Growth of the private rented
sector
47. Declining property values create opportunities
for the tenure balance of an area to shift from owner occupation
to private sector renting, which in turn causes problems. Houses
in low demand areas are being sold to private landlords for as
little as £2,000.[122]
As the Housing Green Paper states, "Unscrupulous landlords
have sometimes been encouraged into low demand areas, where many
of the remaining households are on low incomes, by the prospect
of rich pickings from the housing benefit system."[123]
In Manchester, "We have seen people make 140 per cent or
150 per cent return in a single year on capital by exploiting
social security [housing benefit]."[124]
In the Kensington New Deal for Communities area, Steve Robinson,
Chief Executive of Community Seven Housing, described how housing
benefit rent could be up to £80 per week in an area where
housing association rent was about £42.[125]
48. Wirral Metropolitan Borough Council's memorandum
described the problems caused by an increase in private sector
renting:
"Problems arise when the number of such
properties reach a 'critical density.' It is a common perception
amongst owner-occupiers that an above average proportion of privately
rented stock in their area means that there will be an increase
in anti-social behaviour and a continued decline in local house
prices. This is an understandable presumption, as a landlord's
'stake' in a community is primarily economic rather than social."[126]
49. The Rent Service, an Executive Agency of the
DTLR, established in 1999, was charged with ensuring that landlords
could no longer extract higher rent payments from benefit claimants
than other tenants.[127]
From the evidence that we have received, the problems persist.
The Minister told us that in future the problem would be addressed
through the licensing of private sector landlords:
"I do not think you can shift the problem
off on to the Rent Service. The problem seems to me to lie fair
and square with people who are using a loophole to make a very
lucrative living. The way to deal with it is through the licensing
of private sector landlords."[128]
We recommend that the DTLR should report back
to the Committee on the extent to which unusually high housing
benefit payments persist in low demand areas, 12 months after
the introduction of the private sector landlord licensing scheme.
Estate agents
50. Falling house prices also affect estate agents,
reducing the profits available to them and hence potentially reducing
competition in declining markets. We received a memorandum identifying
the consequences of this reduced competition in the Gorton area
of Manchester. It alleged that the dominant local estate agent
was valuing properties at a lower price than alternative agents
asked to provide a second opinion, and claimed that the agent
had links with the property development firm, which was purchasing
the properties, making the problem of falling house prices much
worse for residents in that area.[129]
The estate agent concerned denied the allegations.[130]
94 Paul Palmer, Secretary of the National Association
of Empty Property Practitioners (writing in a personal capacity),
EMP35 Back
95
Q 596 Back
96
EMP26, Annex 1 Back
97
Local authority and registered social landlord low demand housing
is defined as housing in groups of at least 50 dwellings exhibiting
one or more of the following-a small or non-existent waiting list,
tenancy offers frequently refused, high rates of voids available
for letting or high rates of tenancy turnover. Private sector
low demand housing is defined as neighbourhoods of at least 50
dwellings where private sector housing is the predominant tenure
and where one or more of the following occurs-property values
are low and/or falling in absolute terms, a high private sector
void rate, a high turnover of population, significant incidence
of long term private sector voids or abandoned properties or a
visibly high incidence of properties for sale or let. Source:
Guidance Notes on the Completion of the 2001 Housing Investment
Programme Back
98
We have received evidence from Hastings-EMP77 and David Cowans
pointed to Dover and Eastbourne (Q 3) Back
99
EMP26, Annex 1, Table 2 Back
100
Note of visit to the North west Back
101
Report by the Unpopular Housing Action Team, DETR, October 1999,
Paragraph 1.5 Back
102
Note of visit to the North West Back
103
EMP62 Back
104
A case study, anonymous, northern city Back
105
The evidence we received stressed the difference between the city
centre housing market, which was experiencing a renaissance and
inner urban areas (see for example, the note of the visit to Manchester
and Birmingham Council's evidence-Q 79) Back
106
Q 412 Back
107
EMP23 Back
108
Letter from the public, 43 Back
109
Q 6 Back
110
Note of visit to the North West Back
111
Q 7 Back
112
Council of Mortgage Lenders, Q 388 Back
113
Letter from the public, 6 Back
114
Letter from the public, 10 Back
115
Letter from the public, 14 Back
116
Letter from the public, 42 Back
117
Wirral Metropolitan Borough Council, EMP68 Back
118
EMP24 Back
119
EMP33 Back
120
Note of visit to Tower Hamlets Back
121
See, for example, Matthew Baggott, Q 488 Back
122
In Lower Beswick in Manchester, see note of visit to the North
West Back
123
Quality and Choice: A Decent Home for All, DETR 200, Paragraph
5.36 Back
124
Q 231 Back
125
Note of visit to the North West Back
126
EMP68 Back
127
Paragraph 5.38, Quality and Choice, A Decent Home for All-The
Housing Green Paper, DETR, April 2000 Back
128
Q 651 Back
129
EMP72 Back
130
EMP91 Back
