Memorandum by Shelter (DHB 20)
INTRODUCTION
Shelter is a national campaigning charity that
provides practical support and innovative services to over 100,000
homeless and badly housed people every year. Approximately one-third
of our clients live in the private rented sector. This work gives
us first hand experience of the problems experienced by private
tenants. We have also carried out extensive policy and research
work in this area. In 2001, with the support of the Joseph Rowntree
Foundation, we established an independent commission to look at
the problems of standards and supply in the sector (a copy of
the Commission's report is enclosed). We welcome the opportunity
to submit evidence to the Committee and hope that the inquiry
will generate consensus about how the draft Bill should be strengthened
before it is presented to Parliament later in the year.
SUMMARY
This memorandum focuses on Parts 1, 2, 3, 4,
6 & 7 of the Bill and the measures we believe should be added
to it before it is formally presented to Parliament. To summarise,
Shelter:
— Strongly supports the proposed licensing
scheme for houses in multiple occupation (HMOs) and hopes the
scheme can be extended to include additional properties which
we believe pose a significant risk to the health and safety of
tenants.
— Supports the selective licensing
of private landlords in areas of low demand in order to raise
housing standards.
— Welcomes the new Housing Health and
Safety Rating System.
— Strongly supports the changes to
the Right to Buy which will help to retain valuable social housing
in areas where it is desperately needed.
In addition, we hope that Ministers will be
persuaded to add the following measures to the final Bill before
it is formally presented to Parliament:
— A requirement that all private landlords
are "fit and proper" persons to manage property to ensure
that minimum management standards are met across the sector.
— The statutory regulation of tenants'
deposits and other fees, including a national Tenancy Deposit
Scheme with independent arbitration when disputes occur.
— Measures updating the definition
of statutory overcrowding.
BACKGROUND
Much of the draft Bill focuses on the private
rented sector (PRS). The PRS is home to 2.2 million households
in England. At just 10 per cent of the country's housing stock,
this makes it the smallest PRS in the western world. Independent
research carried out for Shelter estimates that its failure to
meet housing need may be adding as many as 10,000 households to
the annual affordable housing requirement.[4]
At a time when the shortage of affordable housing has reached
crisis levels in many parts of the country, we believe the sector
could make a much stronger contribution to meeting housing need
by increasing the availability of affordable accommodation for
key workers and providing decent homes for those on low incomes.
According to the 1996 English House Condition
Survey, 31% of private tenants live in poor conditions. Shelter
therefore strongly supports the measures aimed at improving standards
in the sector, particularly those targeted at HMOs. However, we
hope the Bill's publication will provide an opportunity to broaden
out the debate to look at how these measures can be harnessed
to a wider strategy to modernise the sector that includes the
fiscal reforms needed to increase supply, as recommended in the
report last year of an independent commission established by Shelter
with the support of the Joseph Rowntree Foundation.[5]
A strategic duty on local authorities to encourage good landlords,
assist those who are not meeting their responsibilities and encourage
investment in the sector would be an important first step.
HOUSING HEALTH
& SAFETY RATING
SYSTEM (PART
1)
Shelter supports the replacement of the Housing
Fitness Standard with the Housing Health & Safety Rating System
(HHSRS), and a rigorous new enforcement regime. We particularly
welcome the clear link the proposed new system makes between housing
and health. Poor quality housing can pose serious risks to health
and in some cases put the lives of occupants at risk. For someone
suffering from physical or mental illness, sub-standard housing
may damage their chances of recovery or worsen their condition.
Poor conditions can also undermine development of children. The
new HHSRS will enable local authorities to collect data and identify
much more effectively than now the links between poor housing
and ill health.
Shelter's experience is that the assured shorthold
tenancy regime can make it difficult to guarantee an improvement
in conditions for private tenants. The intervention of the local
authority can sometimes encourage landlords to evict the tenant,
either to avoid undertaking the works required or because the
tenant has made a complaint. It is essential, therefore, that
local authorities develop a pro-active approach to improving the
quality of private rented accommodation. We believe that the existing
duty, section 605 of the Housing Act 1985, should be strengthened
by requiring local authorities to address conditions in the private
rented sector in a more strategic way.
