House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Eighth Report

4 PRIVATE RENTING

Role of the private rented sector: encouraging mobility and choice

145. The private rented sector, which is currently home to some 2.6 million households,[236] plays a "valued and vital role" in a flexible housing market.[237]A thriving private rented sector is vital to the wellbeing of both the economy and the housing market because it is highly responsive to local fluctuations in supply and demand and it is relatively easy to access, thus facilitating labour and population mobility.[238] Not-for-profit organisations as well as the Government and the private sector itself have recognised the importance of the private rented sector's role.[239]

146. The private rented sector provides homes, often as the tenure of choice, for a large proportion of people who are economically and geographically mobile: higher and further education students, migrant workers and young professionals—people whose current lifestyles or circumstances do not suit homeownership.[240] The Residential Landlords Association drew attention to the significant proportions of young, single people who rent by choice, of older people who move into private renting, perhaps realising equity from a previously owned home or seeking to avoid the burden of maintenance, and of those in the wake of divorce or other relationship breakdown.[241] The sector also plays an important role in providing homes, supported by housing benefit, for households who find themselves homeless and for other low-income households who are unable to access the social rented sector but who cannot afford to buy their own home.

147. A vibrant private rented sector has another advantageous outcome in allowing some groups of people to live in a better area and access a better quality of accommodation than through ownership.[242]The Northern Housing Consortium drew attention to evidence that in 2005 "61 per cent of 18-34 year old tenants believed that renting enabled them to live in a better area than if they bought a home and enabled them to access better quality accommodation."[243]

148. However, the sector caters overwhelmingly for short-term needs. 69 per cent of households who rent privately have occupied the home for less than three years. By contrast, in the social rented sector only 23 per cent of households have lived in their home for less than three years.[244]As Lord Best told us, "few people are expecting and hoping that their long-term future lies in the private rented sector."[245] To an extent this reflects the nature of those who use the sector. It may also be true, however, that the short-term nature of stays in the private rented sector is a product of its main form of tenure, the Assured Shorthold Tenancy (AST).

149. The minimum length of stay under an AST is six months; a typical tenancy in the private sector is between 15 and 18 months.[246] Assured shorthold tenancies have benefits for the individual, in flexibility, and for the economy, in facilitating labour market mobility. But they militate against the creation of sustainable communities because the lack of security not only enables but encourages transience. A household will be less likely to consider staying within an area if the potential of a quick eviction hangs over it. In contrast, the security offered by social tenancies is highly valued for the certainty it brings to tenants and the benefits to the stability of a community.

150. The state of the housing market is such that we consider that there is a need to develop incentives for private sector landlords to offer longer tenancies to their customers. Referring to security of tenure, the Department once again extolled the virtues of home ownership, arguing that "home ownership offers a security of tenure which can be important for families with children."[247] Increasing numbers of families with children are able neither to afford the option of ownership, nor, because they earn enough to rent privately, to obtain a social tenancy. Not only families with children, but also other forms of household, are turning for a variety of reasons to the private rented sector for their accommodation needs. Not all are looking for the flexibility of an assured shorthold tenancy.

151. The Government needs to recognise the benefits to both individuals and communities of offering more variety in the length of tenancies, and address the need for households in the private as well as the social rented sector to have stable homes provided through secure tenures. We recommend that the Government urgently undertake further work on developing secure tenures for the private sector. It should base this work on that already done by the Law Commission, which we consider below.

LAW COMMISSION'S RECOMMENDATIONS

152. The Law Commission has undertaken an extensive review of the laws governing social and private tenants.[248] The Law Commission advocates "landlord-neutrality", under which housing associations, local authorities and private investors would be able to develop new housing on equal terms.

153. The Commission also recommends a written statement of mutual rights and obligations between the landlord and tenant instead of the range of tenancy agreements.[249] The Law Commission's review "Renting Homes" recommended the replacement of the current tenancy agreements with two contracts: a secure contract giving substantial security of tenure protected by statute; and a standard contract. The Commission modelled the standard contract on the present AST, but recommended that it should not be subject to the rule that stops a court ordering possession before the end of the first six months of an agreed assured shorthold tenancy.

