Memorandum from the Residential Landlords Association (RLA) (BDH 20)

 

Summary of Evidence

 

(1) Evidence is limited to those parts of the Inquiry which affect the private rented sector; not social housing.

(2) Private landlords complain that similar standards to those applicable in the PRS are not enforced in the social sector, especially by local authorities. This is now less of a problem because of the implementation of Decent Homes and it means that there is a yardstick in the social sector now broadly comparable with PRS standards.

(3) There is still potential unfairness because private landlords still face potential criminal sanctions, unlike social sector landlords.

(4) Local authorities are, in effect, above the law because they cannot serve a notice on themselves.

(5) Unlike the PRS the social sector has received a large influx of public money.

(6) Finger pointing at the PRS regarding the state of their stock overlooks this large amount of public money which has helped upgrade social sector housing.

(7) Although HHSRS is tenure neutral it has not been enforced even handedly in the owner/occupied sector.

(8) Prior to HHSRS there was prescriptive regime in the PRS lacking flexibility. HHSRS is at the opposite extreme.

(9) HHSRS is too complex and is a local authority enforcement took and does not provide practical assistance for PRS landlords to know what is expected of them.

(10) Private landlords prefer to be told what to do so long as it is reasonable and any alternative proposals are considered.

(11) PRS landlords do not want the upheaval of yet more change by getting rid of HHSRS.

(12) HHSRS needs to evolve. Workable practical guidance is needed on a national basis telling landlords what is required of them relating to the main hazards under HHSRS.

(13) The RLA advocates mass voluntary compliance and this approach would

assist this objective.

(14) There needs to be a management code for the PRS dealing with both

management and the condition of the property.

(15) There are currently insufficient local authority EHOs to deal with all their responsibilities but still it is the compliant landlord who is targeted.

(16) Accreditation schemes need to be developed into a self regulatory regime.

(17) Accredited landlords would be subject to the same requirements as everyone else.

(18) This would mean that the compliant landlord could then be moved out of the local authority enforcement sector giving EHOs more time to concentrate of the non compliant landlords.

(19) The RLA is developing its own national accreditation scheme on a nationwide basis.

(20) The Decent Homes Standard is not a legally enforceable standard in the PRS and this should continue to be the case with HHSRS still being the statutory basis for enforcement.

(21) The RLA advocates a national enforcement inspectorate to ensure compliance particularly in the local authority sector.

(22) The RLA questions the targeted approach implementing Decent Homes and questions its effectiveness, with some difficulties in monitoring it.

(23) The thermal comfort element of the Decent Homes Standard is unduly prescriptive, with questionable requirements. There are problems dealing with older stock.

(24) The main concern would be using the Decent Homes Standard in relation to fuel poverty is that there would then need to be extensive programmes of insulation works at a significant capital cost particularly for older properties.

(25) Another problem is that with Decent Homes the social sector only has to eliminate Category 1 Hazards whilst PRS landlords have to deal with Category 2 Hazards, which is not a level playing field.

(26) Financial assistance for PRS landlords has been cut back because of virtual non availability of grants.

(27) We need to look at new ways of financing PRS major repairs etc. There needs to be an attractive model for a national loan scheme.

(28) There needs to be a proper system of capital allowances for major works.

(29) VAT on major works should be reduced to 5%.

 

Introduction

 

1. The Residential Landlords Association is one of the two national landlords associations in England. We have over 13,000 members controlling over 100,000 units of residential accommodation. Our members let properties to families, single people, young professionals, students, benefit claimants etc.

2. This evidence is limited to those aspects of the Inquiry which touch on the private rented sector. We do not deal with any aspects which are related to social housing.

 

Background

 

3. Over the years, many private landlords faced with local authority demands have quite rightly complained that similar standards have not been enforced in the social sector, particularly by local authorities themselves. It is fair to say that this has become less of a real problem due to the Decent Homes Standard. At least it has meant that there has been a yardstick within the public sector broadly comparable with standards expected of the private sector. Before this happened quite rightly private landlords were complaining of run down properties in the social sector and local authorities/social landlords were facing many claims by their tenants for disrepair.

4. There is still potential unfairness because private landlords face potential criminal sanctions for non-compliance but social sector landlords do not. The worst example of this is that a local authority cannot enforce against itself (because it cannot serve a notice on itself) so effectively local authorities are above the law even though they provide considerable parts of the rented housing stock (treating ALMOs and the like as local authorities for these purposes).

