PRS regulation - could more authorities follow the lead of Westminster?

Back in September, Westminster Council launched a new strategy to help 'protect tenants' and 'ensure they live in good-quality and well-managed properties'.

The London authority has the largest number of privately rented properties in England (52,700), accounting for 43% of its total housing stock.

The council’s private rental sector (PRS) strategy was launched in response to analysis which found that 13% of rental properties in the area – and almost half of local HMOs – contained at least one serious hazard. Westminster Council receives around 1,600 complaints about poor housing conditions each year.

The new strategy is wide-ranging, covering licensing, enforcement, accreditation and communication. Many of the proposals directly affect letting agencies, with the authority estimating that there are at least 380 firms operating in the area.

So, what does Westminster's approach mean for the sector – and has it developed a blueprint which could be followed by other local authorities across the country?

An overview of Westminster's PRS proposals

The London council will be consulting on a discretionary licensing scheme for all HMOs. It will also review its enforcement policy and increase the number of agencies and landlords signed up to the London Landlord Accreditation Scheme (LLAS).

Another proposal is to ensure that all agents, landlords and tenants are aware of their rights and responsibilities, helping renters to take legal action against criminal operators.

The authority says it will also be doing more to publicise successful legal action against landlords and agents to raise tenant awareness of legal duties and act as a deterrent to rogue businesses.

Meanwhile, a PRS forum will be created with the aim of bringing together all local letting agencies and landlords to share knowledge and best practice.

As part of the strategy, Westminster Council will lobby the government for a national register of landlords and letting agencies. It will also push for the existing rogue database to be extended, a policy also covered by the recently delayed Renters' Reform Bill.

You can see the full PRS strategy document here.

What are the advantages of these measures for letting agencies?

A holistic council-led approach to improving the PRS could have some benefits for letting agencies. Higher standards may encourage tenants to rent for longer and treat properties more carefully.

Meanwhile, a more positive public perception of the PRS, letting agencies and landlords could help to expand the market further and reduce the chance of stricter regulation in future.

Sharing best practice and knowledge through a forum could also help letting agencies to improve their service offerings. Property professionals can work together to identify the best PropTech solutions, discuss their responses to COVID-19 and share how they handle key parts of the management process such as referencing, payments, arrears recovery and compliance.

By working together while also communicating more frequently with landlords and tenants, letting agencies can provide a more comprehensive and streamlined service to their customers.

Could other councils take a similar approach?

It is perhaps unsurprising that Westminster Council has chosen to launch a new strategy to raise housing standards as it has the largest PRS in England.

The strategy document, which runs to 36 pages, could certainly be used as a blueprint by other authorities across the country.

Not all councils will have the resources to take such far-reaching action, particularly when we consider the impact of the COVID-19 pandemic. The key PRS issues in a local authority will also differ around the country – a rural council might focus less on HMOs, for example.

However, Westminster's strategy for increasing enforcement and encouraging communication could be applied in any location.

We have seen this year that - whether driven by councils or not - communication between all parties in the rental transaction can help to prevent rent arrears and reduce the need for evictions, especially when backed up by sound financial controls including automated payment reminders and comprehensive record-keeping.

What's more, as councils like Westminster push for more enforcement and licensing, it's important for letting agencies to self-regulate to ensure their compliance obligations are being met – something the sector is already doing.

By adopting best practices now and embracing PropTech solutions that improve communication between agents, landlords and tenants, agencies can futureproof their businesses and operate effectively in a more regulated market.

*Neil Cobbold is Chief Sales Officer at PayProp