Government defends PRS Ombudsman scheme amid concerns over landlord exodus

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Government defends PRS Ombudsman scheme amid concerns over landlord exodus

The government has claimed that the new Landlord Redress Scheme will support both landlords and tenants, claiming “good landlords have nothing to fear”.

Under the Renters’ Rights Act, the private landlord ombudsman scheme will provide independent dispute resolution, which the government describes as “fair and impartial” and intended to give tenants access to redress outside the courts.

During a debate in the House of Lords, Baroness Taylor of Stevenage rejected claims of a landlord exodus, saying the Renters’ Rights Act would have “only a negligible impact on the availability of rental property.”

Redress scheme will help landlords

Speaking during the debate, Baroness Taylor of Stevenage said: “Most landlords are looking to provide a good service to their tenants.

“The new landlord redress scheme will support landlords to do just that, by providing guidance and tools to help them handle complaints locally and early in order to prevent escalation.

“This new service will close a key gap in housing redress, providing private rented sector tenants with enhanced consumer protection rights which tenants in the social rented sector already benefit from. It will help to raise standards in the sector by equipping landlords with tools and information on what best practice looks like.”

She added that, while the regulations do not immediately require landlords to join the Ombudsman scheme, they are expected to do so in the future.

She said: “Rather, they set out the statutory criteria that any future scheme must meet, including requirements relating to governance, complaint handling, types of redress and enforcement of decisions, information sharing, reporting and review.

“This framework is essential because a scheme cannot be approved or designated until these conditions are in force. It therefore enables the next stage of implementation: the establishment of the private rented sector landlord ombudsman scheme and, in due course, further regulations specifying which landlords will need to become members of a scheme and when such a requirement will come into effect.”

Drive landlords out of the market

However, Lord Jamieson, speaking for the Conservatives, warned that additional regulations could drive landlords out of the private rented sector.

During the debate, he said: “The government have described this scheme as a complementary measure, sitting alongside local authority enforcement powers, licensing regimes, the courts and the new landlord database, yet many landlords look at this growing list of registration requirements, fees, compliance obligations and potentially significant fines, not to mention court delays, and wonder whether it is worth the candle to carry on renting out a property.”

Lord Jamieson also questioned how the new scheme would avoid duplication where landlords already use managing agents, who are required to belong to an approved redress scheme.

He said: “Many landlords employ agents to manage their properties; those agents are already required to belong to a redress scheme. Under these regulations, landlords will also be required to join such a scheme, which we raised during the passage of the Bill.

“Can the Minister explain how the government intend to avoid duplication where a complaint relates to actions involving both a landlord and an agent? If a tenant complains about property management repairs, communication failures or other issues where responsibilities overlap, how will the scheme determine who is accountable?”

Hold landlords accountable

Responding, Baroness Taylor of Stevenage said the regulations are intended to hold landlords accountable for issues that are ultimately their responsibility.

She said: “These regulations are intended to close the gap that existed between the redress system for agents and making sure that there is some redress to landlords.

“These regulations specifically concern the landlord redress issues and schemes for people in the private rented sector. They do not alter the existing legal requirements that apply to letting agents, including the requirement to be a member of one of the approved agent redress schemes.

“It is intended that this new framework will fill the gap faced by private renters, specifically where the responsibility for an issue lies with the landlord rather than the agent. It is not right for a landlord to be able to get away from their responsibility because it is the agent that is part of a redress scheme.

“We expect co-operation between the new service and the existing agent redress scheme where appropriate.”

No landlord exodus

Baroness Taylor also denied the Renters’ Rights Act will cause a landlord exodus.

She said: “I know that some organisations are putting forward alarming figures, but the work we have done shows that there would be only a negligible impact on the availability of rental property. We will see how that works out over time.”

However, research by property consultancy firm Allsop found that 41% of landlords said they were unlikely or very unlikely to continue letting property following the abolition of Section 21, rising to 51% among single-property landlords.

As previously reported by Property118, ministers have also suggested the possibility of combining the PRS database registration process with Ombudsman registration. However, they have not confirmed whether landlords will be required to pay separate fees for each scheme.

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Labour MP urges government to consider rent controls amid rising rents

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Labour MP urges government to consider rent controls amid rising rents

A Labour MP is calling on the government to introduce rent controls to curb welfare spending.

Margaret Mullane, MP for Dagenham and Rainham, writes in LabourList that rent controls are needed to tackle soaring rents.

However, industry experts warn that rent controls do more harm than good.

Driving councils to brink of collapse

Ms Mullane writes in LabourList: “As well as the financial impact high rent is having on families who are struggling, high private sector rents are also having a massive impact on the nation’s welfare budget and driving so many councils to the brink of collapse.

“The Housing Benefit bill has ballooned to well over £30 billion a year, with the majority of this going to private landlords. In addition to this sum, a further £3 billion is paid by local authorities on top of the HB payments.

“Given the focus that exists on curbing welfare spending as well as seeking ways to ease the cost of living, now is the time to look again at rent controls.”

Ms Mullane claims rent controls “are not a radical idea” and arguments against rent controls are short-term.

Arguments against rent controls are short-term

She adds: “Whilst I understand the arguments against rent controls, one being the theory that it would result in the mass sale of property, flooding the market and leading to a crash in house prices, I think this is short-termism.

“Many of our European neighbours have rent control systems. It isn’t a radical idea. France, Germany and Ireland have limitations on rent increases in areas experiencing a tight housing market. Ireland refers to these as ‘rent pressure zones’. I believe a similar model could be trialled in the UK at a local authority level in areas with significant social and economic pressures.

“However, as important as I think rent controls would be, to really get to grips with the chronic dysfunctional nature of housing demand and supply, a major increase in the stock of social rented homes must form the foundation of any strategy to tackle the housing and cost of living crises.”

Rent controls do more harm than good

However, as previously reported by Property118, rent controls do more harm than good.

According to the Institute of Economic Affairs (IEA), while rent controls may initially lower rents for existing tenants, they typically lead to higher rents in uncontrolled sectors and reduce housing supply and quality.

Even in Scotland, the rent cap has been blamed for soaring rents, which have increased by 11.6%.

Data by Hamptons reveals Scottish landlords are increasing rents at a faster pace than anywhere else in Great Britain because of rent controls reshaping the market.

Lead analyst at Hamptons, David Fell, said: “The evidence from Scotland suggests that rent controls rarely work as intended.

“At best, they delay rent increases; at worst, they set a new benchmark where landlords feel compelled to increase their rents every year by the maximum allowed.

“Faced with uncertainty over future rules, many landlords choose to raise rents little and often rather than risk falling far below market levels.”

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