Stop meddling with private rented sector but please get on and regulate, RICS tells ministers

The Royal Institution of Chartered Surveyors has called on the Government to stop meddling with the private rented sector.

It has said that the Government should adopt the recommendations of the Regulation of Property Agents report without delay.

The RICS has also revealed that it is working on an updated code of practice to be released this autumn, and which could regulate all agents.

In a new policy statement, the RICS said that the private rented sector has doubled over the last 20 years and is now home to a fifth of all households.

However, it goes on: “Continued government interference in the sector has led to landlords leaving the market, leading to the leakage of stock into sale and decreasing stability and standards for tenants.

“The RICS asks Government to adopt and support RoPA recommendations. This means adopting minimum standards, accreditation of practitioners, and compulsory continuous professional development.”

The RICS says that all property agents should be regulated to a single property code, which should be extended to private landlords.

The organisation also warns against rent controls, saying these will not alleviate affordability issues as private landlords exit the market.

The new policy paper does however show the RICS’s support for the abolition of Section 21, but the organisation calls for court processes for repossession proceedings to be streamlined before Section 21 is removed from the statute books.

Tamara Hooper, RICS policy manager, said: “The private rented sector is a tenure that will continue to grow strongly over the coming years notwithstanding the increased freedom presented to local authorities to increase their development pipeline.

“The PRS has always been a careful balance between landlords’ and tenants’ rights and obligations, and any changes and interference from Government should aim to maintain and enhance this balance.

“The Government needs to ensure the sector is effectively governed, reflecting the requirements of both landlords and tenants and the needs for standards and supply.

“Domestic issues such as housing, which handle the basic human right of shelter, are too important to be lost in the understandable current focus around the country’s departure from the EU.”

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10 Comments

  1. Will2

    The RICS has gone from a professional organisation to a power crazed money grabbing mogul lowering standards to build income generation. Making recommendations to a challenged government equally blinded by thinking it can buy the left wing votes without losing what would have previously been core voters.  Whatever happened to common decency and moral standards.

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  2. undercover agent

    Making it illegal for agents to offer their services to landlords, just because they haven’t paid to join RICS or some other industry body, will reduce landlords choice, reducing competition among agents leading to higher costs for landlords and worse service.

    What protects tenants is not Shelter, or RICS, but all the other landlords that the tenant could rent from if their current landlord becomes too greedy.

    What protects landlords and improves agents standards is not RICS or ARLA, but the other agents the landlord could instruct if their current agent becomes too greedy.

    Forcing agents to join a scheme might raise the average IQ of agents (as joining amounts to paying a fee and passing an IQ test) but it’s not the case that these more intelligent agents will be any kinder or better at running a good branch.

    This is just a protectionist racket, crony capitalism, where the incumbent agents are protected from new entrants into the market.

    This might sound good, until you want to expand by putting a new office into the neighbouring territory, or if you work for an agency, when you want a pay rise or to find alternative employment at a different agency.  What protects employees is not the government or ACAS, but all the other employers that the employee could go and work for if their current employer becomes too greedy.

    This protection is a trap, your bunker will become your prison.

    I don’t blame RICS or ARLA, they are helping the short term interests of their members and themselves, but it’ll end in more government control and disaster for everyone concerned.

    I would also point out that I’m a big fan of both RICS and ARLA, and I find the support and resources they give me as a member to be excellent! I just don’t think the government should let any industry reduce consumers choice like this. If they do it for us, they’ll do it for hairdressers and mechanics. Reducing customer choice DOES NOT result in improved standards for anyone. Surly that’s one of the great lessons from the 1970’s, but if you want more recent examples, just look to any highly regulated economy – like France or Venezuela, are standards higher as a result of more regulations? No way! Just longer queues.

     

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    1. IWONDER36

      The most common sense post I have ever read on Eye.

      Shame that it will be ignored and everything that it warns will happen will happen, due entirely to greed getting in the way of common sense.

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    2. CountryLass

      I do think that the registration and licensing of Agents (sales and lettings) is a good thing, but I don’t think that any existing body should be in charge of it.

      Like a driving licence. You have to pass your test, and receive a license from a specific body. If you are found to be operating the car (business) outside of those license conditions, you are penalised, which can lead to the loss or suspension of your license and criminal charges should you carry on without a license.

      Or Doctors. They are held liable by the General Medical Council who can remove their license to practice.

      Rent controls are daft. Set a percentage cap on how much it can be raised in a 12 month period (I have always assumed that it is a maximum of 10% with one increase in a 12 month period) and let the market dictate the rent.

      Section 21 must stay, unless there is a more streamlined way for a Landlord to gain their property back without having to tick a certain amount of grounds. There has to be protection from revenge or unfair eviction, true, but at the end of the day, the Tenant lives there at the will of the Landlord. It is his property. If he wants to leave it empty for 12 years and let rats and mice live there, it is his choice. If he wants to pay the Agent every 12 months to put a new tenant in, again, his choice. I don’t agree with either option, but IT’S NOT MY PROPERTY SO I DON’T GET TO DICTATE WHAT THEY DO WITH IT!

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      1. undercover agent

        Hi, great points, however; even if we assume that licensing (as proposed by RICS and ARLA) would improve agents service, like a driving license improves the standard of drivers (and it’s a very debatable assumption given the proposals), the driving licence analogy still fails for a few reasons.

        The first is the matter of consumer choice. When you and I take our cars on the road, we want all the other drivers to have a license, because without that we may feel driving would represent an unacceptably high level risk to us. It’s not like there is an alternative road network we (more cautious drivers) could use instead.

