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

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


  Neil Gower, Policy Adviser—Conveyancing & land Law, Tel: 0207 320 5689


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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