Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

Memorandum by the National Rent Deposit Forum (NRDF) (DHB 37)

Representing rent deposit schemes

  The National Rent Deposit Forum (NRDF) is a national charity set up to represent and support local rent deposit schemes and encourage new ones to develop. The NRDF has over 200 member-organisations throughout the UK (176 in England and 18 in Wales).

  Rent deposit schemes house homeless and vulnerable people in private rented properties and can offer the support necessary for clients to sustain tenancies. These projects act as an intermediary between tenant and landlord, offering a legal guarantee, or cash, to pay for rent arrears, theft or damage during a tenancy. Over one-fifth of NRDF members also offer rent in advance, usually until housing benefit starts.

  A forthcoming NRDF statistical report will show that rent deposit schemes house an estimated 10,000 people a year, using some 4,500 landlords. We estimate that NRDF members held over £2.75 million for bonds, cash deposits and rent in advance in 2001-02.

  This response has been produced by the NRDF and a selection of our members.

Improving the private rented sector

  The NRDF is grateful to contribute to the consultation on the draft Housing Bill and welcomes many of the improvements to property and management standards in the private rented sector. We feel further regulation is necessary in order to protect the health and safety of residents and to help improve the sector.

  We strongly support licensing of HMOs and other private rented properties. But we would go further than the current proposals and back the licensing of all private rented properties. If this were a step to far for the government, supporting the licensing of all HMOs would at least bring all of these properties under the same conditions.

  It is good to see that somebody must be fit and proper to manage a property, but that he or she must also protect the health and safety of all residents, not just care for the landlord's purse.

  We agree that there needs to be tough penalties for breaches of licenses. But if somebody is a persistent offender and continues to put people's lives at risk, he or she must be prosecuted and looked away.

  The NRDF also welcomes the introduction of the Housing Health & Safety Rating System, which brings a risk assessment approach to calculating housing standards.

  This bill is a chance for the government to make a major impact on private rented housing. Alongside the proposals in the current bill, we urge the government to include a national statutory custodial scheme to protect tenants' deposits, as we stated in our response to Tenancy Money. Just as the proposals in the draft bill are aimed at improving property and management standards, a custodial bond scheme would specifically improve conditions for the missing link: tenants.

  In order for local authorities to enforce all these changes, they must have adequate resources. Without them, the system is likely to fail.

Licensing HMOs

  We strongly support the licensing of all HMOs, not just those considered "high risk". Using the figures attached to the draft bill (that 29% of deaths would be saved), is the government prepared to risk the lives of four people instead of extending licensing to all HMOs?

  The licensing of all HMOs—then all private rented properties—could be staggered, with high-risk properties first, followed by other HMOs and then other private rented housing. In this case, landlords would not feel that they are being hit on all properties at once.

  Also, should local authorities be encouraged to concentrate more on selective licensing in areas of high demand (rather than low demand), as this is where landlords are more likely to get away with letting unsafe / sub-standard properties?

  The introduction of HMO licensing is likely to reduce the number of rental properties in the short-term, but tenants having access to safer and better-quality properties will be the long-term gain.

  But we fear that further housing requirements will force unscrupulous landlords out of the system, renting to those willing to pay cash for their rent. This could lead to a further reduction in the number of properties available, worsening the choice for vulnerable tenants. Our members already find many landlords unwilling to let properties to tenants receiving housing benefit. If these changes reduce the number of properties further, and provide no long-term gain, many vulnerable people will be worse off.

It is great to see that to gain a license for a property in a low demand area, the property must meet certain conditions (gas, electrical and furniture conditions; proof of smoke alarms; demanding references from tenants; and have terms of occupation). These conditions should also apply to licensing HMOs.

  One of the problems with the introduction of licensing in Scotland was the lack of real measures to enforce the changes, plus no incentives offered to encourage the take-up by landlords. How will the government overcome these problems?

  Is it right that local authorities and registered social landlords are exempt from the HMO definition?

Landlords must be fit and proper

  The NRDF supports the requirement for license holders and property managers to be fit and proper. But without any national guidance, who will decide which landlords or managers are good and which are bad?

