Consumer Focus Piloting Reputational Regulation Mojo Housing Consultancy Ltd 221 Allerton Road, Allerton, Liverpool L18 6JL 0151 475 0726 07721 011276 E-mail: GJMartin@blueyonder.co.uk Introduction As part of its assignment on “Empowering Private Sector Tenants” Mojo Housing Consultancy were asked to suggest a research methodology for testing proposals to introduce a system of reputational regulation for the Private Rented Sector. The research and main report applied considerable effort to exploring the practicalities of establishing such a scheme of reputational regulation, and identifying the features that such a scheme would need to meet in order to be practical and to work. At the time of the initial research it was unclear whether there would be Government support for the establishment of a register of private landlords, and the research explored the practicalities of establishing a system of reputational regulation both with and without the existence of the proposed register of landlords. Government has now clarified that there is no support for a landlord register, and the research methodology proposed reflects this. In discussion with Consumer Focus it has been agreed that there would be little value in retesting the findings of the initial research, and that the key priority was to design a pilot which would either establish that a scheme of Reputational Regulation is practical and workable, or would alternatively demonstrate that the various challenges and complexities identified during the research are insurmountable or unaffordable, rendering the concept impractical. In this proposal we set out our recommended approach to piloting a scheme of “Reputational Regulation” for private sector renting. Stages in the Pilot The main report includes a chapter “Towards a Workable Scheme” which identifies the key features necessary for a scheme to work, and how such a scheme could be designed and then tested through a large scale pilot. The report concludes that: A successful scheme of reputational regulation for private sector renting is likely to include the following features: Be web based Apply to landlords (and preferably agents) only, but not to individual properties Protect the privacy of landlords, but ensure they are genuine Ensure anonymity of tenant/previous tenants providing feedback, but verify they are genuine Be linked to a large, existing database of landlords (such as managed by the deposit protection and dispute agencies, or just possibly to the large property web portals or Council Housing Benefit websites) Be endorsed and supported by Government Be adequately funded at start-up, including having adequate budgets for set-up costs, piloting, initial publicity and to manage legal challenges Have very low running costs Allow landlords to include a brief self-description and identify any accreditation schemes of which they are members, and allow for independent “star ratings” to be provided by appropriate, approved third-party agencies, and allow a web link (where relevant) to the landlord or agents website Allow applicants to easily find the feedback and other information about the landlord, along with simple “good practice” advice to tenants on what questions to ask, and what to think about, before agreeing to a tenancy Minimise administration and moderation costs through good design of the feedback site, including: o Specific questions designed to capture the different areas in which a tenant can rate a landlord’s services o Multiple choice “ranking” answers o Limiting ability to post free field responses o Use of intelligent software to screen free field responses to minimise number requiring judgement by a human moderator Maximise feedback, and optimise “dispassionate” feedback by proactively seeking tenants views at a specific point of the tenancy The rest of the chapter set out the different stages and requirements needed to achieve a successful pilot. These are now considered below in stages. Firstly however it is necessary to consider a practical issue which emerged during the preparation of the proposals for setting up a pilot scheme. In the work carried out in preparing the proposals it became apparent that some of the key activities required considerable work (by third parties) in order to provide a firm estimate of cost. Equally there was a degree of nervousness in the current economic and political climate for potential partners to invest significant cost and resources into costing and preparing for an exercise which may be unfunded. Linked to this there is a degree of uncertainty as to the total budget likely to be available to develop and fund a pilot. To address these very real practical points this proposal is divided into a number of sequential modules, to allow funding to be approved in stages, and to allow maximum progress according to available funding (and also to allow early cut off of the project in the event of the pilot exercise demonstrating that a full National Scheme is impractical). Initial Preparatory Work The work envisaged at this stage would be: The establishment of an advisory group to provide guidance to the project, and to ensure that key stakeholders are represented. Work with tenants (with some input from web-designers) to develop the multiple choice questions which would populate the tenant feedback screens Identify the route to obtaining a sufficiently large pool of volunteer residential landlords for the pilot to have “critical mass”. Obtain detailed costings for software writing, web design and web-hosting for the subsequent “live” stages of the pilot. (If required) Obtain the agreement of an external body (e.g. University) to provide independent evaluation of the pilot Engaging a legal advisor able to quantify the detail and cost of the legal advice needed for the subsequent delivery of the “live” pilot stages. Provide firm costings for the next stage, and appropriate progress report. It is hoped (and anticipated) that the Deposit Protection Service would be willing and able to provide the route to both volunteer landlords and detailed costings of software and web- hosting. However this is not a firm assumption and so for simplicity and neutrality the rest of the proposal will use the term “Landlord Hub Provider” to cover this role. Piloting Tenant Response This stage would cover the development of a “Live Feedback Website”, and the piloting of tenant feedback. Key work elements would be: Working with the “Landlord Hub Provider(s)”, and web designers to develop a fully working “feedback capture” hosted website Working with the “Landlord Hub Provider(s)” to: o Obtain the agreed participation of substantial numbers of landlords on a volunteer basis o Develop a protocol (compliant with data protection rules) for contacting tenants and inviting them to provide feedback on their landlord o Pilot the protocol for contacting tenants, and explore the cost and efficiency of different methods of obtaining feedback from tenants. This would include testing the use of: Email contact Text messaging Semi-automated tele-calling Direct mailing And checking the enhanced return obtained from individual reminders and generalised publicity Analysing the results Exploring the practicalities of using “intelligent software” to moderate “free field” comments Sharing – as appropriate – anonymised results with participating landlords, and assessing support for voluntary participation in the final stage of the Pilot Appropriate reporting to and engagement with Advisory Group (and independent evaluator) As appropriate prepare firmly costed proposals for final stage of pilot Write up interim report of experience of pilot at this stage, including a recommendation as to whether to proceed to the final stage Piloting Tenant Feedback and Live Applicant Access Pilot This final stage (if implemented) would be to allow and enable “live” use of tenant feedback by potential applicants for accommodation. Key elements of work would be: Design of “applicant facing” website, and consultation on details of display and content Agreement with volunteer landlords to use data from stage 2 of pilot to populate website (where forthcoming) Decision on “target locality” for pilot Develop protocols to allow applicants to easily identify properties advertised by participating landlords Recruitment of enhanced pool of landlords Development of protocols and procedures for responding to complaints from landlords about postings Legal advice on nature of postings to be allowed and compliance with Freedom of Information Modelling cost of a full National rollout of scheme, and preliminary exploration of commercial and other potential funding sources, and explore different “hosting” models Survey of users (applicants) to obtain customer feedback Survey of participating landlords to obtain provider feedback Appropriate reporting to and engagement with Advisory Group (and independent evaluator) As appropriate prepare costed proposals for establishing and running a National Scheme Write up final report, including a recommendation as to the practicalities and balance of benefits for the establishment of a National Scheme. Detail and Costings The above summary points are now expanded with indicative costings. At this stage Mojo would be willing to run the preliminary stage of the piloting exercise for the costs identified. Costings for the subsequent “live” stages are illustrative and subject to significant variation. However it is clear that key partners are only willing to cost up the detailed requirements of the “live” stages if they have a clear expectation that firm funding is available for at least the “Piloting Tenant Response” stage – subject of course to fair scrutiny and normal due diligence of the final proposals and costs.