Housing: Encouraging Responsible Letting

Current project status

• Initiation: Could include discussing scope and terms of reference with lead Government Department
• Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
• Consultation: Likely to include consultation events and paper, making provisional proposals for comment
• Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
• Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations

This project is complete. Government has accepted our recommendations in part

This project, which arises out of our previous work on housing law reform and tribunals, aimed to identify and address regulatory challenges in the private rented sector. It was the first project we undertook jointly with the Welsh Assembly Government. (Housing is a policy area devolved to the National Assembly for Wales.)

In this project we were not proposing major changes to the law. Rather, we examined ways in which the existing law could be made more effective. There was a great deal of law that applied to the sector, but much of it did not work as Parliament intended. As a result, the standards set by the law were often not met, particularly in relation to the physical condition of housing. In turn, these failures contributed to the sector suffering from a poor reputation which, arguably, was getting in the way of it playing as full a part as it should in providing housing.

The project

On 14 August 2008 we published our final proposals on better regulation of the private rented sector in the report Housing: Encouraging Responsible Letting. Our report recommends a programme of staged reforms based on principles of smart regulation. Following responses to our consultation paper, we propose a system of self-regulation designed to enhance voluntary initiatives already in place, leaving open the option of future reform to create a compulsory system. It is intended that implementation of our proposals would harmonise and simplify of the current system in an affordable way, with benefits to both landlords and tenants.

Consultation

On 13 July 2007 we published a consultation paper, in which we surveyed the development of regulation of the private rented sector and analysed recent developments in regulatory theory and practice. The paper presented provisional proposals aimed at encouraging better management of rented property. The consultation period closed on 12 October 2007.

The central proposal made in the consultation paper was for a scheme of “enforced self-regulation”. Landlords would be required by law either to belong to an accredited self-regulatory organisation, or to let through an agent who is a member of an accredited agents’ organisation. The self-regulatory organisations would be the existing or new national and regional landlords’ associations or local authority schemes. Accreditation of organisations would be undertaken by a central regulator, which would oversee their codes of practice and disciplinary proceedings. The aim was that this scheme would replace courts and tribunals as the first port of call for disputes between landlords and tenants, and would remove incentives for landlords to keep property in poor repair (and evict tenants who object).

The paper considered, but provisionally rejected, an enhanced version of voluntary self-regulation on the one hand, and a compulsory licensing scheme on the other.  As an alternative, or additional, mechanism, the paper considered property certification, like an MOT test for housing.

Supplementary papers

We also published:

• Supplementary Paper 1 – gives a more detailed explanation of the law on housing conditions, harassment and unlawful eviction.
• Supplementary Paper 2 – deals in greater detail with estimating the costs of improving housing conditions.