154. The Government has yet to respond to the Law Commission's proposals. During our first oral evidence session we were told that the Government was taking "more fundamental look at social housing as part of the John Hills review" and would respond in 2008.[250] Since then the Government has commissioned another review related to social-housing, the Cave Review, which reported in June 2007, and it has now commissioned a review of the private sector. The day after announcing a review of the private rented sector, during debate in the Housing and Regeneration Bill Committee, the Housing Minister stated: "the Housing Act 2004 included a series of measures on HMOs and other matters in the private rented sector. It is right to review the workings and implementation of those measures and to have a more wide-ranging review of the private rented sector".[251]

155. We are disappointed by the length of time it has taken CLG to address the findings of the Law Commission, particularly with regard to changes to the private rented sector. While the review of the private rented sector will be useful, it should not be used as an excuse for stalling further work on tenancy reform.

156. The Law Commission's proposals are broadly supported by the private sector—the British Property Federation[252] and the National Landlords Association,[253] for example—and the potential for longer tenancies is also supported by the British Property Federation.[254] Adrian Turner from the Association of Residential Letting Agents (ARLA) told us:

255

157. If the private sector wants its tenants to feel and behave like "consumers",[256]it needs to show how highly it values them by offering more choice and certainty. The law as it stands, however, restricts their ability to do so. Assured tenancies, which account for 15 per cent of all private tenancies,[257] offer more security than ASTs; but landlords are deterred from offering this type of tenancy because the means of repossession is difficult.[258] There is a gap in the market for a form of tenancy which is less rigid than the assured tenancy, but more secure than the AST.

158. We are attracted to the Law Commission's proposal for tenancies based on mutual rights and obligations, which would offer scope for longer-term tenancies in the private sector. We recommend that the Government undertake further work on tenancy reform, building on the Law Commission's proposals, without further delay.

Growth of private renting and the buy-to-let market

159. The graph below shows the upward trend in private renting since deregulation in 1989, reversing the previous downward trend. The most significant recent change has been the injection of buy-to-let properties, rapidly increasing overall stock since 2001.

Figure 9—Private rented dwelling stock in England 1976-2006

Source: CLG (live table)

160. The rapid expansion of the private rented sector through buy-to-let mortgages was referred to by many witnesses, including CLG.[259] In 2002 there were some 275,500 buy-to-let mortgages. By 2004 this had nearly doubled to 500,000,[260] and the Council for Mortgage Lenders estimated that there were 850,000 outstanding buy-to-let mortgages in 2006.[261] However, the use of mortgage figures must be treated with caution. The Paragon Group told us that "as much as 40 per cent of BTL lending activity is remortgaging, as established landlords move from expensive commercial mortgages".[262]

161. The buy-to-let phenomenon has increased the role of individual investors while the share of rented housing owned by institutional investors has continued to decline.[263] Lower rates of return from the stock market and from personal pensions have encouraged individual investors,[264] who are better able to increase returns by managing their own properties.[265] Buy-to-let investors have purchased a broad range of new and existing property.[266] One fact emerging from our inquiry which surprised us was that around two-thirds of the new-build properties in London in 2005 were purchased by investors rather than owner-occupiers.[267]

162. We have not been presented with compelling evidence to demonstrate that the buy-to-let market has priced out owner-occupiers, even first-time buyers. Despite considerable concern about the possible effect of buy-to-let and the recent publication of a research paper by the National Housing and Planning Advice Unit (NHPAU),[268] we find that this issue is not yet well understood, even though it may be very significant. The NHPAU's research concluded that buy-to-let investments have not been solely responsible for the significant growth in house prices, but confirmed that they have played a part, estimating that in 2007 such investments added up to seven percent to the average price of a home.[269] There is a limited amount of other evidence on the effect of buy-to-let. CLG told us that buy-to-let investors are more likely to purchase newly built properties;[270] some of this investment is made "off-plan", decreasing the ability of other buyers to compete. The Northern Housing Consortium has undertaken a number of case studies on buy-to-let and concluded that because properties are being bought towards the lower end of the market (terraced houses and flats), first-time buyers and local people are feeling priced out of the market.[271]

