Is more Regulation of the Private Rented Sector now Inevitable?

Renting is on the increase. The difficulties of obtaining a mortgage, the problems of raising deposits - particularly for first time buyers – and the ongoing uncertainty in the housing market are forcing many people to rent their home rather than buy. Young professionals who, just a decade ago would have been clamouring to get onto the housing ladder, now find themselves renting, often well into their thirties.

With so many people now living in rented accommodation, there is renewed talk of how conditions in the private rented sector might be improved and how tenants can better be protected from unscrupulous letting agents and so-called “rogue” landlords. All this focus on raising standards is to be welcomed in principle, but the proposed solutions differ widely across the country.

In London, almost 1 in 4 households now live in private rented accommodation and London Mayor, Boris Johnson has recently called for a “new deal” with private landlords, letting agents and tenants based around a so-called “London Rental Standard” (LRA). This is expected to be launched next year after a period of consultation. The LRA is intended as a form of charter, containing a number of commitments such as minimum response times for repairs, protection of deposits and transparency of fees. There is also a proposal for more emphasis on training and accreditation schemes for private landlords.

Contrast London's collaborative approach with that of the Scottish Government. In one of the toughest clampdowns on the private rented sector in years, Scotland has brought in a swathe of new regulations which has left private landlords and letting agents squealing in protest. Here are just some of the measures recently introduced: compulsory registration of all private landlords and their properties (with a fine of up to £50,000 for landlords failing to register); criminal record and other background checks before an applicant is permitted to let a property; a prohibition on using a letting agent without notifying your local authority (it's now a criminal offence to use a letting agent without prior notification); a blanket ban on letting agents or landlords charging tenants fees; compulsory Tenant Information Packs.

The Welsh government is expected to introduce similar laws to Scotland.

Somewhere in between Boris' London Rental Standard and the Scottish regulatory approach, are local authorities such as the London Borough of Newham. Newham is bringing in compulsory registration of all its estimated 35,000 private landlords at a cost of £500 per property, starting 1st January 2013.

It is probably only a matter of time before the UK government brings in reforms for England, perhaps not on the same scale as Scotland, but expect consultation on longer leases and more security of tenure as a minimum.

Some argue that tougher regulation will do little to crack down on the minority of bad landlords and letting agents who already flout current laws and that it will simply drive up rents as landlords pass on the costs of compliance to their tenants. Others believe that the sector has got away with bad practice for long enough. One thing is certain: there are major changes afoot in the private rented sector which are likely to put some agents out of business and put many amateur landlords off the whole idea of letting a property.

Author: Christian Duggan is a director of RentFair.com, a website specialising in renting property from private landlords.