Reform tax, Beef up rogues database

ARLA Propertymark has launched a radical programme of reform for the private rental sector - getting in before the government’s own Renters’ Reform White Paper expected in the New Year.

Propertymark’s 38-page and highly detailed ‘The Future of Renting’ position paper tackles areas of the ector that have been under the microscope by the UK government – affordability, consumer protection and access to justice.

The paper highlights the contribution the private rented sector makes to the housing system and makes a string of recommendations on deposit reform, energy efficiency targets, digitalising possession claims and bringing forward new mandatory grounds in favour of fair access to justice should Section 21 be abolished.

Timothy Douglas, Propertymark Policy and Campaigns Manager, says: “The private rented sector will be a keen focus for the UK Government in 2022 and our Future of Renting Position Paper sets out a strong set of recommendations to improve consumer protections, support landlords and build on existing good practice.

“We need to see collective oversight from all government departments that interact with the sector, putting overall policy development in the context of supply, tenancy management, being a tenant, inspections and enforcement, access to justice and future-proofing the sector.

“Further change is non-sensical without regulating letting agents, and if the UK government remove Section 21 it should be replaced with a system that makes all grounds mandatory. Additionally, any plans to extend redress membership to landlords should be to those who self-manage property only.”

It’s a lengthy and complex document available in full on the Propertymark website but its main recommendations and points include:

Avoid Rent Control - "Evidence tells us that rent controls are unable to effectively regulate rent levels. They are more likely to cause the private rented sector to shrink and will not benefit vulnerable tenants. With a shortage of supply landlords will be able to select the most attractive tenants, pushing vulnerable, low-income households towards rogue and criminal landlords. Fundamentally, landlords do not increase rents for the sake of it. Where rents have risen, the recent increases in costs and legislative requirements that landlords face, along with an array of tax changes have placed additional financial burdens on landlords."

Landlord Taxes - "HM Treasury must launch a review of all taxes relating to private landlords. Investment is stalling because the phasing out of tax relief on mortgage interest for landlords, the additional SDLT surcharge on buy-to-let property, changes to the Wear and Tear rules and the repercussions of the Tenant Fees Act banning letting agents from charging fees to tenants means that landlords costs have significantly increased, and many landlords can no longer make ends meet. Additionally, many landlords and letting agents worked hard throughout the COVID-19 pandemic to support tenants by offering rent deferrals and negotiating rent reductions as well as changing their business models, but they cannot provide this type of financial assistance indefinitely. Through a review of taxation, the UK government will be better placed to introduce policies that reduce costs for those wishing to invest in the private rented sector, which in turn will help reduce rent for tenants, help lead to longer-term tenancies and make it more affordable for renters."

Lifetime Deposits - "To make it easier for tenants to pay for a new deposit when moving home the UK government must balance affordability for tenants with confidence of landlords. The UK government should shift the emphasis from a ‘lifetime tenancy deposit’ to a ‘tenancy deposit passport’. A lifetime tenancy deposit implies that the tenant will spend their whole life renting and not explore other housing options."

Landlords In A Redress Scheme - "To strengthen the rules for consumers, membership of a redress scheme should be a requirement for landlords who are self-managing property only. This is because those landlords who do not fully manage property often have other jobs and are not renting out their property full time. They are unlikely to have either a complaints procedure in place or the infrastructure comparable to a letting agent or a landlord who is managing property on a full-time basis when dealing with grievances."

Explore Automatic Compensation - "This is an area that Ofcom have introduced to protect telecoms customers. Under the scheme broadband and landline customers can get money back from their providers when things go wrong without having to make a claim. Customers are compensated automatically by providers for slow repairs, missed appointments and delayed installations, which in- turn means credit on a customer’s account without having to ask. A similar scheme could be set up for the private rented sector to ensure that consumer complaints and issues are dealt with within a certain time frame."

Rogue Agents and Landlords Database - "The UK government must widen access to the Database and make it publicly available to allow it to be seen by sitting tenants and potential tenants to vet landlords and letting agents; Landlords to check letting agents; Letting agents to check landlords; and Letting agents to use the Database when recruiting staff and vetting potential employees Membership bodies to have access for enforcement purposes "

Privatise County Court Bailiffs - "To further improve the situation, we believe that the county court bailiff system should be privatised, as is the case with High Court Enforcement Officers. The process could be outsourced to providers who work to clear guidelines relating to qualification and certification of private bailiff officers. Through a tendering process the UK government could grant licences to certified private bailiff providers. This would relieve the Ministry of Justice from funding the service and a fee could be charged to prospective service suppliers. There would be no loss to tenants with the same level of oversight as already exists in the High Court."

Universal Credit - "To ensure Universal Credit is adequate and more effective and landlords and letting agents have more confidence to offer tenancies to those receiving it, the UK government should do three things. Firstly, giving tenants the option to have the housing element paid direct to their landlord. Secondly, allowing all Universal Credit claimants to choose whether to receive payment monthly or twice monthly to assist with budgeting. Thirdly, review the waiting period at the beginning of a claim and/or whether the advance would be more effective in the form of a non-repayable grant rather than a loan to help reduce rent arrears and the negative knock-on effects this can have for tenants and landlords."

Right To Rent - "To reduce the administrative burden on landlords, the Home Office should introduce enhanced digital Right to Rent checks— building on the changes introduced as part of the adjusted check process. Through enhanced security, letting agents should be able to conduct the checks remotely."

Anti-Money Laundering - "Letting agents should be included fully within the Money Laundering Regulations to reduce the risk of cash payments being used to ‘clean’ dirty money. The UK government should remove the EUR 10,000 monthly rent threshold and set this at zero to create consistency and cover all tenancies let in the private rented sector. Currently, criminal funds can be concealed and made to look legitimate through an untraceable offshore ‘company’ and subsequently the purchasing of UK property. In October 2021, files in the so-called Pandora Papers revealed how wealthy individuals can shield their income and their assets from taxation through hiding them in tax havens. If the UK government is serious about tackling economic crime, they should accelerate plans to implement a new beneficial ownership register of overseas entities that own property in the UK."