163. The NHPAU's estimate of the effect of buy-to-let on house prices may appear to be small, but can represent a significant amount for first-time buyers. Furthermore, it may be an underestimate. The NHPAU's analysis did not include cash investments made by individuals or institutions (i.e. purchases made without a mortgage), and it is likely that these investments will also have affected house prices. The research note also highlights the need for further investigation into the localised effects of buy-to-let investment, which may be much more substantial than the "headline" figure in certain areas or sectors of the market.

164. The increase in the stock of private rented accommodation through buy-to-let investment has benefited the sector. However, this investment has had a small but nonetheless significant upward effect on house prices; and appears to be concentrated within markets in which first time buyers tend to compete. A better understanding of its effects will greatly assist the development of housing strategy and policy in the private rented sector. We recommend that CLG commission further research into the impact of buy-to-let on local housing markets, particularly where there has been a concentration of activity.

165. It is important to consider the effects of buy-to-let and other investment in planning for mixed communities. The buy-to-let sector has, arguably, provided investment and contributed to more homes being built than would otherwise have been the case, particularly in inner-city areas. But the effect of buy-to-let investors purchasing newly-built homes has become of sufficient concern to English Partnerships that it is now attempting to restrict sales to investors on the grounds that a large proportion of private rented accommodation in an area will militate against the creation of a mixed community. The Housing Corporation, similarly, highlighted its concern about the impact of buy-to-let on developments which were supposed to promote more mixed communities, particularly when lettings are made to local authorities for temporary accommodation.[272] Similar concerns were also expressed by the Borough of Barking and Dagenham.[273]We saw for ourselves the effects of the buy-to-let sector in inhibiting the aim of the creation of genuinely mixed-income communities during our visit to Manchester.

166. We recognise that the investment made through buy-to-let mortgages has helped to increase supply, but Government policy must reflect the fact that buy-to-let and other investment activity does not always benefit the aims of mixed communities. Following on from the experience of English Partnerships, we recommend that the Homes and Communities Agency consider how the use of its own resources, and those of other public sector bodies, can be used to encourage private investment to accord more closely with the aims of mixed communities.

BUY-TO-LEAVE

167. Another issue emerging during the inquiry was the significance, in some areas, of the incidence of homes left empty to earn money simply through capital appreciation. Our concern about this issue arose from several submissions including the Department's own memorandum;[274]it heightened when Lord Best told us about how 20-25 per cent of new apartments in Salford are being left empty.[275] The then Housing Minister, describing this phenomenon as "buy-to-leave", told us of her concern that, in Leeds, vacancy levels of new city centre apartments are 30 per cent, compared to an average of 4.3 per cent for the whole city.[276]Given the significant shortage of housing, the implications of buy-to-leave for the supply of rented housing and the Government's aims to improve affordability through new developments are potentially serious in those areas where it is happening.

168. Representatives from the private rented sector were keen to distance themselves from the activity of buy-to-leave and property investment clubs, arguing that such properties "very rarely come into the private rented sector".[277] Andy Leahy, Managing Director of the Bespoke Property Group, described the motives of such speculative investors thus:

278

169. The activity of investors in the housing market, be they buy-to-let or buy-to-leave, has been a significant driving force behind the supply of new housing. Research commissioned by the Greater London Authority indicates that, in London, two-thirds of newly built private homes go to investors, mostly to rent out, compared to only one third going to owner occupiers.[279]It is therefore crucial that it be properly understood.

170. When we questioned the Minister on this issue, she referred to the fact that local authorities have new powers to address the problem, Empty Dwelling Management Orders (EDMOs).[280] Responding to a later request for further information on buy-to-leave, the Department stated:

281

171. This is an inadequate response to a practice which could have very significant consequences for the supply not only of rented but of all new housing in some areas. With the mortgage market currently in an uncertain state, the buy-to-leave trend may well have run its course. But if the market picks up again, this in turn may only be for a temporary period. The Government needs to be more alert to this and other emerging trends in the housing market and to support any action that local authorities need to take.

