Licence to let will hit all private landlords

All private landlords would have to be registered before letting residential property under government plans to curb abuses in the growing rental market, The Times has learnt.

Easy access to buy-to-let mortgages over the past decade has meant that the number of private landlords has risen to about one million in England and Wales, and ministers are worried that a growing number of unscrupulous landlords are exploiting tenants.

Anyone letting a residential property would have to pay about £50 to register with a national body. This would include developers, buy-to-let investors and the growing ranks of "accidental landlords" who cannot sell their homes and have been forced to let them out instead.

Registered landlords would have to comply with certain standards and those who fail to carry out repairs or who intimidate tenants could be struck off. If that happened, all their tenants would have to move out, although this would not happen overnight, Whitehall sources suggested.

The reforms are to be outlined in a Green Paper within ten days.

The Government intends for the system to be operated with a "light touch" to improve standards and root out rogue landlords, but the bureaucracy could drive out small buy-to-let investors.

Simon Gordon, of the National Landlords Association, said: "We can see the thinking behind this but we need to see the details and be reassured that this is not simply a mechanism for tougher regulations."

In Scotland, private landlords are already required to register to let properties. The scheme was brought in after a series of scandals about multiple occupancy. In the first year only 15 per cent of landlords registered, but tougher legislation has since been introduced. Landlords who fail to register can face criminal proceedings and have a notice served on their properties stating that tenants do not have to pay rent.

Although details of how the scheme would work in England and Wales are still being negotiated, one option is that each landlord would be given a licence number that would appear on all documents related to the letting. This could make it easier for the Inland Revenue to identify tax evaders.

The administrative costs are expected to be covered by the licence fee.

The system would be monitored by an independent body to adjudicate complaints made by tenants. If these complaints were upheld the landlord could lose his or her letting licence. Under one option being considered, the Government might set up a "social letting agent" to place affected tenants in more suitable privately rented accommodation.

Landlords would be able to appeal against the body's decision, but if they lost it could be years before they are allowed to rent out property again.About 2.6 million properties are now let out on the private rental market and ministers are worried about a growing number of rogue landlords.

According to a report by Julie Rugg, who is senior research Fellow at the Centre for Housing Policy at the University of York, up to 50 per cent of all privately rented accommodation are thought to be below the Government's decent homes standard, with some landlords failing to comply with gas and fire regulations and allowing properties to fall into disrepair. Common problems include broken doors and furniture, rising damp, leaking roofs and sinks, peeling paintwork and inches of grime. Tenants' complaints are often ignored and can result in intimidation or even eviction.

Margaret Beckett, the housing minister, will propose a statutory regulator for letting agents. Many agents have no professional credentials and can exploit vulnerable tenants by offering them shoddy accommodation.

The Association of Residential Letting Agents is to propose a voluntary licensing system today, but this is likely to be overtaken by Mrs Beckett's proposals for mandatory regulation.

The measures, which need primary legislation and will first go out to consultation, are in response to the Rugg report, which called for regulation. "Some landlords simply do not consider letting to be an activity that requires regulation, and other landlords - a very small proportion - wilfully act illegally," it said. The Government is not expected to back Ms Rugg's call for tax relief for substantial landlord repairs, such as new roofs, windows and floors, or changes to stamp duty to help developeres buying several properties.

The regulation of private landlords coincides with a government plan to boost the private rental market by underwriting a proportion of the rent. The Homes and Communities Agency (HCA) has invited large investors, including insurance firms and overseas companies, to support a fund to build thousands more homes for rental.

The fund, which would need hundreds of millions of pounds, would help stalled developments and kickstart the construction industry. Ministers are negotiating an incentive for big investors. The current proposal is for the HCA to underwrite any rent in unfilled properties or apartments for the first two or three years.

Housing associations are also being encouraged to invest in rental accommodation. Local authorities are desperate to find places for the 4.5 million people waiting for council homes.

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