While we support the "risk assessment"
approach set out in the draft Bill, we believe a set of absolute
minimum standards should be included for physical conditions in
HMOs. Given the significantly higher fire risks in HMOs, these
standards should include minimum requirements on fire safety of
both the property itself and furnishing contained within it.
LICENSING HOUSES
IN MULTIPLE
OCCUPATION (PARTS
2, 4 & 7)
Shelter has long campaigned for legislation
to improve health and safety in HMOs, and so we welcome the introduction
of a national licensing scheme. The current legal framework is
confusing and easily evaded. Although they can already set up
a local registration scheme, few local authorities have the resources
to actively search out unfit HMOs. Those that do are not helped
by a Court of Appeal decision that a group of students living
together should be seen as a single household, which means their
home can't be regarded as an HMO.[6]
Although some may argue that licensing is an unnecessary regulatory
burden, the truth is that this regime will not require responsible
landlords to do any more than they should be doing already. The
fees and paperwork required are minimal. Only landlords running
sub-standard accommodation or exploiting their tenants have anything
to fear from the new regime.
Over 1.5 million people live in HMOs in England
and Wales, more than half of whom are under the age of 30. Many
are vulnerable young people living independently for the first
time. The conditions they live in are often unhealthy and sometimes
dangerous—adults living in bedsits are six times more likely
to die in a fire than those living in comparable single-occupancy
houses.[7]
The 1996 English House Condition Survey showed that 20% of HMOs
are in a poor condition, requiring urgent remedial works. There
are no universally applied standards for fire safety or amenities,
and because most occupants have little or no security of tenure,
they stand every chance of losing their home if they ask their
landlord to undertake repairs or improve safety.
The new and much clearer definition of an HMO,
outlining the circumstances in which a person is, or is not, to
be regarded as "occupying" a house, and the circumstances
in which persons occupying a house are, or are not, to be regarded
as forming a "single household", will help ensure that
the health and safety of a greater number of tenants can be more
readily safeguarded. The obligation for landlords to obtain a
licence for larger HMOs will give environmental health officers
a much better chance of uncovering those with defects and ensuring
that they are brought up to a satisfactory condition. It should
also help guarantee proper management standards, and give tenants
greater confidence to raise concerns when standards are not maintained.
However, we believe that there is a strong case
for expanding the scope of the mandatory scheme to include all
HMOs of either three or more storeys or occupied by four or more
adults, rather than just those with three or more storeys and
five or more occupants. The evidence is that the risk of injury
or death as a result of fire increases significantly in properties
of three or more storeys. In 1997, DETR research found that 52%
of HMO fire deaths occurred in buildings three or more storeys
high, even though only 16.5% of households at that time lived
in such buildings.[8]
The risk to life is even greater still when fire death rates in
HMOs over three storeys are compared with similar single-occupancy
houses. An adult living in a bedsit house of three or more storeys
is almost 17 times more likely to be killed in a fire than an
adult living in a similar single-occupancy house. We believe that
these findings justify requiring landlords to obtain a licence
for all HMOs with three or more storeys.
As originally proposed in the Government's consultation
on HMO licensing,[9]
we also believe that the licensee of an HMO should be placed under
a general duty of care to ensure the health and safety of the
occupiers. This duty could be modelled along the lines of the
duty of care under health and safety legislation. It would not
be an onerous duty, but would be an important preventative measure,
particularly in ensuring standards in smaller HMOs in those areas
where the local authority chooses not to exercise its discretion
to require smaller HMOs to be licensed.
Shelter's key concern about HMO licensing is
that tenants are not made homeless as a result of landlords withdrawing
from the market or being refused a licence. Measures to regulate
landlords must take account of the risk that, in response, landlords
may choose to end a tenancy or stop letting altogether. At present
the Bill contains no measures to help tenants in this situation.
