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Rugg Review of the Private Rented Sector

The government-sponsored review of the Private Rented Sector carried out by Julie Rugg and David Rhodes (the “Rugg Review”) has recently been unveiled.

A large part of the review is simply a look at the current state of the sector and principally makers clear just how little understanding of the sector there is within local and national government and in Parliament. In particular, the myth that the majority of landlords are out to steal from their tenants came in for some criticism. It is also apparent from the review that the quality of information on which decisions are based is very poor.

The review makes six key recommendations:

  1. A sound base of evidence should be developed to inform future policy and decision-making.
  2. Improvement of the quality of lettings and management agents should be encouraged, primarily through the compulsory licensing of all agents.  This would be overseen by a new, independent body.  Continuing Professional Development should a be a key requirement for all agents as a part of any accreditation system.
  3. Government policy should be modified to view landlords less as investors and more as active small-businesses.  This will mean changes in taxation schemes to recognise the business status of landlords and incentives for good landlords to grow their portfolios.  The mortgage market will also need to be reformed to encourage buy-to-let landlords to present a business plan as a part oif their mortgage application and also to ensure that tenants do not find themselves evicted if those businesses fail.
  4. Tenants who rely on benefits to meet obligations in the private sector should be better supported with assistance over deposits and rent arrears.  Local authorities should be encouraged to set up social sector lettings agents offering attractive rates to landlords in return for placement of their properties in the social sector.
  5. All landlords should be licensed although fees and red-tape to obtain the licence should be kept to a minimum.  Where a landlord proves unwilling to aknowledge his responsibilities he should be excluded from the sector by withdrawal of the licence.  Licence fee income could be used to help fund a new tribunal service for resolution of landlord and tenant disputes without recourse to the Courts.
  6. There seems to be no immediate need to reform the actual legal framework of letting by reforming or amending the Assured Shorthold Tenancy system although landlords should be encouraged to offer longer-term lets.  All parties should be encouraged to view letting as a lower risk activity to reflect the large percentage of tenancies that occur without any problems.

On the whole the review is a balanced and sensible document.  It does a good job of taking the best parts of prevcious considerations of the sector and promoting them while leaving behind the more complex and unworkable ideas.  It does much to imporve understanding of the sector by providing sober review of the issues and should be applauded for this.  In general, while some tenant organisations have been unhappy that the review does not go far enough it has received a warm welcome from landlords and agents.  Whether government takes up the recommendations remains to be seen.

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