The government’s new national landlord database has drawn a mixed response from the property industry, with warnings over duplication, enforcement and additional costs for landlords and letting agents.
The government has confirmed the regional rollout of its Private Rented Sector Database as part of the next phase of the Renters’ Rights Act.
Landlords will have to register themselves and their rental properties through the new service. Registration will cost £65 per property each year.
The National Residential Landlords Association (NRLA) welcomed greater certainty over the timetable. However, it warned that the government risks creating little more than a national directory of landlords.
Ben Beadle, chief executive of the NRLA, said: “Whilst the timetable provides some much-needed certainty, we remain concerned that the private rented sector database will become little more than a national directory for councils, missing a major opportunity to deliver a system which will help raise standards across the market.
“Rather than just a list of local landlords, the database should be a genuine compliance tool that helps tenants and councils check that homes meet required standards, while enabling responsible landlords to demonstrate that they are meeting their obligations.
“Instead of simply requiring landlords to upload documents, the database should make intelligent use of existing data to verify compliance and ownership. Done properly, it could give tenants confidence, help councils target enforcement and make landlord compliance easier to verify.
“In rushing to launch a stripped-back minimum viable product, the Government risks building the database quickly rather than building it properly.
“There is also a real risk of duplication. In many parts of the country landlords already pay for local licensing schemes which collect much of the same information. The Government needs to explain how these systems will work together – compliant landlords should not have to pay twice to provide the same information.”
Warning over multiple penalties
Questions have also emerged about how the national database will interact with existing local licensing schemes.
Scott Goldstein, property disputes partner at Payne Hicks Beach, said landlords could potentially face penalties under more than one registration regime.
He said: “The scheme will run parallel with existing registration schemes such as selective licensing (where they apply), making it theoretically possible for the landlord to be liable for multiple fines of up to £7,000 each for a single property if he or she fails to register for more than one scheme.
“These hefty penalties may well drive more and more small private landlords out of the market. This drop in rental stock is likely to result in further upward pressure on rents in the short term – presumably the opposite outcome intended by the Government.
“The changes make it all the more important that landlords are properly protected by their managing agents, which makes it disappointing that the proposals to better regulate managing agents are far from being finalised, let alone implemented.”
Agents warned to prepare for additional workload
Sean Hooker, head of redress at Property Redress, said the database could improve transparency but warned agents not to underestimate the operational impact.
He said: “The new registration service has the potential to bring much-needed transparency to the private rented sector. It should help tenants make better-informed decisions, enable responsible landlords to demonstrate compliance and make it harder for rogue operators to hide.
“Today’s announcement provides welcome clarity on the cost and timetable, but agents should not underestimate the operational impact. The phased rollout is sensible, although it could create confusion for landlords with properties across several regions, as deadlines are determined by the location of each property rather than where the landlord lives.
“Many landlords will inevitably ask their agent to help. While landlords must start and complete the registration process themselves, agents and property managers will be able to provide certain information on their behalf. Before agreeing to do so, agents should check that their contracts allow for it, clearly define what support they will provide and reiterate that the landlord remains legally responsible for ensuring the information is complete and accurate.
“What may be a relatively straightforward process for one property could quickly become a significant administrative exercise across hundreds of clients. Agents must consider whether they have the necessary resources, systems and checking procedures, as well as what they will charge for the additional work.
“Accuracy will also be critical. Where an agent or property manager is named on the register, their contact details must be correct and kept up to date so important communications do not fall through the gaps. Agents should ensure that information provided for the register is consistent with their redress membership and other compliance records.
“This will not be a one-off exercise. Registration will cost £65 per property and must be renewed annually. In future, unoccupied properties will need to be registered before marketing, and agents and landlords will have to include the unique landlord and property identifiers in advertisements. Registration checks will therefore need to become part of agents’ ongoing onboarding, marketing and management processes.
“The move to make HMRC’s Valuation Office responsible for initial decisions on challenged rent increases is also significant. Agents should ensure proposed increases are supported by credible market evidence, helping to resolve disputes earlier and avoid unnecessary tribunal cases.
“Further guidance is promised, but agents should start preparing now by reviewing their contracts, deciding what support they will offer and ensuring their teams have the capacity to deliver it.”
Agent backs greater transparency
Greg Tsuman, managing director for lettings at Martyn Gerrard, took a more positive view of the database.
He said: “While this is yet another expense for landlords to pay, £65 a year is unlikely to be the straw that breaks the camel’s back. This is a common-sense measure, and the increased transparency and improved standards it should create for the sector are well worth the cost.
“Landlords might balk at the prospect of more red tape, but in practice, the requirements are all things they should already have been doing. For most responsible landlords, the changes will be simple to manage. However, we are still awaiting the full details before we have complete clarity. A key question that remains unanswered is whether the responsibilities can be delegated to managing agents, as many landlords would prefer to rely on these services rather than handle everything themselves.
“The changes will help protect tenants from unscrupulous landlords and provide a clear warning to anyone considering renting a property if the landlord is not registered on the database. The additional transparency for tenants should reduce the risk of exposure to substandard properties. It should also prevent delays in starting a tenancy due to boiler or electrical issues. It is similar to ensuring that a car for sale has passed an MOT.
“The Government had been reluctant to include details of rent, but their inclusion should be immensely helpful in reducing the time needed to determine whether a rent increase is reasonable. It is remarkable that a market as large and important as the private rental sector has gone this long without meaningful price transparency. The inclusion of rent data is therefore a significant and welcome development, which should address this longstanding gap. Importantly, it will also help to reduce the time needed to determine whether a proposed rent increase is reasonable. This is a sensible step and one that should be applauded.
“The Valuation Office is a logical choice for determining rental increases. It’s reassuring to see the Government’s awareness of the challenges involved in employing a professional surveyor to assess rental changes. The Valuation Office has all the requisite expertise, so it is only natural to rely on it as the most cost-effective solution for the taxpayer.”
Rent dispute changes welcomed
The NRLA also backed plans to give HM Revenue and Customs’ Valuation Office responsibility for determining challenges to rent increases.
Beadle said: “We strongly welcome the decision for HM Revenue and Customs’ Valuation Office (VO) to take responsibility for determining challenges to rent increases.
“During the passage of the Renters’ Rights Act, the NRLA repeatedly called for the Government to make use of the VO’s expertise on local market rents to help prevent the Tribunal system becoming overwhelmed.
“A quicker, specialist rent determination service should benefit both tenants and landlords while easing pressure on an already stretched Tribunal system.”