This should be remedied by requiring local authorities to have
robust policies in place for securing accommodation and providing
advice and assistance to tenants at risk of homelessness in these
circumstances.
We also have some specific concerns about the
practical consequences of the "no rent payable" provision
in Clause 67. In principle, if a property does not meet the standards
necessary for a licence to be granted, then the local authority
should take over its management under the terms of an interim
management order. If this happens, Clause 67 will not take effect
and rent will be payable by the tenant to the local authority.
In practice, however, local authorities may be slow to take action
under their new management orders powers. Potentially, this has
two consequences.
Firstly, it makes it more likely that unscrupulous
landlords will evict tenants so the property falls outside the
scope of the statutory licensing scheme, thus avoiding the risk
of having all rental income stopped. This underlines the need
for local authorities to have effective policies in place to ensure
that those who are displaced can access alternative accommodation.
Secondly, tenants who are ignorant of the requirement for the
property to be licensed and continue to pay rent and claim Housing
Benefit are likely to be subject to a subsequent decision by the
local authority to reclaim the over-paid Housing Benefit. They
will not, however, be in a position to reclaim the rent from the
landlord. It is therefore essential that consequential amendments
to regulations are brought forward, making it clear that any Housing
Benefit paid for properties that were subject to Clause 67 should
not be reclaimed by the local authority.
We hope that pre-legislative scrutiny will provide
an opportunity to resolve these outstanding issues, and to consult
with local authorities to ensure that HMO licensing can be implemented
as soon as possible after it has been passed by Parliament.
SELECTIVE LICENSING
OF PRIVATE
LANDLORDS (PARTS
3 & 4)
Shelter recognises the importance of addressing
the factors behind neighbourhood decline. We therefore support
the introduction of discretionary powers to allow local authorities
to introduce a licensing regime for private landlords in areas
of low demand and other areas where standards in the PRS need
to be raised. In particular, we welcome measures to ensure that
landlords in these areas are "fit and proper" persons,
so that those with unspent criminal records or who fail to meet
the test of management competence, for example as a result of
having been found guilty of harassing or unlawfully evicting tenants,
are excluded from holding a licence. We are, however, concerned
that the draft Bill contains unacceptably wide powers for local
authorities to prescribe conditions of licenses in respect of
both landlords and tenants.
As with licensing for HMOs, it will also be
important that tenants are not made homeless as a result of landlords
withdrawing from the market or being refused a licence, and that
they are not liable to repay overpayments of housing benefit resulting
from the landlords failure to obtain a licence. Robust policies
for securing accommodation for those who may be displaced and
further consequential amendments to the Housing Benefit regulations
are again important here. More broadly, we believe that all private
landlords should be required to meet minimum management standards
(see below).
MODERNISING THE
RIGHT TO
BUY (PART
6)
In the two decades since it was introduced,
around 1.5 million sitting tenants have exercised their Right
to Buy. Although, the majority of these tenants have benefited
from the scheme, it is also clear that, alongside the failure
to invest in new affordable housing, the Right to Buy has been
a major factor in the declining number of lettings becoming available
to those in housing need. In London, for example, the annual number
of lettings has fallen to an all-time low —around 35,000—a
third below the level of 1996-97. In our recent report, Time for
a change: Reforming the Right to buy[10],
we estimated that, if Right to Buy sales continue at their current
rate, a further 4,000 fewer lettings would be made in 2005-06
by local authorities in London and the South East than is the
case currently. This loss of lettings is simply unsustainable.
Shelter therefore welcomes the recent reduction
in the maximum Right to Buy discount in the 41 local authorities
specified in the Housing (Right to Buy) (Limits on Discount) (Amendment)
Order 2003. These areas were identified as experiencing severe
housing pressure as a result of having both high levels of homelessness
and high property values. We hope that the reduction in the maximum
discount will reduce the number of lettings lost in these areas,
and believe there is a very strong case to extend the reduced
discount to other local authorities experiencing high levels of
housing pressure. However, additional measures are needed to discourage
the activities of property companies abusing the Right to Buy
and to help retain lettings for those in housing need. We therefore
support the measures in the draft Bill as further steps towards
achieving these aims.