5. Of greater concern to the private rented sector is that to bring their stock up to date they have received a huge influx of public money. In the meantime grants are no longer available, to all intents and purposes, for the private rented sector. We come back to the issue of finance below. What we are now seeing is finger pointing at the private rented sector who are accused of having the worst housing stock but this overlooks the vast amounts of tax payer's money which has been invested so as to upgrade the public sector.

6. Another concern has been that although the Housing Health and Safety Rating System (HHSRS) is intended to be tenure neutral, even though it addresses issues of health and safety, it has not been enforced even handedly in the owner occupied sector.

 

Arrangements for future regulation

 

7. Prior to the implementation of the Housing Act 2004, essentially we had a prescriptive regime to lay down standards in the private rented sector. This lacked flexibility. The introduction of HHSRS however has gone to the opposite extreme with its risk based approach operating on a case by case basis depending on a number of very variable circumstances in some cases. Further, HHSRS is an enforcement tool (using risk assessment) for local authorities, and not of practical assistance to landlords themselves.

8. Overwhelmingly, private landlords prefer to be told what to do, subject to two important provisos. First the requirement should be reasonable (and not excessively costly) and secondly landlords want the opportunity to have alternative proposals seriously considered (i.e. the element of flexibility which the pre-2004 Act did not allow for).

9. HHSRS is a complex system, not understood by private landlords (and not really intended to be) and we suggest not understood always by all Environmental Health Officers! Inevitably, it is a system which takes time to understand and implement.

10. HHSRS is of no real value to landlords because of its purpose and complexity. However, private landlords do not want yet more change of a drastic nature. We are, therefore, not advocating the scrapping of HHSRS despite its limitations.

11. Rather, we are suggesting that HHSRS remain as the statutory enforcement tool but that it should evolve so as to bring about a new modified regime where there is the element of certainty for which landlords ask but equally flexibility. Having gone from one extreme to the other we need to establish workable middle ground.

12. Fortunately, a precedent already exists for this with the LACORS Guidance on Fire Safety Precautions for Existing Housing. The RLA was very closely involved in the development of this document.

13. How we see HHSRS being developed is that for each of the major risk categories (in addition to fire which is now covered by the LACORS Guidance) workable practical guidance should be developed on a national basis, telling landlords what is required of them. This will be a single document covering the main hazards under HHSRS.

14. Such guidance would be based on normal levels of risk likely to be encountered in the average property. Obviously, this guidance would have to address different types of property. Thus, in the majority of cases the landlord would be expected to follow this guidance (with the option of putting forward alternative satisfactory solutions).

15. What is lacking at the moment, because HHSRS is an enforcement tool, is something to which the landlord can work so as to obviate the need for enforcement action. We need to look for mass voluntary compliance of reasonable requirements. This can be linked in with education and training for private sector landlords.

 

A management code for the private sector

 

16. The RLA has long said that we need to deal with people not places. Over the years enforcement has concentrated on physical standards in properties. Rather, we need to direct our attention to property management. In turn this improves tenant welfare.

17. We have long advocated a code of management to set standards for management and this would include requirements regarding repair standards/condition of properties. For example, even though the Housing Act 2004 makes provision for such a code of practice for licensable HMOs, the Government has failed to introduce such a code (except for larger student developments). The RLA even went to the extent of preparing a draft of such a code but the Government do not wish to take it forward.

18. At the moment the legislation is simply not written to enable the landlord to be legally compliant.

 

Local Authority enforcement resources/self regulation

 

19. Currently, there are only approximately 1,600 local authority environmental health enforcement officers. This is to cover 1,000,000 private sector rented homes plus all their other duties relating to housing. Our consistent complaint is that it is the compliant landlord who is targeted. The minority of rogues and non-compliant landlords operate under the radar.

20. The RLA has for a long time argued that existing accreditation schemes should be developed into a self-regulatory regime. Members of this committee have been circulated with details of our proposals and the Chair of the Committee has expressed interest. We would emphasise that accredited landlords would be obliged to observe at least the same standards as everyone else. In this way the compliant landlord can be moved out of the local authority enforcement system leaving environmental health officers with more time to concentrate on the non compliant. This will become even more important as local authority resources reduce due to the current financial crisis. Already there are signs of Council budgets being cut as much as 20%. Regulatory functions are always a prime target for this kind of budgetary saving.

21. The RLA is developing its own national accreditation scheme because accreditation is not currently available throughout the Country.

 

The Decent Homes Standard

 

22. The Decent Homes Standard is, of course, not legally enforceable in the private rented sector, whatever certain local authorities may think. It should not become enforceable in our view in the private rented sector because standards are already dealt with by other statutory provisions, particularly HHSRS.

