1. Creating a better Private Rented Sector: tackling rogue landlords
West Midlands Private Landlords and Letting Agents Conference
7 October 2016
Isabella Connell, DCLG

2. New Ministerial Team…same priorities for the PRS
Increase supply of PRS homes
Tackle rogues, targeting criminal landlords, not majority of law abiding landlords
Increasing affordability and security offered by PRS
Encouraging professionalisation

3. Why is an effective PRS important ?
Growing PRS – 4.3 m households, second largest sector
Housing more families with children
PRS rents increasing – 2.6% increase Mar 15 – Mar 16, and higher in S East and East of England

4. An improving picture…
More PRS tenants are satisfied with their homes in the PRS - an improving picture
And conditions are improving – but still behind other sectors

5. Housing and Planning Act 2016
Act provides new tools to enable local authorities to tackle rogue landlords/property agents , introducing:
Civil penalties of up to £30,000
Extension of Rent Repayment Orders
Banning orders for most prolific offenders
Database of rogue landlords/property agents
Tougher fit and proper person test for landlords of licensed properties
Sharing data on tenancy deposit schemes with local authorities
And introduces: :
New mechanism for landlords to recover abandoned properties without court action
Enabling powers on electrical safety and client money protection
The PRS measures take up around a third of the Act. The aim is to strengthen LA powers to tackle rogue landlords and professionalise the sector
This is what I want to cover this morning:-
Five measures designed to tackle rogue landlords and rogue property agents. They are:-
Banning orders for most prolific offenders
Database of rogue landlords/property agents
Civil penalties of up to £30,000
Extension of Rent Repayment Orders
Tougher fit and proper person test for landlords of licensed properties
I also want to explain new Enabling powers - for electrical safety standards and Client Money Protection for property agents – which are included in the act.
And there are new powers to help councils to identify and target rogue landlords – using tenancy deposit information
I also want to explain two new measures in the Housing Act affecting the leasehold sector
(continued)
And to close, a look at next steps and how you can engage with us as we begin to draw up the detail of the new measures
I’ll pause after each section for questions.
But first: what do we mean by a ‘rogue landlord or rogue property agent?
One definition is from an answer to a recent parliamentary question:-
The term ‘rogue landlord’ is widely understood in the lettings industry to describe a landlord who knowingly flouts their obligations by renting out unsafe and substandard accommodation to tenants, many of whom will be vulnerable
Now onto the first of the 5 rogue landlord measures in the Act – Banning Orders

6. Financial penalties as alternative to prosecution (‘civil penalties’)
Local authorities will be able to set a financial penalty as alternative to prosecution - maximum financial penalty will be £30,000 for each offence
Local authority will need to apply the criminal standard of proof
Option of appeal to First Tier Tribunal against penalty and amount imposed
Local authority will be able to retain income from financial penalty to use for housing related purposes
Aim to introduce in April 2017, and with guidance
Instead of prosecuting a landlord for committing a breach of a banning order in appropriate cases the local authority may instead choose to a issue a financial penalty.
The Bill amends the Housing Act 2004 so that certain offences, including not complying with an improvement notice, breaching an overcrowding notice or licensing requirements will be able to attract a financial penalty as an alternative to court proceedings.
The maximum financial penalty will be £30,000 for each offence.
In deciding whether to impose a financial penalty for the offence the local authority will need to apply the criminal standard of proof - ‘beyond reasonable doubt’
There will be an appeal to the First Tier Tribunal against the imposition of a financial penalty and the amount imposed.
Crucially, the local authority will be able to retain income from a financial penalty to use for housing related purposes. Will incentivise enforcement action
Civil penalties will be available for following existing offences:
Landlord did not comply with statutory notice, e.g. Improvement Notice or Prohibition Order
Licence not obtained for a licensable HMO
Failure to comply with a HMO management regulations
Licence not obtained for a property subject to selective licensing
Allowing a property to be overcrowded.