172. Investment clubs and individuals treating property as investment portfolios have increased investment in housing; but the lack of interest in renting property in some areas is creating resentment, goes against aims to promote a sense of belonging to a neighbourhood, and restricts badly-needed supply. Notwithstanding the Minister's answer to us in oral evidence, the Government has more recently indicated that enforcement action—i.e. EDMOs—"should only be considered as a last resort when voluntary measures have proved unsuccessful," continuing "We are therefore keen to ensure that local authorities adopt empty dwelling management orders as part of a comprehensive strategy that encompasses a wider range of options."[282]Clearly EDMOs are only being used as a last resort: between the introduction of empty dwelling management orders in July 2006 and the end of 2007, only six interim empty dwelling management orders were passed by the relevant residential property tribunals.[283] What is not at all clear is what other options are open to local authorities. Local authorities are in the right position to recognise and act upon the problem; but they should not have to address the problem of buy-to-leave without the tools or support necessary to do so. We consider that buy-to-leave investors, who have been unwilling to let from the start, are unlikely to show great interest in doing so without the threat of some form of financial penalty. We are mindful that such penalties risk decreasing investment,[284] but with housing in such short supply there needs to be a mechanism in between unsuccessful persuasion and the forced control method of EDMOs.

173. We recommend that the Government investigate what fiscal measures would provide an incentive to property owners not to leave their properties empty for long periods. In the meantime, CLG must support local authorities in their efforts to prevent and reduce the incidence of buy-to-leave through investigating how they can better use their existing powers to bring empty dwellings into use, by providing additional funds to local authorities to target the worst-affected areas, and by ensuring that the information necessary to take action—on ownership, for example—is readily available.

PROSPECTS FOR FURTHER BUY-TO-LET INVESTMENT

174. A surprising feature of the private rental market is that, even with the very high pressures on all types of housing noted during this inquiry, private rents have been low and stable.[285]The increase in supply through buy-to-let has reduced inflationary pressures, making private renting more affordable compared to the ever-increasing cost of owner-occupation. One consequence is that comparatively low rents and competition between landlords have made private renting less attractive to larger investors. The British Property Federation (BPF) told us:

286

175. For small investors, buy-to-let can be seen as a second income or a way of supplementing pensions. But with low rental return, the earning potential of this investment is mainly a product of the growth in capital value. Giving evidence for the BPF, Mr Leahy commented that, unlike larger institutional investors, some individual investors might be content "with absolutely no initial yield and work on house price inflation as their driver" but added that as the cost of mortgages increases, further buy-to-let investment will be discouraged.[287]

176. The credit crunch may also have an effect on the size of the private rented sector. The lending market is unstable as a result of the credit crunch, even for housing associations: a point raised during debates at the committee stage of the Housing and Regeneration Bill.[288] It is likely that further enlargement of the buy-to-let sector will be discouraged as a result. Even if lending stabilises, the prospects for significant growth in the sector are uncertain. Since much investment in the private rented sector is driven by anticipated capital appreciation, confidence in the housing market will be a key factor, and that too is uncertain at present.

177. The prospect of further capital gains has been a significant motivator behind buy-to-let investment; if other forms of capital investment begin to outperform property, there may be a contraction in the private rented sector.[289] The effects of the "credit crunch" and confidence in the housing market generally may also slow growth. The Government needs to be alive to these trends and to their implications for housing policy.

Effect of students and migrants on the private rented sector

178. Referring to issues influencing private rented sector demand, CLG told us "difficulties in accessing social housing and the rising costs of entry to owner occupation remain important factors on the demand side".[290]We agree that these two issues are crucial to an understanding of the rented housing market; but other factors also have a significant effect on the market, and they are not fully understood by the Government.