QUALIFICATION PERIOD
Shelter welcomes Clause 153, which extends the
qualification period to five years. As well as helping to retain
lettings for those in housing need, the longer qualifying period
would help ensure that the Right to Buy benefits those who have
been tenants for a number of years—one of the original intentions
of the scheme—rather than those who have only recently become
tenants.
DISCOUNT REPAYMENT
PERIOD
Shelter welcomes Clauses 154, 155 and 156, which
extend the discount repayment period and relate the discount repayable
to a proportion of the property's re-sale value, rather than the
amount of discount actually received. The longer period offers
leaseholders an incentive not to leave the communities they live
in, helping to ensure that another one of the key policy aims
of the Right to Buy—bringing greater stability to deprived
communities—is met. Recently published research by Heriot
Watt University[11]has
shown that a number of private companies are exploiting the Right
to Buy to build up property portfolios in areas of high demand.
Private companies are much less likely to want to get involved
in under-lease arrangements if the property cannot be formally
sold on to them for more than five years. This measure should
reduce the attraction of deferred resale deals, and therefore
help retain lettings for those in housing need.
ADDITIONAL MEASURES
The draft Housing Bill is the first major housing-related
legislation to be brought before Parliament since 1997. We hope
that pre-legislative scrutiny will provide an opportunity to add
other important measures to the Bill before it is formally presented
to Parliament.
"FIT AND
PROPER" LANDLORDS
The draft Bill introduces the concept of "fit
and proper" landlords in areas where selective licensing
is introduced (see above). The stated aims for selective licensing
are to ensure that landlords meet minimum management standards
and that those who do not meet these standards are excluded from
letting.[12]
The intention is to tackle the problems caused by irresponsible
landlords and anti-social behaviour where this is contributing
to low demand and neighbourhood decline.
By its very nature, selective licensing is only
designed to operate in a limited number of areas. However, neglectful
landlords are not confined to unstable neighbourhoods—they
are just as likely to be operating in high demand and relatively
cohesive areas. Although their activities may not be contributing
to low demand or obvious neighbourhood instability, they may be
causing localised problems and delivering a poor quality of service
to tenants. It is therefore inconsistent not to require landlords
operating in these areas to meet the same standards of management
competency as landlords in less stable areas.
Shelter believes that—as consumers—all
tenants should be entitled to a decent standard of service from
their landlord. This is especially important because, particularly
in high demand areas, the sector is often used to house vulnerable
tenants who have little choice or alternative housing options.
We therefore believe that the opportunity provided by this legislation
should also be taken to modernise the sector by ensuring that,
in line with the Government's objectives, all landlords are required
to meet minimum management standards.
We are conscious of the need not to over-regulate
the sector and accept that extending licensing to all landlords
may not be practical. We believe a national scheme based on a
statutorily approved code of management practice would strike
an effective balance between regulation and the need to ensure
that standards are met. Such a scheme would protect tenants and
the wider community, support and encourage good landlords and
improve the reputation of the sector. It would not be a burden
on the majority of landlords but it would ensure that basic management
competencies are met across the board.
Extending the "fit and proper" concept
to all landlords in this way was a key recommendation of the Commission
established by Shelter with the support of the Joseph Rowntree
Foundation.[13]
It is supported by a wide range of interest groups including a
number of bodies representing landlords and we hope that pre-legislative
scrutiny will provide an opportunity to consider expanding the
measures in the Bill along these lines.
TENANCY DEPOSIT
SCHEME
Research has shown that that 70% of the 2.2
million tenants in the private rented sector have paid their landlord
a rent deposit at the start of their tenancy. The average deposit
is around £510, and it is therefore estimated that landlords
currently hold a total of around £790 million in deposit
monies. This money is currently completely unregulated. Although
most tenancies end without dispute, around 20% of households say
that part or all of the deposit from their most recent tenancy
was unreasonably withheld. The only way for tenants to recover
their money if it has been unfairly withheld is to bring proceedings
in the county court. In response to these concerns, the Government
introduced a pilot Tenancy Deposit Scheme (TDS) in 2000, to establish
whether it was possible to tackle these problems through voluntary
regulation.