7. Rent Repayment Orders
Extending Rent Repayment Orders to cover situations where:
tenant has been illegally evicted or harassed, or landlord used violence to obtain entry;
landlord has failed to comply with a statutory notice, eg an Improvement Notice; or
landlord has breached a banning order.
Local authority must consider applying for a Rent Repayment Order where they become aware a person has been convicted of one of the above offences.
Tenant may apply for a Rent Repayment Order
LA retains Housing Benefit
Aim to implement from April 2017, and with guidance
The Act allows us to extend rent repayment Orders to cover situations where:
tenant has been illegally evicted or harassed, or landlord used violence to obtain entry, or
Where the landlord has failed to comply with a statutory notice, eg an Improvement Notice; or
Where the landlord has breached a banning order.
Local authority must consider applying for a Rent Repayment Order where they become aware a person has been convicted of one of the above offences.
Tenant may apply for a Rent Repayment Order themselves
Aim to implement from April Guidance issued in advance
Moving on now to ‘fit and proper persons tests’……….

8. Banning Orders
Aim: Disrupting rogue business model – putting them out of business
To be defined in regulations but likely to include any offence:
involving fraud, violence, drugs, or sexual assault, for which offender was sentenced in Crown Court
committed against any person living at a property owned by offender
Illegal eviction and certain offences under Housing Act 2004
Can be banned from:
letting housing
engaging in letting agency work
engaging in property management work or
doing two or more of above.
Banning order must be made by FTT following application by local authority who obtained conviction. Notice and appeal.
Aim to introduce in October 2017
Clear ministerial ambition: to disrupt the business model of rouge landlords and to put them out of business
The Act introduces banning orders for landlords and property agents who have been convicted of particularly serious offences and/or are repeat offenders. A banning order offence means an offence of a description specified in regulations – which are still to be defined.
Banning orders must be made by the First Tier Tribunal following an application by the local authority who obtained conviction.
The Consultation paper we published last year set out offences we were minded to treat as banning order offences. These are:
Being involving fraud, violence, drugs, or sexual assault, for which offender was convicted or sentenced in Crown Court
Offences committed against any person living at a property owned by offender
Offences committed under the Housing Act 2004 (category 1 & 2 hazards)
Rogue landlords can be banned from:
letting housing
engaging in letting agency work
engaging in property management work or
doing two or more of above.
LAs must inform landlord that they are applying for a banning order within 6 months of the conviction
Covers offences by ‘bodies corporate’ – not just individuals
And there is provision for ‘anti-avoidance measures’ – toprevent a person subject to a banning order from transferring property to a family member or business partner.

9. Applying Banning Orders.
Minimum 12 months. Length of ban must be specified.
Penalties for breach: civil penalty, Rent Repayment Order, unlimited fine or 6 months imprisonment. Provision for daily fines where breach continues.
Local authorities can make a management order if they want property to continue to be available for rent. All rental income would be retained by the council.
Anti avoidance measures.
Committed to consult on detail. Keen to work with the sector in developing guidance.
A banning order must be for a minimum12 months. Length of ban must be specified. Can be for an indefinite period
There is a range of penalties for breeching banning orders. Civil penalties (up to £30k), Rent Repayment Orders, unlimited fines or 6 months imprisonment. There is provision for daily fines where breach continues.
By definition, a landlord subject to a banning order would not be able to let licenced properties.
Management orders can be made if councils want the property to continue to be available for rent
Now, during the passage of the bill through parliament, it became clear that MPs and peers wanted greater transparency in the process involved in determining what a banning order offence is.
So we have committed to hold a public consultation on the details. Keen to work with you in developing the regulations and guidance. And the regulations are ‘affirmative’ – meaning debates in parliament before commencement.
Indicative timetable for consultation on banning orders: Sept – Oct – formal consultation, 3 stakeholder group meetings before end of year, plan to introduce regs in April Commencement is planned for October 2017
Next: provisions for a database of rogue landlords and property agents…..

