This is being proposed through the Landlord and Tenant (Private Housing) Bill 2014 (the Bill) which is currently under review after a controversial reading in the House of Keys on 10th February when it was sent back to the Attorney General’s Chambers for redrafting.
There has been some backlash over the Bill with some suggesting that it could lead to fewer landlords willing to provide accommodation and especially at affordable rents. Some argue that this could lead to a housing crisis. Perhaps this stretches the argument a little too far but there are reasonable grounds to claim that the Bill in its current form gives tenants the upper hand. The Bill is currently undergoing various amendments in response to the reading in the House of Keys and feedback from a public consultation issued by the Department of Health and Social Care in 2013. The Government must be careful to ensure that the Bill complies with its original purpose which was to “achieve a fair and reasonable balance between the rights of landlords and tenants”. Whether this is achieved remains to be seen.
What are the minimum standards and how do you register?
The Minimum Standards mainly address the adequacy of the accommodation but also address issues such as protection and return of deposits, tenant privacy and general compliance with the law. They require certain clauses to be included in a tenancy agreement. In the registration application, the landlord will need to go through a process of self-assessment and declare that it is a fit and proper person and that its properties comply with the Minimum Standards. Once registered, the landlord will be on the scheme for 3 years during which time Environmental Health Officers will carry out inspections on either a random audit basis or when in receipt of a complaint.
Until the Bill comes into force, in order to ease the registration process, the temporary Voluntary Landlord Registration Scheme 2013 has been established and many landlords have signed up in acknowledgement of the potential change in the law. It allows landlords to register early for a slight discount on fees due. There will be a fee payable by landlords to register (which is then payable every three years) based on the number of properties held. In the Bill’s current form, the fees are not high and may therefore seem minimal for landlords owning just a few properties but for those that own more, this could be significant, especially if improvement costs must also be made to ensure the properties are in line with the Minimum Standards.
In order to allay some landlords’ fears, the register is private and subject to the Isle of Man Data Protection Act 2002. However, the consultation on the Bill suggested that 100% of tenant respondents believed that the register should be available to the public (whilst only 44.4% of landlord respondents agreed with this.) It is therefore unclear as to whether landlords’ current state of privacy will last.
Consequences of not registering or not complying with the minimum standards
Once the Bill has been passed, letting agents will not be able to advertise residential property without a registration number. In addition, a tenant who discovers that its landlord is not registered will be entitled to terminate its lease with one month’s notice and can recover rent paid since the enforcement of the Act as a debt. Failure to register once the Bill has come into force will be an offence with a maximum penalty of £20,000 and/or six months’ custody.
Furthermore, to ensure that the legislation has some bite, once landlords are registered, the Department of Health and Social Care, the department that will be responsible for supervising the implementation of the Act, will be empowered to enforce the Minimum Standards not just against the landlord entity but also against an officer of the landlord (if the landlord is a company) if that person authorised, permitted or failed to take all reasonable steps to prevent the offence. For the purposes of the legislation, an officer includes the registered agent, a manager and even a member who manages its affairs.
Many corporate landlords use letting agencies to manage their properties and these agencies should be familiar with the Bill but it is important to note that it remains the landlord’s responsibility to ensure that their properties meet the Minimum Standards.
Is this long overdue?
The idea of landlord registration is by no means new; the idea was first proposed in England in 2009 and introduced as early as 2004 in Scotland. It seems that the Isle of Man has now decided to keep pace and is beginning to supervise a previously minimally regulated sector.
The public consultation on the Bill revealed that 100% of tenant respondents agreed with the introduction of a registration scheme. This is perhaps expected as the scheme aims to ensure that tenants will receive at least a basic standard of living with the onus of compliance being laid wholly at the landlord’s feet. Therefore, perhaps it is more telling that 50% of the respondent landlords also agreed to the scheme in principle (a surprisingly high figure). Though of course not as positive a response as from the tenants, it shows that even landlords are accepting that they have a responsibility to their tenants and welcome some clear regulation to guide them.
Chris Robertshaw MHK has said that, “Responsible landlords have nothing to fear from the proposals but the small minority of irresponsible ones should see this as a clear and unequivocal warning that providing accommodation in the private sector which falls below a basic level of decency will no longer be accepted.” Mr Robertshaw has emphasised that the bill is a “light-touch” and is intended to “give a voice” to vulnerable tenants, not to “impact on the core business of private landlords.” It will be interesting to see whether landlords agree.