Better protection for tenants?

Monday 29 April 2019

Rental properties could be licensed under a new law which could also protect tenant’s deposits although the statistics used to formulate the draft report have been disputed.

Four key changes are being suggested by the Committee for Environment and Infrastructure which has put together a 17-page plan for bringing up standards in the island’s private rental sector.

The General Housing Law, which is currently out for consultation, includes proposals for the registration and licensing of properties as well as a new deposit protection scheme. 

Aspects of the proposals are said to be supported by the Chief Fire Officer while landlords from the Guernsey Private Residential Landlords Association call it a ‘wish list’. 

The report, which was commissioned in July 2018, is due to be brought to the States by E&I after the consultation period. Its primary objectives are: to introduce the means by which the Office of Environmental Health and Pollution Regulation (OEHPR) can assess the standard of accommodation in the island across all tenures, and have in place robust measures to enforce an improvement in standards where necessary; make it a requirement for all private rented properties to be registered; implement a licensing system for Houses in Multiple Occupation (HMO) making it a legal obligation for landlords/owners of a property/properties meeting the definition of a HMO to be licensed with the Office of Environmental Health and Pollution Regulation (OEHPR); and to introduce a statutory requirement for a deposit protection scheme. 

Pictured: President of the Committee for Environment & Infrastructure, Deputy Barry Brehaut. 

It estimates the total amount of deposits – usually between one and three months rent required before tenancy begins - held in the island at any time is around £12 million.

“In Guernsey, the private rented sector operates relatively free of a legal framework. Tenants and landlords negotiate terms between themselves on a contractual basis, and courts generally rely on these contracts, rather than on legislation, to adjudicate tenancy disputes,” the draft report reads. 

Although it has found “most landlords behave responsibly and hold deposits fairly, and most tenants discharge their obligations under the lease” it said that a “significant number” of deposit disputes are brought to the Citizens Advice Bureau (CAB). This interpretation of the statistics has since been disputed by the CAB.

It also states that there are limits to the benefits of an unregulated system set by free market principles. 

“So in theory, tenants can access the kind of accommodation they wish to pay for. In reality, however, there are limits to the benefits brought about by a largely unregulated private rented sector. The current model can cause harms, and these are felt by both landlords and tenants.

“Citizens Advice Bureau report that they deal with a significant number of queries from tenants who feel that their deposit has been unfairly held by a landlord at the end of a tenancy. 

“With no formal guidelines or dispute resolution process, neither party’s rights are clear; unscrupulous landlords and tenants can freely exploit the system to the disadvantage of the other party,” it reads. 

Paul Chambers, CEO of the CAB (above) said he has since been in touch with Deputy Brehaut to ask for the section of the report on deposits to be amended. 

"CAB Guernsey has pointed out to the Committee for the Environment and Infrastructure that whilst the report was correct that more than 750 calls in 2015 were regarding private tenancy issues (783), only 92 were specifically related to deposits and only 52 relevant to the introduction of a tenancy deposit scheme. [I] have asked the President of Environment and Infrastructure, Deputy Barry Brehaut, that the report be amended to reflect these figures’."

A response from the GPRLA addressed many of the points in the report individually. On the introduction of a deposit protection scheme it wrote that it feels there is not sufficient evidence to show its necessity. 

“Historically there have not been any cases that we can recall of landlords absconding with deposits. Even if this was to happen, the fact the landlord has bricks and mortar with the tenant inside gives some security to the tenant. As previously stated, a problem can occur when a company or business goes into liquidation (as recently happened with an estate agent) and has no tangible assets. 

“We would ask the question why landlords are being singled out for a deposit scheme. If a scheme is to be set up, any deposit of any nature should be covered by the scheme and, by law, businesses should be forced to use it. It should not form part of a housing standards law.” 

A custodial scheme proposed includes using an agency which deals with the resolution of a dispute without recourse to the courts. One off fees to these agencies are said to start from £13.20, and in Northern Ireland the cost of administering the scheme is paid through interest earned on the deposit held. 

The GPRLA argued the agency system would bypass the need to reform the court system.

“The current court system is archaic, slow, and costly with very weak enforcement powers. In our opinion the court system in Guernsey, as far as it deals with evictions and debt recovery, is not fit for purpose in the 21st Century and needs a total review and overhaul. If such a review could form part of the holistic approach presented in these proposals, then it would help the wellbeing of all sections of our community who are owed monies and find it a very stressful process under the current system,” it said.  

This article originally appeared in edition 5 of the Bailiwick Express printed newspaper. It was amended on 29 April to include the statement from Paul Chambers, CEO of CAB. 

Pictured above: Jeff Guilbert, president of the Guernsey Private Rental Landlords Association.