Licensing enforcement gets going in Wales
An article examining what lies in store for landlords and tenants as they get to grips with new legislation
[Extent: Wales only]
This article was originally published in the March/April 2017 issue of Adviser magazine and was correct at the date of publishing.
Landlord compliance
The Welsh Government originally predicted a 20% compliance rate with the new scheme; however, when the planned year’s grace period came to an end in November 2016 a rush of landlords — more than 50% of the estimated total in Wales — made last-minute registrations and applications for licences. While Rent Smart Wales (RSW) aims to process an application within eight weeks, due to ‘extremely high volume’ it is not meeting this target. Landlords who have applied are not being penalised for RSW failing to process their application.
The role of tenants
RSW does not have a definitive list of landlords in Wales; therefore, tenants are the only stakeholders in this system who know for sure that they have a landlord. Tenants can check their address on the RSW website to see if it is a registered property and if there is a licence holder. If they find out their property is unregistered or not managed by a licensed agent/landlord they can also report this anonymously via the RSW website or landline telephone number. RSW has been writing to landlords who it believes have not registered to warn them that further non-compliance may lead to enforcement action. For this tenant arm of enforcement to work, building awareness amongst tenants and getting them to check their own landlord is key.
Our research found a very low level of awareness amongst private rental sector tenants of the difference between Welsh and English housing law, regulation and of RSW. While some progress has hopefully been made since our research, the continued media and advertising emphasis has been on targeting letting agents and landlords.
The agents
RSW has concentrated its campaign and enforcement on professional agents. Although it is an offence for a landlord to appoint an unlicensed agent, it is not an offence for an agent to work for an unregistered landlord.
However, RSW has issued licences to agents with the condition that they contact all their landlords to inform them of the need to register their properties with RSW. It is fair to say that this group of landlords will be amongst the easiest to target and get compliance from as they have engaged with a professional agent to undertake management of their property.
The challenge for RSW and local authorities across Wales will be in finding the remaining private rental landlords in Wales. Their indication of immediately concentrating on the larger landlords and letting agents means they are likely to be leaving the ‘worst’ till last. It seems it will be those who are likely to be the least informed about their roles, and those operating under the radar, who will not be tackled for the time being.
Enforcement proper
What options are there for RSW when it finally gets to enforcement against the rogue landlord or agent who refuses to comply? The system will need to be enforced rigorously at this point or it will risk becoming a list of landlords adhering to best practice. In order for tenants to have faith in the system, RSW and local authorities will need to be seen to be tackling those operating outside of the law.
The first stage for enforcement will be Fixed Penalty Notices which, if paid by the landlord/agent within 21 days, will discharge any liability for the offence. RSW has indicated that Fixed Penalty Notices can and will be issued up to twice prior to pursuing other enforcement options, such as prosecution, Rent Stopping Orders or Rent Repayment Orders. Currently RSW is writing to landlords who are reported and informing them of their legal obligations; at an as yet undecided point this year RSW will begin issuing Fixed Penalty Notices to landlords who ignore these letters of advice.
Prosecution
RSW and local authorities can prosecute landlords and agents for non-compliance.
As this is yet to happen, it is a matter of guessing how it will work in practice. The legislative framework sets out the penalties that come with prosecution, beginning with a fine of up to £1,000. Once a prosecution has been obtained there are other ramifications for the landlord.
Rent repayment and stopping orders
There are a couple of practical issues that arise with both types of rent orders. First, neither can be applied for by any party until there has been a prosecution or an offence relating to registration or licensing. In short, the landlord must have been prosecuted or RSW/local authority must satisfy the Residential Property Tribunal that an offence has been committed. Second, after a prosecution or offence, local authorities and/or RSW can apply to the Residential Property Tribunal for a Rent Repayment Order. Tenants can apply for a Rent Repayment Order, however the RPT in considering an application must be satisfied that the landlord has been convicted or that a rent repayment order has already been made. Whether tenants will be aware of this option is doubtful at present, given there is no public information about them from RSW.
Local authorities or RSW can also apply for Rent Stopping Orders, but to date there is little information as to how this will work in practice. This is further complicated since a landlord who pays a Fixed Penalty Notice will have discharged the liability for their offence. Therefore, we are unlikely to reach this point with landlords in most cases.
Pre-emptive enforcement
It is said that prevention is better than cure, and preventing landlords who should not be managing properties from continuing to do so will make enforcement easier in the long run. To that end, licence holders must pass a ‘fit and proper persons’ test, which precludes those guilty of serious offences from holding a licence, and can take into account past breaches of housing law. It remains to be seen how effective RSW will be in denying licences and using this ability, although appeals against refusal are already pending.
Next steps
With the introduction of RSW and the start of a Wales-wide register of private properties, tenants will need clarity on which organisation to contact for different levels of non-compliance, such as an environmental health issue that may need to be reported to a local authority or RSW. Central to this will be the use of the Code of Practice for Landlords and Agents — a document that must be complied with as a condition of all licences granted.
Looking to the future, there is room for developing the registration and licence into a more useful tool for tenants to enforce their rights. Currently tenants can check that their property is registered with RSW, but in the future the tool could potentially be used by tenants to see other information about their property, such as the expiry date of the current Gas Safe certificate, or whether there have been enforcement notices on the property. This would allow tenants to make more informed decisions about renting and enforce action through consumer choice before the regulator has to take formal action.
This article was written by Calum Higgins in March/April 2017 as Welsh law expert in the Expert Advice Team at Citizens Advice.
This article was amended online on 03/05/17, to clarify the use of rent stopping and repayment orders.
