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Frances Burkinshaw: why regulation is good for us

Lettings professionals have, for years, argued for more regulation and, says Frances Burkinshaw, it has dramatically improved the sector.

Frances Burkinshaw

Frances Burkinshaw imageThe long ‘reign’ of the Conservative government ended in 1997 soon after the Housing Act 1996 was enacted (28th February 1997). This important legislation introduced Assured Tenancies and confirmed lettings as a true force in the British economy.

The Old Bailey law courts statue imageThe Labour party had wanted to revert back to the ‘old days’ of protected tenancies but over time realised the benefits of the burgeoning lettings industry and were now broadly in support of the legislation.

I became President of ARLA in May 1999 after five years on Council. During my time as President until October 2001, I argued for regulation and compulsory client money protection (CMP); I was ignored, it is only now that these issues may be addressed. ARLA members already had CMP, one of my first jobs was to improve the cover so clients would be reimbursed once they could show misappropriation of funds. Prior to this, criminal proceedings had to be brought and proved for the fund to pay monies.

Tenants are nervous about starting legal proceedings, so they often don’t do so. Good legislation becomes bad legislation when it’s not properly used.

Had CMP been made compulsory then, many landlords and tenants would not have suffered losses from rogue agents. The government now plans to introduce compulsory CMP – will it happen?

CONTRACTS & ACTS

The Unfair Terms in Consumer Contracts Regulations 1999 were introduced as consumer protection legislation. The Office of Fair Trading (OFT) decided that many standard clauses in our tenancy agreements were fundamentally unfair. An example is a standard clause stating ‘no pets’. One has to add: ‘permission will not be unreasonably withheld’. This is almost a ‘yes pets’ clause! Individually negotiated clauses can never be deemed unfair; so it’s really important that they are well drafted, in this example a tenant should be asked to agree by initialling the special clause stating that they will never have pets there. The clause will then stand. Legal documents should be written in plain English, with punctuation, legalese words should be explained in a glossary.

The Housing Act 2004 introduced changes for lettings but most took several years to implement such as Deposit Protection (2007) and HMO Licensing.

The protection of deposits was necessary, without regulation of the industry and without CMP deposits were often misused or never returned. The legislation required deposits to be held in a central fund or protected by insurance. A free dispute resolution was introduced for the tenant in the case of a problem at the end of a tenancy. This detailed legislation was a major step, but sadly still only protected deposits, not all client monies.

MISSED TRICKS?

I believe that successive governments have completely missed a trick. There have been amendments to legislation, but none recognised that tenants probably need help to instigate legal proceedings. If a deposit is not protected the tenant should be able to report this to a government body such as Trading Standards; the matter should then be dealt with on the tenant’s behalf. As it stands tenants themselves must take the landlord or agent to court to be awarded up to three times the deposit. This is a good penalty but is not used enough as tenants (understandably) would be nervous about how to commence legal proceedings. Good legislation becomes bad legislation when not properly used.

Tenants also were nervous about raising the issue of a non-protected deposit – for fear of being asked to leave their home. Such non-protection had to be dealt with during the tenancy, the tenant would only realise that the deposit had ‘gone missing’ after vacating – too late! This was dealt with and a tenant can now bring an action against a landlord or agent for up to six years after the tenancy ends if the deposit was (a) never protected and/or (b) prescribed information or a leaflet about the scheme is not given. More cases need to happen, however, more publicity given so that everyone understands the need to protect deposits.

HMO Licensing was another change, introduced to protect tenants in the case of fire or other serious injury. Properties with three or more stories, occupied by 5 or more people forming 2 or more households had to have a licence. Selective licensing was also permitted with permission from the Secretary of State if local authorities could prove a need. This selective licensing has now been rolled out in many cities and areas; the first area was Newham where about 36,000 let properties needed a licence. Fines of up to £20,000 could be levied for non-compliance!

More legislation followed…. has it all been for the good of the industry?

Frances Burkinshaw is an independent trainer available nationally for in-house training or group training. 01892 783961 or 07887 714341 or frances@ivychimneys.co.uk

September 1, 2017

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