Thursday, 22 May 2014

More anarchy than deregulation

We are now considering the Government’s third Deregulation Bill in three years. It represents their absolute failure to address the cost of living crisis or implement a proper industrial strategy.

Deregulation alone is not a long-term, sustainable growth strategy. This Deregulation Bill is a desperate rag bag, comprising an incoherent bunch of proposals which look as though they were brought together after a drunken session at an anarchists’ convention.

The draft Bill’s statement of impact estimates that all the measures together would only save British businesses 20 pence per business per year. Wow! And this is Cameron’s latest big idea.

Therefore, you may think it’s not worth considering. Well, it is, because of the rag, tag and bobtail proposals that have been thrown in at the last minute.

For example, the government’s obsessive view, that health and safety legislation is a hindrance to the economy, has lead them to propose exempting self-employed people working in certain lines of work – to be decided by the Secretary of State – from health and safety legislation.

It’s staggeringly inept. From clarity, it will create confusion and muddle. It is estimated to save self-employed people thirty-seven pence each a year. Yes, you read that correctly, 37p each a year.

Then, we have botched proposals about taxis and private hire vehicles (PHV).

In May 2012 the Law Commission launched a consultation on changes to taxi regulation, with a final report and draft Bill originally scheduled for publication in April 2014. The industry, unions and local authorities have been engaging with this process. Then, out of the blue in January 2014 the Government announced a 10 day consultation on three measures relating to taxi and PHV regulation.

Then, in March, without any meaningful engagement with stakeholders, new proposals were made for this Deregulation Bill. Report Stage is expected in the next few weeks. The proposals include allowing a PHV operator to subcontract your booking, without your consent, to another operator who is licensed in a different licensing district.

I’ll leave you to think about whether you think this is either sensible or something you will welcome. For my part, I think the proposals are both unwise and unwelcome.

Wednesday, 21 May 2014

The regulation of letting agents

I have written before about private rented housing and, specifically, about the investigations and recommendations of the all-party communities and local government select committee, which I chair[1].

The housing crisis is pushing home ownership out of reach for many people. We are building less than half the number of homes we need to keep up with demand. The current coalition government has presided over the lowest level of house-building in peacetime since the 1920s.

Since its launch, I have been asking serious questions about the appropriateness of George Osborne’s Help to Buy programme. Now, as I write, the Governor of the Bank of England says the housing market has “deep, deep” problems and is the “biggest risk” to Britain’s economic recovery sending a clear message to the Bank’s new Financial Policy Committee (FPC) to consider early intervention.

Meanwhile, 9 million people now rent privately including over 1.3 million families with children.  Nearly half of private rented households are over the age of 35. Many want the same security and stability they would have if they owned a home or had rented from their council.

But rules on private renting have not caught up with these changes, leaving people struggling with the growing cost of renting and with the insecurity and uncertainty built into the rental market. I shall write separately about rents and tenancy terms, but want to concentrate here on the regulation of letting agents.

The cost of letting agents’ fees, which can be up to £500 every time someone moves house, has added to the growing cost of renting. There are large numbers of complaints about agents, almost all about fees and charges. It is not just that there is one fee upfront for a tenancy agreement; there are also the charges for inventories and for credit checks. 

People enter into a viewing not knowing what the ultimate charge will be. It is a charge they have to find upfront as a prospective tenant; at the same time as they are trying to find the deposit.

The process gets repeated to a degree every time people renew their tenancy after six months or 12 months, and that militates against having longer term contracts. Agents see this as an incentive not to let longer term contracts because short-term contracts mean renewals and more fees for them. 

The Committee said there should be absolute transparency of fees upfront when a property is advertised and it must be clear what the totality of charges to tenants will be, and there should be no double charging. If there is transparency, it will be harder for a letting agent to charge a tenant and a landlord for the same thing, which happens at present.

We did not then recommend a complete abolition of fees to tenants. What we said was that it has been done in Scotland and that we should review the Scottish experience. We will do that in the autumn. 

We’ll also consider whether banning charges to tenants means higher rents. If so, there is a question as to whether tenants favour paying slightly more in rent rather than being forced to pay massive fees upfront, often on a frequent basis.