Regulation, Regulation, Regulation!

Ordinarily as a general election approaches we expect the fiscal war chest to be opened and tax breaks and increased spending to underpin a renewed sense of optimism.

This time it’s different and without the funds available the Government has to be a little more creative.  

In light of the recent rash of policies to raise standards in the private rented sector (PRS) the 2015 political football appears to have been chosen and the industry should strap itself in for the ride.

In the second of three short articles Rajeev Nayyar of Fixflo looks at proposed changes that will affect letting agents and property managers.

With the 2015 general election fast approaching and an economy that is limping towards recovery, politicians are eyeing up the PRS as a crucial source of votes.

More households now live in the PRS than the social housing sector and the PRS is predicted to grow to 20% of households by 2020.

The standard of housing in the PRS is (understandably) a key concern for tenants.  By focusing on and solving this, the Government is able to impact on the everyday lives of a large number of voters and it is reasonable to expect that it will fare better in the general election.

Regulation is coming at both a regional and a national level with a central tenet being that all letting agencies and property managers will have to be part of a redress scheme.  [For more on Redress Schemes see our previous article here]

The requirements for redress schemes have been fleshed out in recently published proposed conditions (Conditions) for redress schemes for lettings agencies and property managers.

Although the Conditions focus on the requirements and standards of redress schemes, they also contain standards for good practice in letting and property management work.  

Failure to comply with these standards could result in sanctions including fines and expulsion from the redress scheme.  In outline if, as expected, these conditions come into force then a letting agency or property manager that fails to comply with them will lose its ability to operate.

To see the rules in full please click here.

The rules range from ensuring that published material is accurate and not misleading to clearly stating fees in advance.

We will look at three requirements in a little more detail:

Tenants Speak A Different Language?

Letting agents and property managers will be required to take special care when dealing with consumers who might be disadvantaged by their lack of linguistic ability.  

Unlike a number of other conditions, this requirement refers to consumers rather than clients and as such it is reasonable to expect it to apply to tenants and guarantors as well as landlords.

With 1.5m people in the UK not speaking English to a proficient level and the majority of them being in the PRS, how are you planning to deal with this?  If you have a large number of tenants who speak a language other than English it may be cost-effective to bring in a property manager who speaks that language but what will you do for the handful of tenants who speak another language?  

It is unclear at present whether this requirement will extend to providing tenancy documents in other languages and we hope that clarification on this point will be forthcoming.

That detail aside, getting the right systems in place will help to protect your business and give you an advantage over your competitors.

Keep it Simple!

All communications must use plain and intelligible language. 

We suggest that compliance with this requirement should come in two forms.

First, at the outset of a tenancy, letting agents should provide a tenant information pack in the style of those that have been required for new lettings in Scotland since May 2013.

Secondly, for ongoing interactions (eg maintenance/repairs or rent collection) ensure that you have trained your staff to provide information clearly and support them with standard processes.  For example, best practice may be to require all substantive discussions to be followed up with a short note to the customer or tenant to summarise the outcome.

Keep it Safe!

You must keep appropriate permanent records.  Some of our clients are ahead of the game on this and require all formal communications with and from tenants to be in writing.  This allows them to keep clear records and, crucially, to show that they acted correctly in the event of a dispute.  

This defensive approach to record keeping will become more important as membership of a redress scheme will be mandatory and failure to comply with rules could, in effect, mean the end of your business.

Rajeev Nayyar is MD of Fixflo, a picture-based repair reporting system that makes life easier for property managers, landlords and tenants.  

By guiding tenants to identify their precise issue, Fixflo gets you the information you need about a repair without time consuming calls, emails and inspections. 

Fixflo is available in 40 languages and automatically alerts tenants to issues that they are responsible for fixing and steps they should take in emergencies to protect themselves and their property.

To find out more visit: www.fixflo.com