10. Database of rogue landlords and property agents
Aim: Help councils keep track of rogues and target enforcement action.
Accessible by DCLG and local housing authorities. Anonymised data will be made public.
Local authorities may include details of landlords/property agents convicted of a banning order offence or with 2 civil penalties. Will be required to include details of any landlord or property agent served with a banning order.
First Tier Tribunal and notice/appeal process
Aim to introduce in October We will publish guidance on when & what to include on database and for how long.
Aim: Help councils keep track of rogues and target enforcement action.
why? Stories of rogues moving across boroughs and setting up new businesses again. The database will help councils to focus on those who cause the most problems, and will help to focus enforcement action on them.
Database is not available to public. It is for councils to input and access. This was a big issue in the House of Lords during the passage of the Act
Giving tenants access to the database might be fine if the purpose of the database was to blacklist landlords and drive them out of business. But that is not the purpose. Banning Orders should be used for a landlord who should not be in business.
Like penalty points on a driving licence offences – a person will remain on the database for a specified period – a minimum of two years. Also like someone who has incurred penalty points, continuing to breach the law may result in a ban.
The info on the database will relate to criminal records and is highly sensitive. Releasing this info to tenants or prospective tenants could jeopardise individuals’ right to privacy and cause uneccessary anguish.
Information included in the database will get set out in Regulations.
A person’s entry could include:
Their address and contact details
Period for which entry is to be maintained
Details of properties owned, let or managed
Details of any banning order offences of which they’ve been convicted
Details of any banning orders whether or not still in force
Details of any financial penalties that they have received
For body corporate, information about its officers
Anything else?
Also, its important to remember that entries on the database must be removed after a specified period - which is written into the court’s decision notice
What will the database look like? LogasNet has been used for a number of years by DCLG to administer grant payments to local authorities and capture data. The plan is to host the database on Logasnet. It will be:-
Accessed via a web browser
Registered user and password protected
Working with the LogasNet team to develop
We’re setting up a Technical User Group of selected local authorities to develop and test the framework. Need LA reps to be involved!
Aim for database to be introduced in October 2017

11. A stronger Fit and proper person test
More stringent fit and proper person test for landlords of licensable properties, involving:
Possible ‘Disclosure and Barring Service’ check so LA has information about any criminal convictions;
checking whether landlord:
has received civil penalty for not carrying out Right to Rent check;
has leave to remain in the UK;
is bankrupt or insolvent;
or managing agent, has office in UK.
The fit and proper person test would apply to landlords of any licensable property
The Housing and Planning Act allows us to strengthen existing ‘fit and proper person test’ which already exists in housing legislation
We are currently considering whether to introduce a ‘Disclosure and Barring Service’ check so the council has information about any criminal convictions. We need to explore this further.
A fit and proper person test would check whether the landlord:
has received civil penalty for not carrying out Right to Rent check;
has leave to remain in the UK;
is bankrupt or insolvent;
or managing agent, has office in UK.
We will seek views on this later in the year. The plan at this stage is to bring in measures in April 2017 – but to be confirmed.

12. Powers to help identify and target rogue landlords/agents
Data sharing - new powers to enable LHAs to receive information from tenancy deposit schemes about tenancies in their areas, eg on
PRS property addresses
Addresses of landlords letting these properties   
Addresses of letting agents managing PRS properties
Number of deposits registered at PRS property address
By end 2016
We have taken a power in the Housing Act to increase the tools that LAs can use by requiring Tenancy Deposit Protection schemes to share data they hold on tenancies to Local Authorities. The three providers hold data relating to nearly 3 million tenancy deposits.
Why? - councils tell us they have a limited picture of the size and scale of the PRS in their area.  It is difficult for them to identify rogue landlords to ensure that properties meet basic standards.
What are the benefits? The data will help authorities to identify privately rented housing and to crack down on rogue landlords in their area. It will help to improve conditions in rented properties, benefitting tenants. And it will cut the costs of enforcement.
What data will be shared? Councils tell us that the data of most use to them is:-
PRS property addresses,
Addresses of the landlords letting these properties   
Addresses of letting agents managing PRS properties
Number of deposits registered at the PRS property address
Councils will only be able to use the data to carry out their duties under the Housing Act 2004 parts 1-4.
We are not requiring councils to access this data. It will be up to individual authorities to decide whether to use the information or not.
Plan to go live by end of the year.