        Landlords however, can choose their level of risk, weighing up the choice between more expensive qualified agents and cheaper unqualified ones (roughly speaking).
        What about tenants? Well tenants risks are already protected by law. Let’s say the landlord chooses a cheap bumbling agent, and that agent failed to protect the deposit, failed to give the tenant the gas certificate on move in and failed to ensure that the guarantor signed the correct deed of guarantee. Well that landlord might lose a lot if the tenant fails to pay the rent or if they want the property back (a metaphorical car crash), but the tenant is fine, some may even argue that the tenant is better off as a result of the bumbling agents errors.

        Risk adverse landlords are free to choose qualified agents while more gung-ho or cash strapped landlords can choose cheaper options.

        What would happen if government could close down the unqualified agents, well this cash strapped landlord would likely leave the market (making the tenant homeless), or self manage. Both of these options are likely to be worse for the tenant than the bumbling agent was. Therefore licensing reduces standards and reduces choice for tenants.

        What if the government forced all landlords to use an agent (that’s the dream, use us or go to prison). Well as we already discussed that licensing reduces competition, and that passing a governments IQ test does not mean you have higher moral standards, agents who pass the test would have every incentive to abuse that power, most likely by increasing fees while reducing service.
        No more out of hour viewings to appease tenants and landlords, because “use us or go to prison!”

        Licensing and regulations also reduce innovation because by their nature they are restrictive. That’s great when it come to traffic flow, but not so good when it stops possible improvements that creative agents could make to the customers journey.

        Regulations tend to get tighter every year (as regulators/trade bodies, seek to protect their members from more competition) resulting in rules about: what can and can’t be in your window, the required size of your window, the sq foot shop space you need and the minimum staff members to properties managed ratio. We might be a fair way off that crazy level, but it can get crazy in a hurry once the laws and infrastructure are in place, ready to be abused by an over eager politician out to “make a difference”.

        And I haven’t even mentioned the higher costs agents will need to recoup, which landlords will then need to recoup and so will eventually be born by tenants. Or the problems that are likely to arise when the industry regulator is considering expelling an agent, effectively forcing them to close, which may again mean a lowering of standards; as even RICS might think twice about ejecting an agent when they known 8 people will lose their jobs, thus having the effect of watering down RICS standards.

        The public won’t forgive RICS once they see that it’s not working how they expected, so RICS should be careful what they wish for, because licensing does not provide the benefits that young people expect.

        Milton Friedman successful argued that even Dr’s shouldn’t need to be qualified and that product regulations (even for medicines) do more harm than good. His arguments favour ‘informed consumer choice.’ You can choose to pay more and see a qualified person if you want, but you shouldn’t be forced to do so. His talks and debates have been uploaded to YouTube on the “free to choose network”, if you’re interested.
         

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  3. RosBeck73

    Thanks, RICS, for supporting the scrapping of Section 21. With friends like you, who needs enemies?

    Rather than interfering in something you don’t understand – you are an organisation of surveyors, not private landlords – listen to the real experts on this: us. We are the ones who know that rather than scrapping Section 21, it needs to be significantly strengthened. The ‘traps’ set for landlords should also be removed – it is incredible that with a house which has a current gas safety certificate, proving the house is safe, but where the landlord can’t prove they handed over a copy of the piece of paper recording this on a certain date, this can mean the tenant taking control of the owner’s asset possibly forever. If you want to speak for landlords, deal with issues such as these which are an outrage to natural justice. Don’t try and add to our problems by making us rely on Section 8, which is much more time-consuming and riddled with problems such as rogue tenants being allowed to raise spurious defences, gain adjournments and live rent-free even longer in our properties.

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  4. singlelayer

    The RICS – The Royal Institute of Chartered Surveyors…what business have you even commenting on the Private Rented Sector? Respected in certain circles though you may be, this is no more bizarre than the British Medical Association, another respected industry body, getting involved outside of their field of expertise!

     

    As far as I understand, there are two types of surveyors: chartered and non-chartered. Those chartered are so through the RICS. For whatever reason, there are two categories and surely it would be in the interests of the RICS for *all* surveyors to be chartered…so why aren’t they relentlessly pursuing that as their sole objective?

     

    Perhaps there’s a good reason why there are indeed surveyors that are unchartered, so why does the RICS not apply the same logic to private landlords, or rather agents in this particular article, and accept that a great many could indeed operate without their approval/registration/adherence to code of practice…just like unchartered surveyors?

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    1. Will2

      AssocRICS have nowhere near the qualification of a Chartered Surveyor MRICS or FRICS.  It is just a way of selling what appears on the surface to be a high qualification. I respectfully suggest it lowers the standards and does not do qualified (MRICS OR FRICS) any favours whatsoever but is no doubt a money spinner for the institution.

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  5. Woodentop

    Continued government interference ….. decreasing stability and standards for tenants.

     

    So where have you been RICS as an effective organisation, this is not news? As soon as you championed abolishing Sec 21 you lost my vote. Lunacy and demonstrates a clear misunderstanding of the situation from such an organisation. Who do you represent … your members?

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  6. PossessionFriendUK39

    So,  How does knowledge of House-building enable or qualify such to know about the occupants.  ?

    How many Tenancies have RICS issued ?

    How many rental defaults have they suffered

    How many evictions have they carried out,and importantly –

    Would they like it to take them a lot of time and expense and  nearly 8 months to get paid  ?

    Thought Not.

    Its likely Landlords know far more about property standards than RICS know about Tenants, as Landlords have had to experience Both.

     

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