179. The growth in student accommodation, and its concentration in certain areas of university towns, is one such factor. "Studentification" presents challenges to the creation of sustainable mixed communities; it has also in some places resulted in pre-existing communities suffering anti-social behaviour.[291] Many students live in Houses in Multiple Occupation (HMOs), which present their own particular set of challenges: we consider this further below.[292] Some housing associations and the private rented sector have responded to the rising number of young people going to university by investing in accommodation specially designed for students.[293]The Unite Group, for example, intends to build more than 10,000 new bed spaces between 2008 and 2010, with nearly 3,000 in London.[294]

180. Not all students rent from a traditional private landlord. Many are fortunate to be able to "rent" from parents. Figures quoted by the National HMO Lobby suggest that around 83,000 homes were bought on behalf of students in 2005, 26 per cent more than in 2000, and this figure could grow to as much as 100,000 by the year 2010.[295] There is a knock-on effect from the purchase of homes by parents for their student children. Figures for the subsequent sale of such homes are not readily available, but given that there is a regular churn of students and the buy-to-let market has had a corresponding growth, it is possible that a significant proportion of student-parent homes are retained as investments after the children have finished with their studies, adding to the overall increase in private rented stock.

181. Another source of growth in the private rented sector is through migration, particularly from eastern European countries. Migrants from the new European Union countries are not automatically eligible for social housing or housing benefit: for example, A8 nationals must be registered and in work for a year before potentially becoming eligible for housing assistance. According to the Paragon Group, migration could increase the private rented sector by 55,000 homes a year.[296] As we have seen during our inquiry on community cohesion and migration, this trend is also leading to increases in shared housing, with the neighbourhood problems which that brings, and in overcrowding. Very little research has been undertaken on the needs, the type of property and location used to house the migrant populations.[297] Such information could assist local authorities when forming housing strategies.

182. We recommend that the Government undertake further research on the trends, patterns and needs of students and of migrants to better inform regional and local housing strategies. We welcome the recently-announced Government review "aimed at improving the management and conditions of people living in Houses in Multiple Occupation", which will have a particular focus on areas with a high concentration of HMOs housing students, but note that the focus of the review is narrow and will be insufficient of itself to meet the need for information which we identify.[298]

Licensing of houses in multiple occupation

183. Several witnesses referred to the introduction of the compulsory licensing for Houses in Multiple Occupation (HMOs) introduced by the Housing Act 2004. No-one challenges the reasons for the introduction of the regulation of HMOs, which was and continues to be widely recognised as a necessary step in addressing the wide range of problems to which such accommodation can give rise. Shelter, for example, considers the new licensing of HMOs to be of benefit as "Environmental Health Officers spend less time tracking down HMOs and more time taking action to improve their conditions and management."[299]

184. Nevertheless concerns have been raised about the way the system is operating in practice. The private sector expressed significant concern over the implementation of HMO licensing. The main issue was the variation in approaches to implementation taken by different local authorities; the differences between the fee charged for the licences by different local authorities was also raised, as was the concern that local authorities were targeting the "easy" cases rather than tackling the bad landlords who were more difficult to deal with.[300]

185. When we put these concerns to CLG officials in oral evidence, John Daniels, policy adviser on the private rented sector, told us that measures were taken to coordinate the implementation of the regulations "so you can get some sort of common standards."[301]But these measures were not taken until after the introduction of the 2004 Act, despite the fact that the Government was told during the consultation that consistency would be vital.[302]Moreover, industry witnesses told us that the main reasons for the regulation—to tackle unfit and unsafe HMOs, as well as poor quality management by landlords—were not being effectively addressed. Mike Stimpson, a private sector landlord, told us:

303

186. The Government failed to ensure consistent approaches from local authorities when it introduced measures to control HMOs. It also failed to ensure that local authorities were in a position to use the system effectively. Local authorities appear to have ended up concentrating their efforts on simply administering the licensing system, rather than using it effectively to tackle the most problematic landlords. We recommend that CLG assist local authorities in developing a more targeted approach which ensures that resources are focused on tackling the worst cases.

