The Private Rented Sector

Written submission from Simon Shinerock

My credentials

1. I own and run an estate agency called Choices; we were established in 1989 and entered the rental market the year after. We operate mainly in Surrey Sussex and South London where we manage in the region of 2500 properties. In addition to our local portfolio we also manage a growing number of properties on behalf of our investment clients on a nationwide basis. Furthermore I have in depth experience of the effects of poorly conceived and implemented regulation in the financial services industry as well as the Home Information Pack debacle.

2. Executive Summary

3. Don’t do it! Further regulation is unnecessary and would make things worse; instead work at improving and SIMPLIFYING what is already there, create a program aimed at educating tenants and potential tenants, starting at school, encourage building to let and allow the market to work. The problem with all these attempts at regulation is that they are drawn up by a committee who haven’t got experience of how the business works, taking advice from those with a vested interest and implemented by un-invested civil servants who implement the rules literally and often without any commonsense.

4. I will deal with the issues in more detail to be considered by the committee in the order they are presented on the website.

5. The quality of private rented housing, and steps that can be taken to ensure that all housing in the sector is of an acceptable standard;

6. There are already measures in place to ensure property meets basic standards of habitability. However it is preferable to impose higher standards on the properties than to regulate the agents There will be problems in drawing up and implementing minimum standards that go beyond the current standards. The best way to raise standards is to give tenants choice, which means expanding the number of properties available.

7. Levels of rent within the private rented sector – including the

possibility of rent control and the interaction between housing

benefit and rents;

8. Rent control would be cumbersome, very hard to operate and would lead to an even greater migration by landlords away from the housing benefits sector which itself needs simplification and common sense reform.

9. For example it is ridiculous that housing benefit tenants can ask for rent to be paid to them not the landlord and then withhold the rent and stay for months awaiting expensive eviction.

10. Local authorities should undertake to pay the agreed rent direct to the landlord irrespective of the wishes of the tenant.

11. It also takes too long for the assessment process to take place and Landlords are left in limbo waiting for a tenant to get confirmation that they will get housing support.

12. Regulation of landlords, and steps that can be taken to deal with rogue Landlords;

13. There are already adequate mechanisms in place to deal with rogue landlords; the authorities do not always implement them effectively. Emphasis should be placed on increasing efficiency rather than new regulation, which will be expensive and involve new procedures, which may not be followed, if you do anything, increase the powers of the courts to impose fines, even better create a truly low cost fast track court process to prosecute rogues.

14. Regulation of letting agents, including agents’ fees and charges;

15. Lettings agents are already regulated to an increasing degree by existing rules, legislation. Deposits are protected; there is a disputes service, the property Ombudsman has extensive powers.

16. More regulation runs the risk of decreasing competition and increasing fees and charges. Whilst this may suit the industry bodies, if it is too harsh it could damage the whole industry.

17. Regulating fees and charges is unnecessary and would kill fair competition as well as stifle creativity and innovation. As far as I am aware, fees and charges to landlords are at an all time low as a result of the lack of supply of properties to the market. Agents have been forced to charge tenants more in order to stay in business, the Scottish market is now in a total mess because agents have been stopped from charging tenants entirely. Provided there is transparency with charges then it should be up to the market not regulators to set their level

18. As an example of bad regulation I site the financial services act 1986 which imposed regulation on financial advisors and set off a chain of events that more or less destroyed that industry.

19. The long-term result of this poorly thought out legislation has been to kill off a thriving industry without improving the lot of the consumer. If the legislation had regulated the products rather than the people and if we taught financial planning in our schools, there would be no need for the complex, expensive and pointless structure that is currently in place. If I were asked I could show the Government how to fix the consumer financial services sector and save everyone a lot of wasted money.

20. The regulation of houses in multiple occupation (HMOs), including the operation of discretionary licensing schemes imposed by a local authority for a category of HMO in its area;

21. This is not an area I am very familiar with, however as I understand it, there is already a raft of rules in place imposing standards on HMO’s. I feel it is right that local authorities apply their own rules for the supervision of these standards, and even for them to set the standards according to the needs of the local community.

22. Tenancy agreements and length and security of tenure; and how local authorities are discharging their homelessness duty by being able to place homeless households in private sector housing.

23. The market should determine the length of tenancy agreements and security of tenure. The last time security of tenure was imposed on the market, the result was that there was no market; surely we don’t want to go down that route again? Landlords need to be able to borrow to fund their portfolios, any attempt to impose security of tenure on the market would stop mainstream lending and the market would collapse. As I have already said, the way in which local authorities try to palm off their responsibilities onto private landlords is discraceful.

24. Summary:

25. In summary, I thought from reading about the current mood of Government that we were finally starting to leave behind the madness of over regulation and political meddling in the private sector.

26. The fact that this committee has been formed at all demonstrates that the specter of more costly and destructive regulation still looms on the horizon.

27. Regulation and intervention should be a last resort to be used only once all efforts have been made to use the existing structure to implement the desired improvements. This certainly has not happened yet in the case of the rented sector.

28. If we are to introduce reform at all the three areas we should focus on are the education of tenants, starting at school, the locally controlled implementation of standards for HMO’s and a change that requires local authorities to take responsibility to pay private landlords their rent and not pass it to the tenant on request as happens at the moment.

December 2012

Prepared 6th March 2013