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Landlord registration: good or bad?

The shadow cabinet is making a lot of noise about landlord registration, but is it necessary?

by .

Landlords in Scotland are required to register with each local authority where they own a rental property. Whilst landlords south of Hadrian’s wall might think they’ve dodged a bullet by escaping this requirement to date, landlord registration might be even closer than just a glen or two away.

For one, the shadow government have made it a part of their housing policy (see Labour’s policy review Private Rented Housing: Improving Standards for all, released a few months ago). Various pressure groups are also calling for a national landlord register, and some local authorities (such as the East London borough of Newham) have launched licensing schemes of their own.

But is landlord registration good or bad?

Landlord registration in Scotland

If you want to know if the spaghetti carbonara is any good, you look over at the chap on the next table who’s already ordered it. Landlord registration has existed in Scotland for over seven years, which makes for as good an example as any.

Whether or not it has worked depends on who you ask. Back in 2009, a Shelter report declared it as something of a mixed bag. Whilst they lauded the advice and training private landlords received, good measures for addressing and resolving complaints and stamping out bad practice and rewards for upholding good standards, they noticed a number of problems, largely with inconsistencies between councils as to how landlord registration was enforced. They also noted a lack of awareness among landlords and tenants about landlords’ responsibilities and tenant’s rights.

The report noted that some 15% of landlords weren’t registered, accounting for about a quarter of Scottish rental properties.

Also see Evaluation of the Impact and Operation of Landlord Registration in Scotland.

More recently, the Scottish Conservative Party released figures that painted a more negative picture. Despite estimated annual running fees of just £300,000, the landlord registration scheme in Scotland is thought to have sucked £11.2m from private landlords and £5.2m from the Scottish public. Furthermore, only 100 landlords have been banned in the last half a decade, calling into doubt whether or not the scheme really does deter bad practice. This is in line with claims in the above two reports that tenants are either fearful to report their landlords, or unaware that they are able to.

Landlord registration in England

A closer example exists near the old Olympic Village. The private rented property licensing scheme in Newham has been going for eight months, and figures published this month look encouraging – at least as far as stamping out crime in the borough is concerned.

A whopping one in five unlicensed properties has been found to harbour suspected criminals and police have made 110 arrests for alleged violent crime.

It’s true that the scheme in Newham is the first of its kind, and Newham Council certainly know that all eyes are on them. If the performance could be repeated country-wide, however, landlord registration in the UK could well be considered a success.

So would a landlord register in England be a good or bad thing?

Letting property is a people business, and with more and more novice investors entering the market, we can’t escape from the fact that good practice needs to be incentivised, and bad practice penalised.

A couple of things need to be the case, though. Firstly, any scheme needs to be properly policed, consistent and cost-effective (if the Scottish Tories’ figures are accurate, the total running cost to date of the Scottish landlord registration scheme is a mere 13% of the money it has cost landlords and the public).

Secondly, tenants and landlords need to know their rights and responsibilities, and thirdly, penalties need to be proportionate. A landlord who doesn’t repair their tenant’s boiler because they aren’t aware they need to – and their tenant hasn’t told them – is far removed from a landlord who knows about the breakage but ignores it to save themselves a few bob.

The UK relies on the private rented sector for a massive proportion of its housing, and the private rental sector relies on landlords. Any mechanisms put in place to regulate it needs to make sure it does the best job possible for investors and customers alike.

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Amelia Vargo is an online marketing executive for CT Capital. Amelia writes for Turnkey Mortgages, Turnkey Landlords, TurnKey Bridging, TurnKey Life and Commercial Trust.