Memorandum by the Law Society (DHB 40)
The Law Society broadly welcomes the draft Housing
Bill, although we do have reservations about important aspects—especially
concerning information packs in Part V of the Bill. Our main concerns
on the draft bill are as follows:
Statutory Tenancy Deposit Scheme
We believe that the Government should use the
opportunity presented by the draft Housing Bill to introduce a
statutory tenancy deposit scheme.
The proper management of deposits is a significant
issue. A statutory tenancy deposit scheme could hold deposits
on behalf of landlords and resolve any disputes between landlords
and tenants about deposits. The cost of the dispute resolution
mechanism could be funded from the interest earned on the deposits
held. If disputes about deposits are not resolved satisfactorily,
tenants may not have the necessary funds to move onto another
property in the private rented sector. This affects people's mobility
and puts them at a higher risk of homelessness. Alternatively
tenants may be forced to move into poor quality accommodation.
Research has shown that those tenants who can provide a deposit
secure better quality housing.[20]
The introduction of an independent tenancy deposit
scheme would make the private rented sector more attractive, benefiting
both landlords and tenants. This complements one of the main aims
of the draft Housing Bill, namely to address the poor management
of the private rented sector through the use of licensing schemes.
Licensing proposals (Parts 2 and 3)
The Law Society welcomes the proposals to introduce
a mandatory, national licensing scheme for houses in multiple
occupation ("HMOs") and to give local authorities powers
to licence all landlords in areas of low housing demand. It is
well documented that HMOs tend to be unsafe. Research carried
out for the DETR found that in bedsit-type accommodation occupants
were six times more likely to die as a result of fire than adults
in an ordinary house[21].
We also welcome provision in the draft bill
allowing the relevant Minister to specify other criteria for imposing
a licensing requirement in certain selected areas, such as those
that suffer from poor management of the private rented sector.
We hope this provision can be used to tackle poor standards of
housing in all areas regardless of the level of housing demand.
Anecdotal reports from our members suggest that poor conditions
are a problem in the private rented sector both in areas of high
and low housing demand.
We have particular concern in relation to provisions
in the proposed licensing schemes allowing for non-payment of
rent for the period during which a property has not been licensed
(clauses 67(2) and 88 (2)). In such a situation, housing benefit
will not be payable to a tenant. Most tenants in the private rented
sector and HMOs will have an assured shorthold tenancy and landlords
will be able to evict them at the end of the term regardless of
the reasons for non-payment of rent. Unscrupulous landlords will
perhaps disregard the term of the tenancy and illegally evict
tenants who cannot pay the rent. Tenants may then face additional
obstacles when making a homelessness application of convincing
the local authority that they are not intentionally homeless.
Tenants facing this situation will require legal
advice. We support the suggestion of Citizens Advice that local
authorities, when establishing a licensing scheme, should consider
the advice needs of tenants and how they will meet those needs.
We would also suggest that the Homelessness Code of Guidance for
Local Authorities be amended to provide that tenants in un-licensed
properties are not considered intentionally homeless on account
of eviction due to non payment of rent.
Home Information Packs (Part 5)
The Law Society has always welcomed initiatives
that genuinely assist the consumer in the home buying and selling
process. The Society itself developed the Transaction scheme,
which helped to speed up the house transfer system by ensuring
that relevant information was provided promptly to prospective
purchasers. The Society thus supports the aims and objectives
of the proposed reforms. However, some of the proposals set out
in the draft bill would not, in our view, assist the functioning
of the market and might well impair it.
We are particularly concerned by the plan to
include a home condition report in the proposed home information
packs. This report, which will essentially be a mini-survey, will
cost several hundreds of pounds, which each seller will have to
find up-front. Yet, it is unlikely that buyers will feel it safe
to rely on them, especially in the absence of comprehensive arrangements
to ensure that those producing the reports are insured against
claims for negligence.
We also fail to see the justification for making
the provision of a home information pack mandatory. If—as
the Government asserts—the packs will be popular with buyers,
then sellers will have every incentive to provide them as a valuable
marketing tool. But, if they are not wanted, what is the point
of the Government making them mandatory? We accept that it is
essential for sellers to be required to make it clear whether
or not the home information pack is to be provided, but not that
the Government should legislate to requite them to be provided.
For further information, please contact:
Stella Groves, Policy Adviser—Housing,
Tel: 0207 320 5693
E-mail: stella.groves@lawsociety.org.uk
Neil Gower, Policy Adviser—Conveyancing
& land Law, Tel: 0207 320 5689
E-mail: neil.gower@lawsociety.org.uk
20 Helping people on low income secure private rented
accomodation, Housing Research 193, September 1996, Joseph Rowntree
Foundation Back
21
Fire risk in House in Multiple Ocupation Research Report, 1998,
HMSO, London Back
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