What will private rented sector regulation look like?

Regulation has suddenly become the talk of the town.

In mid-October, shortly after the Conservative Party first announced the UK’s private rented industry would become regulated, the Department for Communities and Local Government (DCLG) started an industry consultation about minimum training requirements and compliance with a new code of conduct. The consultation is due to end on 29 November, and more will no doubt be said in the November 22 Budget.

Earlier in the year, Communities Secretary Sajid Javid initiated consultations with the judiciary about a new specialist Housing Court, and announced that all private sector landlords and agents would be required to join a redress scheme. He also promised incentives for longer-term tenancies and launched a consultation about cutting out leasehold abuses.

But what will regulation look like in practice?

As we await details on all these proposals, new private rented sector regulations in Scotland could provide some clarity. Letting agents working in Scotland will soon have to comply with a Letting Agent Code of Practice (31 January 2018) and join a Register of Letting Agents (30 September 2018).

• The Scottish Code of Practice sets out letting standards, makes it compulsory for agents to offer client money protection and professional indemnity insurance, and specifies how client money should be handled.
• A Register of Letting Agents will ensure letting agents have adequate training. When more than three years have passed since qualifying, agents will have to undergo mandatory updates on specific topics and comply with legal obligations for handling tenants.
• After September 2018, it will be a criminal offence to do letting agency work in Scotland if agents are not on the register. All landlord and tenant disputes will be heard in a new tribunal, and on being convicted, agents could face fines of up to £50,000, up to 6 months’ imprisonment, or both.

Scotland has traditionally been a vanguard of change for the UK rental sector – the most recent example being the ban on tenant fees, which took hold there before blowing over to Wales and the rest of the UK. Agents across Britain must therefore be aware of these undercurrents, in case they do find favour locally.

Neil Cobbold

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