187. Shelter considers that the mandatory licensing scheme should be extended from homes in buildings with three or more storeys.[304]Some local authorities have used their discretionary powers to target problem areas. Manchester City Council told us during our visit of its desire to extend the application of the regulations because of concerns about the quality of some conversions. More recently, during our inquiry into community cohesion and migration, Peterborough City Council has told us of its struggle to extend its licensing powers to cope with the increasing numbers of houses being occupied by large groups of recent migrants. The definition of HMOs used for the mandatory licensing scheme is insufficient to cope with situations where landlords are simply cramming more and more people into the smallest spaces possible. Local authorities have told us, however, that the process of acquiring discretionary powers to deal with such housing is cumbersome and time-consuming—not what is needed to deal with an increasingly urgent problem.

188. We favour extending the requirements of the HMO regulations to cover a wider variety of houses in multiple occupation. Meanwhile, the Government must give local authorities the easiest possible access to the tools they need to do the job of regulating the worst examples of HMO abuse, particularly by streamlining the process of applying for extension of their discretionary HMO licensing powers.

Regulation

189. The issues of poor quality in the private rented sector which we note above need to be addressed, and quickly. The quality of life of large numbers of tenants depends on it. Improvements in quality are also crucial in wider policy terms, however. The growth in the private rented sector is a welcome change towards diversifying the range of choice of housing and has demonstrated the important role private renting has in meeting the needs of a more diverse and mobile population. We have proposed that the private rented sector should extend its role to become a viable long-term option for the accommodation of a wider range of households. If that extension of the private sector's role is to happen, we agree with the Audit Commission that "decisions are needed on the type and level of intervention that are required for the sector to safeguard standards and security."[305]

190. Regulation of the private rented sector is mainly undertaken by local authorities, through the Housing Health and Safety Rating System, HMO regulations, and voluntary accreditation schemes. The Housing Ombudsman Service is the statutory body adjudicating on complaints of maladministration both against housing associations and also against private landlords and agents which voluntarily register themselves with it. Over the period March 2006April 2007, the service investigated over 2800 cases. Most (nearly 68 per cent of cases) did not result in maladministration being found. Only 1 per cent of cases concerned assured shorthold tenancies, the main form of tenancy in the private rented sector.[306]

191. The Ombudsman for Estate Agents was established in 1998. The Ombudsman's remit also covers letting agents, and it has developed a code of practice for letting agents with the National Association of Estate Agents. As with the Housing Ombudsman Service, letting agents are not required to be members. By contrast, provisions in the Consumers, Estate Agents and Redress Act 2007 require persons who engage in estate agency work in relation to residential property ("relevant estate agency work") to be members of an approved redress scheme for dealing with complaints in connection with that work.[307] All estate agents must register with an authorised organisation which investigates complaints against its members. Agents may be fined or struck off and potentially referred to the Office of Fair Trading. From April 2008, estate agents who are not members of a scheme will no longer be able to sell houses.[308]

192. Self-regulation of landlords and agents within the private rented sector exists through membership of associations such as the Association of Residential Letting Agents[309] and the National Landlords Association.[310] The efforts of these and other organisations to improve management standards are welcome and should be supported, but there is a clear need to do more to eliminate unsavoury tendencies within the private rented sector.

193. One of CLG's objectives for the development of the private rented sector was the use of local authority accreditation schemes.[311] Such schemes can work on a regional as well as local basis: the London Landlord Accreditation Scheme, for example, operates across London to provide landlords with training and to enforce standards.[312]Collectively, local authorities have undertaken extensive work with the private rented sector in forming accreditation schemes, which are often linked to measures to prevent households being made homeless. Accreditation schemes only function through co-operation between local authorities and landlords,[313] and are constrained by the limited time and resources available to environmental health teams.[314]

194. Notwithstanding concerns about the variation in the application of regulation by local authorities, particularly with the application of HMO licensing, no evidence was presented to us questioning the right and ability of local authorities to regulate the private rented sector. The approaches taken by local authorities in establishing private sector forums and accreditation schemes are largely supported by the private sector, which acknowledges the benefit of recognising "the work of responsible landlords who choose to become accredited."[315]This support provides the opportunity for local authorities to exercise the "strategic" housing function which the Government is promoting for them. Local authorities can and should act as conveners of the bodies who invest in and provide private rented housing, rather than just as enforcers. There is also a role for Oftenant, using its experience within the social rented sector, to coordinate the efforts of local authorities and the private sector in disseminating good practice and working with local authorities to address specific issues relevant to their area.

