who provide a first class and essential service.

Here’s to the future!

 

What is a redress scheme?

A redress scheme is an independent service tasked with resolving disputes, currently between letting agents and their consumers.

By law, all letting agents are required to join a government authorised consumer redress scheme allowing landlords or tenants access to an escalated complaints system.

Find out more about how redress schemes work here.

You can also hear Sean discuss these announcements in the latest in the Hamilton Fraser podcast series featuring our CEO, Eddie Hooker, and Brand Ambassador Paul Shamplina here.

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