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ARLA Propertymark gives compelling evidence at CLG evidence session

Friday 02 February 2018

ARLA Propertymark Chief Executive David Cox gave compelling evidence at a second CLG evidence session on 29 January on the Private Rented Sector and the Draft Tenant Fees Bill, which was broadcast live on Parliament TV.

During the session our Chief Executive said that the piecemeal approach taken by successive governments to regulating the industry was the wrong way to tackle problems within the sector, and that it's been a struggle for agents to keep up with all the changing laws. He argued that instead of finding individual solutions to individual problems the Government need to look at the industry as a whole, in a coherent and strategic fashion. 

A brief summary of the topics discussed is given below, but we highly recommend that you take half an hour or so out of your day to watch the recording of the evidence session on Parliament TV. That way you can see for yourself how David Cox is representing the interests of our members with clarity and confidence, to influence the Government in a powerful and constructive way. 

Draft Tenant Fee Bill

David Cox explained how the Draft Tenant Fees Bill will have a significant impact on agents, particularly with regard to referencing and called for clarity and legislative certainty within the bill in areas including the Green Deal, leaving a tenancy early, and deposit replacement insurance schemes. He said that this was necessary so as to avoid a "PPI situation" further down the line and avoid costly and timely court cases, citing the Superstrike Ltd v Marino Rodrigues [2013] as an example of how problems can occur when there is a lack of clarity in legislation. 

He also challenged the Government's impact assessment for the Bill as being incomplete - saying that the Government's 'familiarisation' costs were woefully inaccurate and that there was no way that businesses can change their business models within the suggested 20 hours. 

As well as evidence on the Tenant Fees Bill, David Cox also covered a lot of other ground on a wide range of topics including:

Licensing

When asked about licensing, David Cox argued that licensing simply doesn't work, saying that existing licensing schemes are just a "litany of catastrophic failures" even in places like Newham, which is widely seen as the most successful of licensing schemes across the country.

He argued that such schemes are nothing more than an administrative burden with enforcement taking a back seat and made the point that, when the rhetoric from previous witnesses statements is removed, Newham have only made 1200 prosecutions, which works out at 240 per year out of 47,000 properties - meaning that they have only managed to take enforcement action for 0.5% of properties. This is with a resource of 140 officers, which works out at less than two prosecutions an officer, which he described as pitiful. He painted a similar picture when using Croydon as an example, where 30,000 licensing applications were made, of which only 10 were refused - asking "Are they really suggesting that only 0.03% of properties were not up to standard?"

The entire country has not even managed to rack up 500 prosecutions in a year. "Is that a success?", he asked. 

Another clear indicator that licensing schemes aren't working is that many councils are having to re-designate licensing areas after five years. "It's never worked and it never will work", he said. "Education is what is needed". 

He said that continuing to roll out licensing across the country would be "the biggest backwards step to improving the PRS in 20 years." 

Redress schemes 

David Cox described the introduction of a legal requirement to belong to a redress scheme in 2014 as a positive move, but said that there are too many redress schemes with only one of them using a Code of Practice. He said that the industry needed just one Code of Practice, which should be set by a regulator overarching the entire industry. 

The future of regulation

When asked, what model of regulation ARLA Propertymark would like to see, David Cox replied that ARLA Propertymark's preferred model for regulation is for an overarching independent regulator, with approved bodies such as Propertymark being responsible for accreditation criteria and administration of the scheme, similar to the way that the legal profession is currently regulated. 

The overarching regulator themselves should not be responsible for the administration of regulation, as it's been proven not to be efficient of cost effective, as in the case of Rent Smart Wales who have only prosecuted a handful of landlords and agents since its inception. RSW has spent more time and money on bureaucracy and administration than they have on enforcing it, meaning it's not a financially sustainable model. However, he explained how lessons could certainly be learnt from Scotland's model of regulation, which could be improved further for England. 

Landlord vs tenant power balance

Contrary to evidence previously given to the committee by Shelter, Mr Cox disputed that there is a power imbalance between landlord and tenant rights, saying that he actually thought it was now about equal. He defended his position, explaining why more laws wouldn't help, saying there are already over 150 different laws and regulations which cover all aspects of the industry. What is needed is more enforcement of existing laws, a simplification of existing laws, and greater tenant empowerment. 

Watch the recorded session