  If a landlord is known to be below standard and a license is not granted, an interim management order should be imposed on his or her other properties. Landlords can be refused a license for high-risk HMOs because they are not considered fit, but then continue to let two-storey HMOs. Known bad landlords should be forced to license all their rental properties.


  There must be provisions for landlords to be forced to tell local authorities when they sell a property so that the new landlord can be checked and a new license issued.

  Reference to the property being licensed must be noted on the tenancy agreement with a number that can be checked with the local authority.

  Five-year licenses seem too long. Annual checks should be made to ensure standards are maintained.

  Would it be right for the license fee to vary according to area, to reflect property values and rental income? But perhaps the government should consider a maximum to protect landlords.

Protecting tenants

  Many tenants in the private rented sector are vulnerable, especially those living in HMOs and poorer-quality housing. These people worry that complaining against poor standards will result in them loosing their unprotected tenancies. This would make the tenants more vulnerable. So there must be strong safeguards to protect tenants in need.

  Rather than expecting landlords to manage the behaviour of their tenants, there should be enough support in place for both landlords and tenants in order for problems to be addressed and to reduce anti-social behaviour. The Supporting People programme should help to finance such services, but many rent deposit schemes have found it near impossible to enter the programme. In addition, the programme will only pay for support during a tenancy, not support before a tenancy begins. The government should address this issue.

  We are concerned that landlords will continue to charge rent, or a similar fee, if they have unlicensed properties that should be licensed. Although the bill states that no rent will be charged, who will protect the tenants where a landlord still forces payment?


  In many areas, the number of staff in environmental health departments has reduced due to cutbacks. It would take more than the suggested license fee to cover the full running costs of a license scheme. In order for this to work, more resources must be found. This would also enable local authorities to be more proactive in enforcing the changes, rather than relying on complaints from tenants.

Tenancy deposits

  Just including the power to introduce a mandatory scheme without defining it would be a start.

  The NRDF responded to the consultation paper, Tenancy Money, supporting options 2.1, 6 and 7. A statutory custodial scheme would protect both tenant and landlord. Alongside this is the need to strengthen inventories and regulate non-deposit fees. If letting agents had to belong to recognised trade bodies, which had adequate cover for tenants" monies, tenants would also be protected.

  For these arrangements to work, a national, independent adjudication scheme would be necessary. This would enable decisions to be uniform, in place of any two-tier system with different adjudicators.

  There are many more tenants than landlords. Most households have more than one resident, and landlords, on average, own more than one property. On average, each landlord used by a rent deposit scheme houses more than two tenants. This is a reason to opt for a scheme that favours the majority—tenants—than the current situation, which favours the few. We know that tenants support a statutory custodial scheme, rather than voluntary arrangements, which landlords prefer.

  The statutory licensing of all rented properties, in conjunction with a custodial scheme, would reinforce the private rented sector. Scrupulous landlords should not fear a custodial scheme or statutory licensing. Unscrupulous landlords should rightly fear a statutory scheme that forces them to provide safe and satisfactory properties.

Specific questions to the ODPM

  Part 1) 5 (4)

  What will happen to the tenants if an improvement notice is served and the responsible person has to carry out work?

  Part 2) 67 (2)

  If no rent is due on unlicensed HMOs, what will be done to safeguard tenants where a landlord pursues payment?

  Part 2) 69 (5) & Part 3) 90 (5)

  Has the Minister decided how much the licensing fees can be? Different levels across Scotland have caused confusion.

  Part 2) 70 (2)

  Why are the license conditions at 86 (4)—that each property meets gas, electrical and furniture conditions; proof of smoke alarms; demanding references from tenants; and the terms of occupation—not included for HMO licensing?

  Part 2) 71 (3) & (4)

  When will the standards on properties be published?

  Part 2) 72 (5)(a) & Part 3) 92 (5)(a)

  What will constitute a "sufficient level of competence" for property managers?

  Part 2) 78 (1)

  When will the Minister issue a code of practice?

  Part 7) 167 (6)

  Where is "prescribed relationship" described? How will this affect friends, work colleagues or students?

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