Memorandum by Brent Private Tenants' Rights
Group (DHB 21)
INTRODUCTION
For the last 15 years, Brent Private Tenants'
Rights Group has been bringing private tenants together to voice
their concerns, and working to improve their living conditions.
We run a specialist housing advice service as well as a membership
organisation providing tenants with the latest information about
their rights, (or the lack of them).
The constituency of Brent East is reckoned to
have the highest number of houses in multiple occupation in the
country, and one in twenty of the unfit HMOs in England and Wales
is in Brent.
We were the first organisation to call for licensing
to protect private tenants. We believe that it has the potential
to transform the private rented sector (PRS) by raising management
standards. If this is achieved, the PRS could take its place in
a future that offers genuine housing choice. It could become a
viable alternative option to social housing in areas like Brent
and other London boroughs where we expect to face an acute shortage
of social housing for decades to come.
For this reason, it is essential to ensure that
the legislation is drafted in a manner that will enable it to
fulfil this vital role.
THE CONTEXT
When we first began discussions with Ministers,
shadow ministers and others about these ideas, it was in the days
before the 1988 Act had had any serious impact on the PRS. The
vast majority of vulnerable tenants who most needed protection
and who found themselves in the worst parts of the sector with
the least competent landlords DID AT LEAST HAVE SECURITY OF TENURE,
and could therefore exercise their rights to improvements. These
tenants were either (mainly elderly) tenants regulated by the
Rent Acts, or they were newer tenants who had security of tenure
by default, because their landlords had not provided the correct
paperwork to create assured shorthold tenancies.
By the mid-nineties, most landlords had got
the hang of how to create shortholds, and the least competent
of all were assisted by the 1996 Housing Act which abolished the
need to actively create shortholds, by making them the default
tenancy for all new lettings. Now, of course, the vast majority
of all tenants have no security beyond the first six months.
Deregulation of the sector had the desired effect
of encouraging investment in the PRS from some quarters such as
"Buy to Rent", though far less than was envisaged. The
downside is that, to all intents and purposes, shorthold tenants
have no housing rights. If a shorthold tenant dares to propose
that the landlord repairs their leaking roof, installs smoke alarms
or gets the gas boiler serviced, they know that the landlord can,
and frequently does, respond by giving them two months' notice
to leave, against which there is no defence. Housing Advisers
are constantly having to explain tenants' rights while warning
tenants of the possible consequences of implementing those rights.
Similarly, enforcement action by the local authority
is frequently a trigger for landlords to evict their tenants,
as an easier option than complying with the health and safety
measures the Council requires.
THE CHALLENGE
We understand the Government's commitment not
to contemplate the re-introduction of security of tenure. This
places an onus on us all to find an alternative means of protecting
tenants and preventing landlord exploitation. We believe that
this entails a switch from the traditional focus on the physical
standards in accommodation, towards an emphasis on professional
management. Since tenants have no redress against landlords who
wish to evict them for merely attempting to exercise their basic
housing rights, we have to ensure that those landlords either
change their approach, or are replaced by those who are motivated
by the wish to obtain a fair return from running a responsible
business. With competent management, improved physical standards
will follow.
A Licensing system therefore faces the challenge
of being robust in its requirements to raise management standards,
without the risk that licensing itself will result in wholesale
homelessness created by landlords as a means of avoiding compliance.
The legislation as drafted does not meet that
challenge for the reasons we summarise below.
1. Definition of HMO
The definition of "house in multiple occupation"
as set out in s.164 of the draft bill appears to restrict HMOs
only to those where there are shared amenities. We hope that this
is a drafting omission, since the ODPM's Fact Sheet 3, which accompanies
the draft housing bill, also includes "a house that comprises
of self-contained flats that has not been converted at least to
the standards by the 1991 Building Regulation and less than two
thirds of the flats are held on long leases or by freeholders."
It is essential that the definition is set as
widely as possible, to encompass all types of HMOs falling within
the 1985 Housing Act definition (s.345), that is, "a house
which is occupied by persons who do not form a single household
. . . [and is a house which] . . . was originally constructed
or subsequently adapted for occupation by a single household."
The importance of widening the definition is
to ensure that local authorities needing to license all types
of HMO as a part of their strategic approach to the area are able
to do so. This will be necessary is areas such as Brent, where
the high demand for all types of PRS accommodation, leads to low
management standards across the sector. Unless the scheme can
be enforced in all, or almost all types of lettings, the response
of the worst landlords will be one of the following.
(i) Landlords will evict most of their tenants,
as they do now, for example, when the Council serves an enforcement
notice requiring an additional kitchen, or fire doors; wait until
the Council has dropped the enforcement process and turned its
attention elsewhere, and then re-let as before.
(ii) Landlords will evict their tenants,
and adapt the property to a category of HMO which falls outside
the licensing regime. This will inevitably create fewer lettings
at higher rents, while retaining the same irresponsible management.
(iii) If the definition in s.164 is not
a drafting omission or a misunderstanding on our part, landlords
will simply be able to close shared kitchens, where there happens
to be, say, one household on each floor in rooms leading off the
common parts, with a bathroom and wc on each floor; shove a baby
belling in each room (increasing the fire risks), and the property
will not be subject to licensing.
2. Defence against Licensing Requirements
Almost by way of an encouragement to landlords
to evict tenants, s.66 (2)(b) provides a defence for a landlord
against the requirement to be licensed, if "he is taking
all reasonable steps to try to ensure that the house ceased to
be a house in multiple occupation to which this Part applies."
