Member News
WRITING FOR POLITICSHOME, SHADOW HOUSING MINISTER JACK DROMEY OUTLINES LABOUR’S PLANS FOR REFORM OF THE LETTING AND MANAGEMENT AGENTS MARKET TO TACKLE “THE BIGGEST HOUSING CRISIS IN A GENERATION”.
The private rented sector provides a home for over a million families in England. It is growing rapidly and will play a key role in meeting housing need. But on its current terms, the sector doesn’t meet the needs of those living it with too many homes unaffordable or of poor quality and too many families and tenants facing instability.
That’s why today, as part of Labour’s policy review, we’re calling for reform to the lettings and management agents market which we believe stands as a barrier between the sector we have now, and the sector we want to see.
Britain faces the biggest housing crisis in a generation. The Government’s economic failure and its failure to build the homes the country needs, is making it worse, not better. The crucial issues now are to get the economy going again, boost housing supply, and help aspiring homeowners to achieve their dream. That’s why, through our five point plan, we’ve called for action – for infrastructure investment to be brought forward, including on housing, and a repeat of the bankers bonus tax to fund 25,000 affordable homes and put 100,000 young people back to work. That would provide a welcome kickstart to an industry increasingly struggling.
But one of the consequences of the Government’s failure to tackle the crisis is the rise of "generation rent" as families and young people face a squeeze on their wages, increasingly unaffordable rents and greater difficulty saving for a deposit. By 2025, it has been predicted that 27 per cent of low to middle income families will be living in the private rented sector. Meanwhile many young people are losing hope of ever being able to buy a home – by 2020 one million young people could be locked out of home ownership.
Labour believes that the growing number of tenants and families in the private rented sector should not have to wait for the Government to build more homes in order to have an affordable, stable and decent home. Labour wants to see a private rented sector that provides affordable, stable and good quality homes for tenants and families and a sound long-term investment for responsible landlords and investors. We believe the proposals set out today are an important first step towards that.
Right now, while the majority of letting and management agents provide an important service and act responsibly, too many unscrupulous agents rip-off tenants and landlords alike. This means that tenants and landlords don’t get a fair deal and the many responsible agents are undercut and their reputation undermined.
Too often, unjustifiably high charges are applied to both tenant and landlord and they have little financial protection or recourse to complain and many face difficulties in contacting agents and getting repairs undertaken.
And this is no small problem. According to estimates there are more than 4,000 managing and letting agents that are entirely unregulated - in that they don’t even belong to voluntary bodies which encourage a responsible approach to letting and management practice. While not all use lettings agents, there are nearly 1.4 million landlords and 3.6 million private rented sector households in England, meaning huge numbers of tenants and landlords are currently unprotected.
Despite the scale of the problem, the Government remains unmoved. Responding to a question tabled by me on this very subject the Government’s Housing Minister, Grant Shapps, said that “between a third and a half of agents belong to bodies offering voluntary regulation” and that he did not “think the time is right” to regulate.
This is a familiar approach from this out of touch Government. From energy companies to train operators, banks to letting agents, this Government, rather than intervene to protect working people – tenants, landlords and those running responsible businesses – instead stands by and allows them to be ripped-off.
By contrast, Labour has been listening to the calls for action on lettings and management agents not just from tenants and landlords but from the industry itself and we now intend to work with all of them to develop a different model with the goal of creating a level playing field for the many responsible operators and basic protections for tenants and landlords.
We believe steps should be taken now to stop irresponsible agents operating and end the scandal of rip-off fees. But while a reformed lettings market can be part of the solution to the wider problem, it is just one part of the change that is needed to ensure the private rented sector meets the needs of the increasing number of people living in it.
That’s why, in the coming months, Labour will be putting forward further ideas for change in the sector. We want to ensure that the private rented sector provides the stability that families need. We also want to work towards a sector that provides homes of decent quality for all. And we want a sector that allows for a sound long-term investment for responsible landlords and investors.
Labour wants to see a private rented sector based on long-termism and responsibility which works for working people whether they are tenants, landlords or running businesses that operate within the sector.
_________________________________________________________
Response: Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA)
The NLA believes that landlords and tenants should be able to expect certain provisions when using a letting agency to ensure transparency, fairness and a degree of consumer protection.
Our advice to all landlords is to look for agencies which have a commitment to Continued Professional Development (CPD), comprehensive Client Money Protection Insurance (CMPI), Professional Indemnity Insurance (PII) and have elected to abide by a respected industry code of practice.
Currently, these features are only available by means of membership of a recognised trade body such as The UK Association of Letting Agents (UKALA), The Association of Residential Letting Agents (ARLA), National Approved Letting Scheme (NALS) or the Royal Institution of Chartered Surveyors (RICS).
The NLA would welcome more agencies proactively seeking out these organisations in order to provide the kind of consumer protections and assurances which landlords and tenants need to work and live in the private-rented sector.
However, if the industry can't provide confidence to its consumers, it has to accept that some form of regulation will inevitably follow.