The pilot scheme has been extremely worthwhile
in developing a model that meets the needs of tenants, landlords
and their agents. It has explored and tested different means of
protecting deposit monies and developed an independent adjudication
service under the auspices of the Independent Housing Ombudsman
to deal with disputes, and has shown that a TDS can work in practice.
Unfortunately, however, because it was only voluntary, few private
landlords have participated in the scheme. This has also made
it impossible to demonstrate that the scheme can be self-financing.
Shelter has always maintained that statutory
regulation of deposits would be the most effective way of ensuring
that all deposit monies are dealt with equitably and fairly. This
approach is also supported by a wide range of sector representatives,
including the British Property Federation and the Association
of Residential Letting Agents. We therefore welcome the suggestion
in the recent consultation document, Tenancy Money: Probity and
Protection, that because of the poor take-up of the voluntary
scheme, legislation may now be required.[14]
Recent statements by Ministers indicate their
willingness to adopt a statutory approach. The period of consultation
on the Government's proposals ended on 28th February 2003. Subject
to the outcome of this consultation and pre-legislative scrutiny
on the draft Bill, this provides an ideal opportunity to draft
the necessary provisions in time for them to be included in the
full Bill when it is presented to Parliament. By signing Early
Day Motion 843, over 100 Members of Parliament have indicated
their support for the scheme's inclusion in the Bill.
HOUSEHOLD OVERCROWDING
Clauses 123-128 refine the existing legislation
on overcrowding in HMOs. Although it will be possible to assess
and tackle hazards resulting from overcrowding in other types
of accommodation under the new HHSRS, the hazard score will continue
to be used alongside the current statutory overcrowding standards
which date back to 1935. These standards are in urgent need of
modernisation. As Ministers have pointed out, our understanding
of the need for space and privacy has come a long way since then,
and yet the legislation remains unchanged. The effect on the health,
education and well-being of the half a million households estimated
to be overcrowded by the Survey of English Housing can be very
severe.
The risk of transmission of respiratory and
infectious diseases as well as mortality and death rates are highly
correlated with overcrowding. Longitudinal studies into the health
impacts of poor housing have shown that overcrowding alone in
early childhood can significantly increase the odds of developing
severe ill-health, including heart disease and bronchitis in later
life. It has also been linked to emotional problems that can cause
developmental delays and bed wetting among children, and can affect
children's educational attainment. Living in cramped conditions
can make it hard for children to read or do their homework, and
disrupted sleep patterns can mean they do not get the rest they
need, all of which means they can fall behind in school.
We therefore hope that Ministers will take the
opportunity afforded by the draft Bill to address the issue of
overcrowding not only through the new HHSRS, but by updating the
present statutory definition and strengthening the legislative
framework along the lines proposed in Andy Love MP's recent Housing
(Overcrowding) Bill.[15]
4 Shelter's Submission to the Spending Review 2002. Back
5
Private renting: A new settlement; the report of an independent
commission established by Shelter with the support of the Joseph
Rowntree Foundation; Shelter, (May 2002). Back
6
Barnes v Sheffield City Council, Court of Appeal 1995. Back
7
Fire risks in HMOs (DETR 1997). Back
8
Ibid. Back
9
Licensing Houses in Multiple Occupation-England, DETR (April
1999). Back
10
Time for a Change: Reforming the Right to Buy , Shelter (Sept
2002). Back
11
Exploitation of the Right to Buy Scheme by Companies by Professor
Colin Jones (Heriot Watt University) in March 2003. Back
12
Selective licensing of private landlords: A consultation paper,
DTLR (2001). Back
13
Private renting: a new settlement, Shelter, (May 2002). Back
14
Shelter has produced a detailed response to Tenancy Monies: Probity
and Protection. Back
15
Shelter has produced a detailed briefing on the Housing. Back
| 
