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National licensing scheme for landlords imminent

publication date: May 6, 2009
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Big Brother or Big Opportunity?

Government proposes licensing and regulation for the Private Rented Sector

As ARLA launches its licensing scheme for letting agents, the news from the Government is that a Green Paper, due for publication in the next ten days, will propose a national licensing scheme for all private landlords.

Margaret Beckett, the Housing Minister, is also to propose a statutory regulator for letting agents, a move which could render the new ARLA scheme unnecessary.

The Green Paper will be published as the Government’s response to last year’s Rugg report, by Julie Rugg from the University of York. Dr. Rugg recommended a ‘light touch licensing system … and a new complaints procedure for tenants.’

Who will be the regulatory body? When will it be introduced? How light will the touch be? All these questions and more will be discussed across the industry in a flurry of comment when the proposals in the Green Paper go out to consultation.

Already various organisations are seen to be jockeying for position in the regulatory race; there are several landlords’ associations and several more letting agents’ associations. The Ombudsman for Estate Agents has morphed into the Property Ombudsman (May 1st), creating the largest property redress scheme in the country. NALS (The National Approved Letting Scheme) is an established letting agents accreditation system. ARLA counts several thousand letting agents as members but doesn’t have landlords. The NLA has 14,000 landlords, the largest number in one organisation but still representing only a small percentage of the estimated 1million landlords in the UK.

The ‘light touch’ seems fairly unlikely; is it possible to have light licensing?
Licensing, even at a token rate of £50 or so, for landlords, combined with requirements for both the landlord and his properties to reach certain standards is not likely to be appreciated, unless imposed with a sweetener such as recommended by Julie Rugg. Dr Rugg suggested tax breaks for landlord investors including VAT relief, Stamp Duty concessions and other measures to encourage investment and raising of standards - but these are not anticipated to be on the horizon.

Once again, this has caused the Government’s proposals to be met with cries of ‘it is just another tax!’ ‘it is just so they have current records of all landlords so they can check on their tax position’ and ‘its big brother’.

Like most legislation, licensing and regulation of the lettings industry will help the Government, but it will also help the industry to be perceived as professional and trustworthy, which can only be good for everyone involved.

Far from ‘hitting all landlords’ as the Times headlined, landlord licensing (if properly managed) and regulation of letting agents (ditto) could be the best thing ever for the growing private rented sector.