Opinion: The four tests for a fee-charging regulator
Published by Max Salsbury for 24dash.com in Housing and also in Regulation
Standard housing pictureImage: Housing via Shutterstock
By Phil Morgan, housing consultant and former TPAS chief executive
Now that the dust has settled on the regulator’s consultation on charging landlord fees it is worth reflecting on the issues raised. There’s been a range of public comments from conditional support to calling this the “second bedroom tax”. I’ve also discussed this with my fellow board members and been impressed by their insight into the principles.
I’ve previously written about the thin blue line of regulation and the need for more resources. I still believe that additional resources would help both the regulator and the housing sector. Yet at a time when social landlords are having to cope with what the regulator itself regards as the biggest risk to landlords in welfare reform, spending a further £12 million per year to save the government money is an unhelpful burden.
So the first test for a fee charging regulator is that the resource is additional to, and not displacing, the current level of government grant.
Yet as we all know only too well spending more money does not necessarily result in improved performance. Undoubtedly the regulator would employ more staff, and those staff would engage with landlords and stakeholders to gain more regulatory assurance.
Yet one of the benefits to landlords, and the taxpayer, of the regulator is in reduced borrowing rates. So the second test for the fee charging regulator is that it uses the additional resources to improve its performance to benefit landlords.
Which leads us nicely into the third test. The regulator, in exchange for charging fees, needs to adopt one of its own principles of co-regulation – transparency. The temptation is to simply lump both the fees and government grant into one big pot and be modestly transparent.
This would be wrong. Instead the regulator needs to be open about what additional benefits the sector gains from the fees that are being charged. It needs to identify and report openly on the measures in place to demonstrate its improved performance paid for by fees.
Finally the regulator needs to adopt another of its principles of co-regulation – accountability. Currently as funding comes from the sole source of government its accountability is understandably focused in that direction. To underpin fees to landlords must be accountability of the regulator for the improved performance and measures in place.
And as you might expect from someone with my background in tenant involvement, that accountability should be both to landlords who pay the fees, and to their tenants who pay the rents that pay the fees.
These are tough tests for the regulator to pass. But they are tests that are necessary to ensure that fee charging is not a further financial burden on the sector.