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.
Licenses
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?
Resources
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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