Two of the key issues we have been looking into is regulation of the sector, and length of tenancy agreements. Taking each one in turn, it is interesting to note that regulation of Letting Agents is pretty much nonexistent. We heard how Estate Agents are regulated under the Estate Agents Act of 1979 but that this does not cover Letting Agents.
So, theoretically, there is nothing to stop an Estate Agent being closed down for misconduct one day and the next day setting themselves up as a Letting Agent. This also leads to the rather odd situation of walking into an Estate and Letting Agents company with one side of the room being subject to qualifications and standards and the other side being free to act however they wish. The Select Committee has considered recommending to Government that there be some regulation of Letting Agents.
The second point we have taken a significant amount of evidence on has been the security and length of tenure. This is a very interesting issue. As part of our inquiry, the Committee went to Germany to get to grips with the Private Rented Sector they have there. What we found was a complete culture change to here. Germany has tenancies of indefinite length, with rent increases linked to an index. Out of this the Committee has been looking into whether it might be beneficial to both tenants and landlords to have longer tenancies as the default rental option.
It was suggested, in the sessions we held, that it is in the Letting Agents’ interests to continue to have a high turnover, or more renewals, in the properties they rent as they receive a commission for every new contract. This may often be the case, and there is a broad acceptance that longer tenancies should be encouraged. As long as landlords and tenants both respect their rights and responsibilities, there should be no reason why the basis of rental agreements going forward could not be long tenancies with the option to leave early, as opposed to the current system where the default position is short tenancies with an option to extend.
The Inquiry has been highly informative and the Select Committee will publish its report at the end of June. The Private Rented Sector has got to be in a position to be able to cope with the increase in demand it faces going forward and, whilst I am sure it is more than ready, I hope the recommendations we make to Government will help it in this endeavour.