Again this serves only to undermine the local authority's strategic
role. In Brent, for example, there is such an acute need for (relatively)
affordable accommodation in the PRS that the borough's Unitary
Development Plan calls for the retention of houses comprising
bedsits. Appeals against the refusal of planning applications
to convert from this type of accommodation must surely succeed
with the statutory support proposed by s.66.
3. No Rent PayableIn the event that landlords
need further incentives to evict their tenants, s.67(2) proposes
that "for the period during which the house in multiple occupation
is not licensed -
(a) no rent or licence fee is payable by
a person who occupies the house under a tenancy or licence; and
(b) no other compensation is payable for
use or occupation of the house."
This will, of course, have no effect on those
tenants who do not claim housing benefit. Shorthold tenants will
have no more power to refuse to pay the rent than they have power
to exercise any other housing right. However, for housing benefit
claimants, the situation is tragic, because their benefit will
cease, and they will lose their homes at the earliest opportunity.
Many of these tenants will be in priority need, and will have
no option but to present as homeless to the local authority. The
effect of this section of the bill alone, will be sufficient,
in areas such as Brent, to completely undermine the considerable
efforts being made to comply with the ODPM's directive to cease
the use of B&Bs for homeless families, other than in emergencies.
There will be a similarly adverse impact on the attempt to eradicate
rough sleeping in metropolitan areas.
4. Prohibition Orders
Further powers to evict appear to stem from
the issue of Prohibition Orders (s.47). These appear to combine
the existing Closing Orders with local authority powers to require
a reduction in the number of occupiers. At present Closing Orders
trigger a rehousing duty by the local authority towards those
who lose their homes as a result, and we trust that such a duty
will accompany the use of Prohibition Orders. Under current legislation,
the reduction in the number of occupiers is normally achieved
through "natural wastage", that is tenancies that end
naturally may not be replaced until the required reduction is
achieved. It would appear from combining the two, that landlords
have a right to immediate possession in both these situations.
We must therefore hope, from the tenants' point of view, that
the homelessness duty covers both situations, while recognising
the additional pressures this will place on the local authority's
ability to reduce homelessness.
5. Fit and Proper Status
Our final reservation concerns the test of a
"fit and proper" person to be a licence holder or manager.
On this issue we echo concerns that have been expressed in the
past by landlord organisations at the responsible end of the sector.
The test is, like existing legislation, wholly negative, relying
on what a person must NOT be (ie convicted of various offences).
We believe that there could be a Human Rights issue here, since
it allows for refusal of fit and proper status where convictions
are spent. In any event a more positive approach would be desirable
in encouraging responsible landlords to replace those unwilling
to comply with licensing requirements.
POSITIVE CHANGES
We must accept that, given that we are not creating
a private rented sector from scratch, there cannot be a perfect
way of bringing about the transition from irresponsible to responsible
management of the sector without any negative results. Nevertheless,
we believe that our proposed changes will serve to minimise the
adverse effects while maximising the effectiveness of the licensing
regime.
1. Licensing must be Comprehensive
As suggested above, licensing must be available
for every type of house in multiple occupation. We would go so
far as to ask the Select Committee to give serious consideration
to an extension of licensing to cover all forms of rented accommodation
in the PRS. We would like to see licensing mandatory for all letting
types. At the very least, it must be a strategic option available
to local authorities who wish to operate a broadly defined licensing
scheme. This will remove the incentives that are otherwise available
to landlords to switch to lettings falling outside the scheme.
2. Drop proposal that no Rent is Payable
in unlicensed HMOs
This proposal will not provide any incentive
to landlords to comply with licensing requirements; it will merely
serve to penalise housing benefit claimants who will lose their
homes as a result.
3. Re-define "Fit and Proper" for
Licensing Purposes
In order to switch the focus away from bricks
and mortar in favour of professional management, more thought
should be given to the definition of a fit and proper person to
manage tenants' homes.
We are currently working with Brent Council,
the Independent Housing Ombudsman and local Housing Associations
to devise a scheme whereby all fit and proper persons (in this
case relating to Brent's existing HMO Registration Scheme) must
provide evidence of having passed a test in basic housing management,
which will normally require them to undertake a short training
course (max. 12 hours). Landlords have the option, of course,
to undertake the training themselves, or to employ a fit and proper
person as their agent (which could be a Housing Association).
We are also considering membership of the Independent
Housing Ombudsman as the criterion for being deemed to be "fit
and proper". This, in turn, could provide access to a range
of support services to landlords, as well as a fast and cost effective
means of dispute resolution. It would also overcome the marked
omission from the draft bill of any protection for tenants' deposits,
since IHO membership could automatically include membership of
the existing (pilot) national Tenancy Deposit Scheme administered
by the IHO. The Tenancy Deposit Scheme could then become a permanent
part of the service. This more positive approach could be presented
in a way which would be welcomed by the responsible parts of the
PRS. Hopefully, responsible landlords and potential new investors
would thus be encouraged to replace those landlords who leave
the sector, either because they cannot, or do not choose, to take
on the responsibilities of a fit and proper manager.
We therefore suggest that s.72(2) of the draft
bill which lists evidence the local housing authority should consider,
should be replaced with a power for the Secretary of State to
introduce criteria for what constitutes a fit and proper person.
This would allow for secondary legislation to reflect good practice
in this area, perhaps after using Brent's initiative as a pilot
for Licensing.
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