13. Abandonment
New procedure for legally recovering property without needing to go to court. Landlord must serve 3 warning notices before property can be recovered. Copies of 1st and 2nd notices must go to guarantor/deposit payer.
1st warning notice may not be served until at least 4 weeks/1 month rent is unpaid. 2nd notice can only be served if at least 8 weeks/ 2 months rent unpaid.
3rd and final notice must be affixed to door of property and tenant must be allowed at least 5 days to respond. Regulations will set out form that final notice must take.
---Only if no rent paid and property abandoned --
Next set of slides summarises other PRS measures in the bill - not targeted at rogues, but they aim to professionalise the sector for the benefit of tenants and landlords.
The first measure is on abandonment. The aim is to help landlords to legally recover a property without the need to go to court when it has been abandoned by the tenant
No specific role for the LA (unless it has contributed to the tenancy deposit) but will want to be aware of process in case landlords not following properly. No verification needed by LA to prove property has been abandoned.
We’ve introduced protections for tenants introduced. So, a landlord must serve 3 warning notices before reclaiming property:
1st warning letter - can only be served if at least 4 weeks or 1 months rent has been unpaid
2nd warning letter - can only be served if at least 8 weeks or 2 months rent is unpaid
3rd and final notice - must be fixed to the door of property
Scope for tenant to be reinstated into the property– they apply to the county court – needs good reason for not responding to warning notices.
Plan to introduce regulations in October 2017.

14. Further protections for tenants
Enabling powers to:
ensure property agents that hold client money, such as rent or service charges, belong to a client money protection scheme;
Review underway - the consultation closed on 3 October
require that rented properties in the PRS meet acceptable electrical safety standards.
There are new enabling powers on Client Money Protection and Electrical safety in the Act:-
Housing Act includes an enabling power to require letting agents and property management agents to belong to a Client Money Protection scheme.
What is CMP? These schemes protect the money of landlords and tenants in two ways:-
1) Protection in the event of a letting agent going into administration
2) And protection against theft or illegal use of the money by the agent whilst it is in their custody or control.
What money are we talking about here? This is typically a tenant’s deposit and landlord’s rental payments kept for safe keeping by an agent
How does it work? - Agents pay a membership fee (around £300) to join a scheme. Typically the scheme will then buy insurance to cover itself against successful claims by landlords and tenants.
Importantly - Minsters have committed to using this power if a review of CMP (which will look at estimated costs and burdens to businesses and to local authorities) demonstrates this is necessary.
The enabling power provides for a clear enforcement mechanism most likely through local authorities trading standards teams. We would need to design how that works.
Electrical Safety
Similar in many ways to Client Money Protection
The Housing Act contains an enabling power to set requirements for electrical safety standards in the PRS – to protect tenants against death or injury resulting from electrical shock or electrical fires in the property.
Ministers have committed to carry out further research to understand whether this regulation is necessary - and if so, what requirements should be introduced for landlords to carry out electrical safety checks. (Government currently encourages five yearly checks to be carried out, and legislation exists which requires landlords to keep the supply of electricity, in good repair and proper working order.)
And similar to Client Money Protection, the enabling power provides for a clear enforcement mechanism through local authorities
We will continue our work with experts in the sector, such as electrical safety first, and landlord and tenant groups to carry out this research. Again, it is likely to take the work of a working group, expected to conclude in the Autumn.
We will also need to complete a full regulatory impact assessment, and guidance for local authorities and landlords before any regulations are introduced.

15. Looking ahead
Programme of consultation and secondary legislation to deliver Housing and Planning Act measures to Oct 2017
Affordability and Security Working Group underway, involving organisations across landlord and letting agent sector as well as Shelter, Crisis , Generation Rent and Local Authorities
Taking forward work on HMO licensing.
Working groups on Electrical Safety and on Client Money Protection underway
Promoting good practice.
In view of these improvements and challenges, Government is committed to raising standards in the PRS.
We have set up an Affordability and Security working group, which will help us gather ideas and consensus from the sector and build our knowledge of the problems on the ground.
We have consulted on extending mandatory licensing of high risk HMOs, and continue to make strides in that sphere through selective licensing.
The Housing and Planning Act also introduces a wide range of measures which incentivise and resource action against rogue landlords and agents while professionalising the sector.
We also continue to promote accreditation and good practice to drive up standards in the PRS and eradicate rogue landlord activity.