23. The Decent Homes Standard does, however, provide a level playing field between the different sectors, as we have already pointed out. This should continue. Indeed, we would advocate a national enforcement inspectorate to ensure compliance, particularly in the local authority sector where there is no enforcement vehicle. The Inquiry refers to use of the Decent Homes Standard in the private rented sector in the case of vulnerable households. This was previously the PSA7(A) target which was subsequently replaced by the CLG Departmental Strategic Objective (DSO2). Whilst the RLA encourages improving standards in the PRS we do question whether this kind of target approach is effective. It is virtually impossible to monitor. This is because local authorities can only monitor their own enforcement activities not work done by landlords themselves. There are also a considerable number of variables in assessing vulnerability and defective premises in that tenants are constantly moving in and out of vulnerability and properties in and out of decency.

24. Another problem regarding the Decent Homes Standard is in relation to the thermal comfort element. It is unduly prescriptive. It also illogically suggests for dwellings with gas/oil programmable heating the need to have cavity wall insulation without the need for loft insulation? Undue emphasis is placed on central heating rather than looking at other solutions, particularly in relation to accommodation such as bedsits. There is also the problem of dealing with older stock, particularly that with solid walls. We are dubious to say the least of any suggestion of extending the Decent Homes Standards in relation to matters such as fuel poverty because of the links to fluctuating fuel prices and incomes.

25. Our main concern with regard to the use of the Decent Homes Standards in relation to fuel poverty is potential for requirements for extensive works of insulation (e.g. double glazing and cavity wall) because of the significant capital cost relative to rental returns, particularly with smaller older properties. Whilst loft insulation does not pose such a cost problem other means of improving energy efficiency so as to reduce fuel poverty are much more problematic in cost terms. There are also the practicalities particularly with older houses.

26. Another issue with regard to the application of the Decent Homes Standard to Council owned and ALMO social rented housing is that it only requires Category 1 Hazards to be addressed; whereas the private landlord may be subject to enforcement action with regard to Category 2 Hazards. This is not a level playing field!

 

Finance

 

27. As we have already pointed out, there has been very considerable investment of tax payer's money into the social sector but at the same time grants for private landlords have been cut back. This is despite the fact that it may simply not be economically viable for landlords to improve their properties and particularly to carry out expensive energy efficiency improvement measures.

28. We do need to seriously address the issue of the financing of improvements/major repairs/refurbishment in the private rented sector. Even in the good times Banks were very reluctant to lend for this kind of activity on the whole. The problem at the moment is that everything is left to the individual local authorities. Some still have loan schemes but these tend to have restrictive conditions attached which make them unattractive. Others are developing schemes (sometimes across a number of local authorities). Essentially, we need an effective national model for a loan scheme which is attractive to landlords. The current credit crunch will mean that it will be impossible for many landlords to obtain finance. We could look at an equity sharing approach.

29. We also need to look at the Tax Relief Regime and introduce a proper system of capital allowances for improvement/major repairs/refurbishment, with a reduction on VAT to 5% on this kind of work (which although now permitted by European Law has not been implemented by the British Government).

 

Conclusion

 

30. The Decent Homes Standard has led to something of a level playing field as between the social sector and the PRS. However, there are still inequalities in the enforcement regime as between the two sectors. Of greater concern is how major repairs/improvements (particularly in relation to energy efficiency) are going to be financed going forward, with grants being virtually non-existent. A new form of loan scheme is required, coupled with tax allowances, building on the existing LEASA Scheme.

31. We do have serious concerns regarding HHSRS and how it works. It is far from landlord friendly. However, in view of the very considerable upheavals affecting the PRS over the past few years we are not advocating root and branch change. Rather, we need to look at putting in place sensible guidance for landlords not just in relation to physical condition of properties but also management standards.

32. What we do need to change radically is the way in which housing standards are enforced in the PRS. There is simply insufficient local authority resources and the position will get worse due to the current financial climate. Rather, we need to look at taking compliant landlords in to a self regulatory regime through developing accreditation. They would have to observe the same standards. This would then free up the limited number of EHOs to concentrate on those not willing to comply.

33. The Decent Homes Standard should not become legally enforceable in the PRS. As regards vulnerable tenants in the PRS we have severe reservations about the existing targeted scheme which is not workable in practice. We do not see how the Decent Homes Standards could be extended in relation to fuel poverty.

34. We welcome the current Inquiry. Clearly, as the Decent Homes Standard has been around for some time, thought needs to be given as to the way forward. We would, however, prefer that the Decent Homes Standard should remain a standard which concentrates on the social sector; not the PRS.

 

September 2009