The right place to stand on Rugg

The government’s positive response to the Rugg review, out last week, is a fillip to the private rented sector. As well as backing the idea of institutional investment in new private rented housing – something that the Homes and Communities Agency (HCA) began to take forward in its funding initiative a fortnight ago – the review also suggests changes that will make it easier to attract this investment. A fundamental shift in how we view renting both as consumers and as investors could lead to a step change in the number of homes built for let.

Pleasingly, the government has accepted many of the recommendations made in the review, and by doing so has taken a large stride towards delivering at least the basis of a coherent strategy for the housing industry.

A long-standing campaign led by many in the sector to have letting and managing agents licensed has been accepted, meaning landlords will find their money protected should a dishonest agent abscond. Also, tenants will have access to independent redress and therefore a cheap and effective method for pursuing a complaint.

Landlords will be subject to a “light touch” registration scheme. If this is implemented as Julie Rugg envisaged, it should help to address landlords’ biggest bugbear: that the honest comply while the dishonest get away with breaking the law.

There is much else to commend the review, whether it be the work on accreditation, local authority letting agencies, or simply having better information and research on the sector.

One big ‘but’ remains. To have a coherent strategy you need the support of other ministries, because policy on private renting is not just the preserve of the communities department

One big “but” remains, however. To have a coherent strategy you need the support of other ministries, because policy on private renting is not just the preserve of the communities department: housing benefit policy is administered by the Department for Work and Pensions and tax policy through the Treasury.

On both aspects, the government’s response to Rugg is virtually silent, despite the fact the review made some good recommendations on housing benefit, which tried to ensure landlords were attracted to renting out their property to claimants. For example, ensuring rent was available in advance, because that is the way that people not on benefit pay their rent, and offering assistance with deposits.

Similarly, on the tax recommendations, the government says it will keep Rugg’s recommendations “under review” – code for having no intention of doing anything. But as Rugg explained, tax policy can help “grow the business of letting” and therefore underpin the professionalism and quality the government is seeking. Fundamentally, Rugg suggested smaller landlords should be treated like businesses for income tax purposes. She also supported residential real estate investment trusts and not aggregating stamp duty on portfolio sales, as that is unfair on investing institutions and dissuades the very pension fund investors that the HCA is seeking to attract.

Overall, the Rugg review and the response of the government are welcome steps towards a better and more professional private rented sector, but without the support of other departments it will remain work that is unfinished and difficult to support wholeheartedly.