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Almost 4,000 landlords are still illegally letting properties after failing to sign up to a Welsh Government scheme which began two years ago.

Rent Smart Wales requires landlords to become registered or licensed.

While the majority are "fully compliant with legislation", Rent Smart Wales said it was cracking down on those who are flouting the law.

The first estate agency in Wales was prosecuted last week.

Yvette Phillips, trading as estate agent R Miles Scurlock of Milford Haven, Pembrokeshire, failed to submit a completed licence application or register her rental properties and was fined £4,600.

The Welsh Government wants the scheme to help tackle bad landlords who give the private rented sector a bad name.

There were previously thought to be 130,000 landlords but Rent Smart Wales said this was an "over estimate" and there are now thought to be about 90,000.

The scheme was launched on 23 November 2015, with landlords given 12 months to register before it became law last year.

But as of Thursday, figures showed 86,238 landlords are now registered - meaning an estimated 3,762 are letting properties illegally.

Rent Smart Wales said eight landlords have been successfully prosecuted and 162 fixed penalty notices of up to £250 have been issued.

The figures were released by Cardiff council, which is administering the scheme for the whole of Wales.

Cardiff estate agent Hern and Crabtree has operated in the city for more than 160 years.

Lettings agent Lance Robertson said about 70% of their letting properties were fully managed by the company, while the other 30% were just advertised on behalf of landlords who then managed their own tenancies.

He said the Rent Smart Scheme had made landlords understand more about the extent of their obligations to their tenants.

He told BBC Wales: "We were very supportive of it when it came in.

"It's part of the discussion we'll have with landlords now right from the start.

"I think there is a lack of awareness of the law. As professionals we know the law but perhaps there were a number of landlords who didn't know what they could do, and if anything it's alerted people to what they have to do and how to conduct themselves as a landlord.

"So it's opened their eyes."

Although the Residential Landlords Association in Wales said it agreed with the scheme's "ideals", it has raised concerns about its effectiveness.

Douglas Haig, RLA vice-chairman and director for Wales, said: "Valuable resources continue to be directed into yet another bureaucratic scheme that does little to actually improve the quality of housing in Wales."

The RLA has seen landlords "being penalised due to confusion" about the registration requirements, Mr Haig said, adding more needed to be done to increase awareness of the scheme.

A Rent Smart Wales spokeswoman said, although the majority (around 85%) are now "fully compliant with legislation, there are some who continue to operate illegally".

RENT SMART FACT FILE:

Registering as a landlord is £33.50 if completed online and £80.50 on paper. That is irrespective of the number of properties they have

Another alternative for people who own and rent out a few properties is to pay for a letting agent. Agencies pay fees ranging up to £6,000 depending on the numbers of properties they manage

The money raised pays for running the scheme and for making sure landlords comply with the regulations. Those who do not comply can be issued with a fixed penalty or fined

The licences last for five years

Cardiff council has been chosen to administer the system for the whole of Wales

You can check online whether any house or flat is on the register as a rented property and find out who the landlord is

"RSW and its partners across the 22 local authorities in Wales are now taking action to make sure that those that need to comply, do so, with fixed penalty notices of up to £250 being issued and prosecutions taken forward," the spokeswoman said.

"In addition to enforcement action, rent penalties and restriction on re-possession of property can also become a consequence of non-compliance.

"The simple message therefore to all those affected is come forward and comply now."