The Financial Inclusion Centre has published a pamphlet calling for the creation of a Renters and Leaseholders Protection Agency (RLPA) to protect renters and leaseholders from unfair, abusive practices and to help raise the quality of homes in the rented sector in the UK.
There is a compelling social justice and consumer protection argument for a new RLPA. The authorities recognise that, given the importance of financial services, the complexity of the products, and the lack of consumer sovereignty, a person transacting with the financial services industry deserves the protection of a well-resourced, effective financial regulatory and redress system. Yet, if the same person pays money to rent a property, s/ he is not afforded the same degree of consumer protection. Having a decent home is as important as financial services and detriment can have a huge impact on those affected. Consumer sovereignty is weak in this market.
Renters spend around £63bn a year on rent. It takes up a huge share of their incomes. There has been a major growth in the private rented sector. Overall, there is now a greater proportion of households renting (private and social) than owning a home with a mortgage. There is a worrying level of detriment in the rented sector. The regulatory anomaly between the two sectors is unfair and surely unsustainable.
But, the unfairness and inconsistency is worse if we consider the profile of renters. Consumers that use regulated financial products and services tend to be better off than average. Whereas renters tend to be on lower incomes, so the detriment caused can have a disproportionate effect. Similarly, renters tend to be younger and may not have had the opportunity to build up high levels of financial capability leaving them more vulnerable to unfair practices than experienced older consumers. Therefore, if we apply the principles of consumer theory, consumer-renters should be a priority for consumer protection.
The current system for protecting renters is complex, fragmented and poorly resourced. With FIC proposals, renters would be given a new charter of consumer rights. The new RLPA would have powers to set fit-and-proper tests and authorise landlords and agents, supervise and enforce renters’ rights, impose fines and sanctions on landlords and agents, recommend the setting of local rent caps, and direct local authorities to improve local markets.
The new pamphlet can be found here: FICrentersprotectionagencypamphletfinalcopy