195. The Government recognises that the previous measures in the 2004 Act and the private rented sector need to be reviewed.[316] While we welcome this further review of the sector, it demonstrates that the problems affecting private tenants have not been satisfactorily addressed following the last set of reforms, which should have gone further.[317]There is a yawning gap between the rights of consumers who are purchasing a property through estate agents, and tenants of private landlords. Prospective and actual tenants in the private rented sector can face discrimination, retaliatory action, and general poor management of their home. A good basis exists in existing regulation, local authority accreditation schemes and the activity of trade bodies to introduce a system of accreditation similar to that which exists for estate agents, devised by trade bodies but reinforced by the involvement of local authorities, with the ultimate oversight of Oftenant. We recommend that the Government work with organisations in the private rented sector to develop a robust scheme which will enable tenants to gain redress against poor landlords.

196. The British Land Company presented the case for a 'carrot and stick' approach where the threat of the removal of incentives would "remove the burden of enforcement from local authorities".[318] Financial incentives could include lower taxation on repairs and improvement works, for example. Other incentives could include a 'risk-based' approach to inspection whereby demonstrably good landlords face less regular visits from the local authority. Advocating a "build-to-let" approach to enlargement of the private rented sector, the British Property Federation also highlighted the potential for "some kind of Code of Standards or Accreditation Scheme, which was open to private managers and housing associations and backed by a dispute resolution body, such as the Housing Ombudsman Scheme".[319] The 'carrot and stick' approach to regulation of the private sector appears to receive support from a broad range of interests. During the debate at the fourth session of the Housing and Regeneration Bill, Adam Sampson of Shelter, for example, said "regulation needs to be married with a package of incentives to encourage the further development and professionalisation of the private rented sector."[320]

197. We recommend that the Government's review of the private rented sector consider and report on the merits of establishing an accreditation system under which letting agents, private landlords and housing associations would register the extent of their private property portfolio with the relevant local authority. Such a system would assist local authorities' strategic housing and regulatory functions. The enforcement function would also rest with the local authority but only insofar as it was necessary to oversee how registered bodies process complaints, or how individual unregistered and unaccredited landlords manage their stock.

198. The review of the sector should also consider the establishment of a new regulatory system based on a carrot-and-stick approach which rewards responsible landlords with fewer repetitive regulatory hurdles and greater financial incentives such as rewards for investment in maintenance and energy efficiency. Landlords should have the choice whether they wish to use letting agents, which under our previous recommendation would be accredited and under the ultimate oversight of Oftenant, or similar management companies including housing associations; or undertake their own marketing and management and then be directly regulated by the local authority. Whichever route the landlord took, new properties would be required to be registered with the relevant local authority when a tenant was found.

236 CLG live tables Back

237 Ev 12 (Northern Housing Corp) Back

238 Ev 124 (RLA) Back

239 Ev 12 (Northern Housing Consortium); Ev 29 (Cumbria sub-regional housing group); Ev 69 (Audit Commission) Ev 110 (NHF); Ev 170 (CLG). Back

240 Ev 188 (Housing Corp); Ev 78 (National Landlords' Association). Back

241 Ev 124 (RLA) Back

242 Ev 116 (RICS) Back

243 Ev 12 (Northern Housing Consortium) Back

244 CLG Survey of English Housing 2004-05 Back

245 Q 30 Back

246 Q 300 and Ev 78 (NLA) Back

247 Ev (HC 457) 160 (CLG) Back