Insights and Opinions Calum Davies 30/03/2021

Why the next Welsh Government should streamline licensing

With the Senedd Cymru/Welsh Parliament election only weeks away, the NRLA is promoting its manifesto calls for the next government of Wales. Our flagship call is for the current licensing system to be streamlined. 

Since coming into existence in 2015, private landlords must be registered and, if practicing property management, licensed with Rent Smart Wales (RSW). This “single licensing body” was introduced to, generally, improve the private rented sector (PRS). 

However, there still exists discretionary local licensing for smaller Homes of Multiple Occupation (HMOs). These are in place in half of Wales’ 22 council areas. This means that landlords that fall under these schemes are required to duplicate paperwork and subjected to extra costs despite being approved by the national scheme. 

Whereas online registration with RSW costs £45 and licensing £187, local schemes also demand landlords incur additional expense.  There are often substantial top-up costs per property, room, or resident depending on where the property is. For example, landlords who manage one HMO with 3 or 4 people in Swansea will  pay £740. RSW also landlords to pass a “fit and proper person” test, yet additional licensing criteria often require the same. 

The NRLA agrees with the consensus that HMOs should have higher safety standard thresholds. If for no other reason than that, compared to non-HMOs, they are more likely to incur fires and waste management issues. But why does this have to incur extra paperwork and cost outside at a local level when there is a national regime to do just that? 

That’s why the NRLA propose integrating the need for additional qualifying criteria for HMOs and their landlords into the existing national framework of RSW, making it a “one-stop shop” for licensing. The heightened safety requirements for these properties can be built into forthcoming Fitness for Human Habitation standards, due with the introduction of the Renting Homes Act in Spring 2022. Therefore, streamlining licensing will not compromise standards. 

Aside from increasing efficiency, local authorities can be empowered to focus on enforcement rather than the administrative bureaucracy  produced by the processing of additional licences. Landlord and tenant groups are united in their belief that enforcement is key to improving practices in the sector. Ultimately, no amount of legislation will solve issues in private renting without the strength behind laws to enforce them. This will help drive out criminal landlords and give good landlords the confidence that RSW is a worthwhile body that is achieving its purpose. 

This brings us onto the other aspect of our call regarding the improvement of RSW. Our recent report Rent Smart Wales: The Accountability Gap found that the body has an accountability deficit and lacks transparency; there is no regular evaluation of RSW, hampering improvements to the regime. In short, the absence of a central, guiding strategy for the PRS from the Welsh Government has contributed to RSW’s shortcomings. 

This  is  why there should be a public annual report into RSW’s performance and direct scrutiny by the Senedd every year; operational and political decisions should be clearly identified for reasons of accountability; and, as was recommended by a Senedd Committee in 2011, an encompassing PRS strategy from the Welsh Government is needed, potentially setting out a wider role for RSW. If RSW is to succeed, landlords and tenants both need confidence in its effectiveness. 

Our proposal ensures standards are upheld, RSW becomes more accountable and there is transparency.