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By Neil Cobbold

Chief Sales Officer, PayProp


OTHER FEATURES

Why automation could improve enforcement of PRS regulation

It’s now more than a year since the government offered an additional £4 million to councils to combat rogue landlords.

At the time, Housing Secretary Robert Jenrick said the money would be shared between more than 100 councils across England to crack down on landlords who break the law.

The money was earmarked to train over 100 enforcement officers across Yorkshire and Humberside and create a Special Operations Unit in Northampton, as well as being used to help vulnerable young tenants in Thurrock, Essex, and to trial new technology identifying especially cold homes in Greenwich, Greater London.

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This time last year, in response to the Housing Secretary’s announcement, I said the standout measure was the extra money for enforcement officers. One of the biggest issues in the rental sector in recent years has been increasing regulation without enforcement to match – creating new burdens for law-abiding professionals while leaving rogues untouched. Hiring more officers across the country would significantly help to increase compliance – but it isn’t the only quick win available.

The rise of digital oversight

Since that point, the market has become even more regulated - with the beefing up of the tenant fees ban, energy efficiency standards and rules surrounding habitable homes, as well as new rules on electricity checks – and of course there has been a global pandemic to contend with, which has forced people to stay at home for much of the last 10 months.

This means compliance, and enforcement of compliance, has become even more important – and more time-consuming. In an increasingly digital world – which has been further supercharged by Covid-19 and the need to reduce face-to-face contact – it’s inevitable that high-tech solutions have been sought.

Right to Rent checks are one example of this trend. As a result of the pandemic, these previously (largely) manual checks were forced to go digital, with landlords allowed to carry them out over video calls. Meanwhile, tenants can send scanned documents or a photo of documents for checks using email or a mobile app, rather than sending originals.

For the moment, the government says that landlords and letting agents must return to the old-fashioned checking process, set out in the code of practice on illegal immigrants and private rented accommodation and the right to rent document checks: a user guide, once the pandemic is over.

Retrospective checks will also have to be conducted on tenants who started their tenancy during this period or who required a follow-up check while the temporary measures were in play.

By all accounts, though, the move to remote Right to Rent checks has been effective, and the Home Office is now reviewing their post-pandemic future. So surely now is the ideal time to consider a different approach – something more streamlined, automated and digital.

A more joined-up approach to compliance

Let’s take the issue of referral fees in lettings as another example. In October last year, the National Trading Standards Estate and Lettings Agency Team (NTSELAT) called for greater transparency regarding referral fees in the lettings sector. It submitted a report to the government recommending mandatory referral fee disclosure by property agents.

In its response to the Ministry of Housing, Communities and Local Government (MHCLG), which commissioned a review of how referral fees work in the property market, the compliance body was in favour of improving the transparency of fees rather than banning them altogether.

The report’s key recommendations were for the government to:

    • make referral fee disclosure mandatory
    • launch a public awareness programme about hidden referral fees
    • work with professional bodies and redress schemes to produce industry guidance

Again, this appears to be tailor-made for a digital revolution – automated and immediate, so that all parties know where they stand from the start. Letting agents wouldn’t need to worry about being non-compliant, while landlords and tenants would be reassured that they have full transparency from the off.

Something similar has been suggested for Client Money Protection. Kristjan Byfield, a well-respected letting agent and keen PropTech advocate, has said that – with CMP being a legal requirement – it would make sense for CMP providers to submit client databases to NTSELAT, who could then cross-reference with a central industry database and accordingly take action against those breaching regulations and placing clients at risk.

This would be a similar system to the one used for banning orders as well as London’s Rogue Landlord and Agent Checker – and it could be extended to other areas of regulation, too, such as the Tenant Fees Act, Minimum Energy Efficiency Standards and the Homes (Fitness for Human Habitation) Act.

Enforcing regulation the old-fashioned manual way can be costly and time-consuming, and the money is often not there to do it well. By automating these processes, a more efficient and effective system could be established, creating a transparent level playing field for landlords and agents while making compliance less burdensome.

*Neil Cobbold is Chief Sales Officer at PayProp

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