The Government released early details of their proposed scheme to Licence all private Landlords on the 5th May, the exact same day the Association of Residential Letting Agents (ARLA) was at the House of Commons launching the Licensed Agent scheme to regulate agents. It has to be said that anyone who thinks that is simply a coincidence probably still believes in the tooth fairy.
Although only preliminary details have been leaked The Government Landlord License scheme main aims are to curb the rise in unscrupulous Landlords exploiting Tenants. The Government have remained tight lipped on the source of information they feel they base these concerns on.
The details we have so far are that The Government Landlord Scheme would mean every private Landlord would have to register and, of course, pay a fee for the privilege (sources say £50 however inevitably the fee is always higher should this scheme ever reach primary legislation). The Landlord would then receive a unique number which would appear on all documentation connected with the renting of his properties. This would of course greatly assist the Inland Revenue to clamp down on tax evading Landlords.
What we know of the Governments proposal so far is that the result of a Landlord failing to keep up standards in terms of repairs or intimidation of the Tenants the Landlord would be struck off. In that event the Tenants would have to move out of their home.
The back ground theory the Government have is to root out the 'rouge' Landlord, which is of course highly commendable. However there are numerous questions hanging over the proposals.
Firstly there is the issue of cost. The already excessively over burdened tax payer would no doubt be the incumbent investor, after all setting up such scheme does not come cheap. Secondly the cost to the Landlord, while there are no precise statistics the number is believed to be around 1.3 million Private Landlords in England. Multiply that by what ever the final figure that might be specified and no doubt this fee would need to be paid again, maybe annually or at 3 or 5 year intervals as with other Licensing schemes such as Houses of Multiple Occupation (i.e. student accommodation and bedsits).
There are a number of other unanswered questions such as Will the Governments scheme work at all in practise. Once a Tenant realises that they will potentially loose their home if they report the Landlord resulting in them being struck off the register, surely they would be LESS rather than more likely to report an offending Landlord.
I feel it is necessary to looking at this from ground level for a moment. Throughout the country there is currently no shortage of properties to rent, in London Tenants are flooding agents with requests for rent reductions and if the Landlords don’t agree then very often the Tenants move to cheaper equivalent properties. Tenants are wise consumers and if they are not happy about something and the Landlord does not attend to the request within a reasonable time then they simply move on.
The only Tenants that are generally in a less favourable position to be able to move are social tenants, guess who would be exempt from the Government Landlord License scheme? Yes of course, local Government and Housing Associations.
It does beg the question where does the Governments true concern sit? With the Tenant? Some sceptics might say that the Government in these times when national borrowing is at record levels are introducing some more 'stealth' taxes.
ARLA's Agent Licensing scheme which was launched on the same day (5th May) is a different scheme altogether. Firstly it will not cost Landlords or the tax payer one penny.
More importantly ARLA’s will not drive away Landlords from renting their properties and therefore will not adversely effect stock levels within the Private Sector Rented Sector.
The conditions of ARLA membership are that the Agent has Professional Indemnity Insurance, Client Money Protection, proof of annual audit to ensure correct handling of client monies, adhere to the strict code of conduct and have trained, qualified staff in every office carrying the ARLA logo. Proof of membership to an Independent redress scheme is the new requirement for the ARLA Agent to be able to call themselves Licensed. The independent redress ensures that the consumer, Landlord or Tenant, is protected.
The Government could simply 'rubber stamp' this scheme, once it has proven itself to work, and make it a mandatory requirement across the industry and rid the industry of un-regulated, un-trained, un-scrupulous and un-ethical agents for good.