Examination of Witnesses (Question Numbers
283-299)
MR RICHARD
JONES AND
MR MARK
BUTTERWORTH
23 NOVEMBER 2009
Q283 Chair: Can I welcome you to this
evidence session of the Committee. Do not feel the need for both
of you to speak on every point unless there are additional points
you want to make.
Mr Butterworth: We speak with
the same voice.
Q284 Chair: Excellent! Obviously
a Stalinist method of control! We are now talking about the private
sector and I think we have already felt from evidence that we
have got thus far that the Decent Homes programme has worked much
less effectively within the private sector than it has in the
social sector. Can you give your views on whether you think that
setting the target for vulnerable households in the private sector
has achieved anything at all?
Mr Jones: I think not. It has
had little or no impact. The target has been down-valued as time
has gone on in any event; it is no longer officially the same
quality of target, if I can term it that way, as it was before.
Our experience is that local authorities are essentially operating
on a reactive basis. They receive a complaint or they receive
an application for a grant and they have to concentrate their
efforts on that. HMO and selective licensing have also had a massive
impact in terms of resources.
Mr Butterworth: I would also like
to point out that the "vulnerable" tag has expanded
quite widely and covers all those in receipt of working family
tax credits, et cetera, which covers quite a big median income
scale, and we think the term has possibly, as Richard has pointed
out, become devalued because it has become so wide. Also, previous
witnesses have alluded to the big transfer of low income families
from the social sector into the private rented sector and they
acknowledge within the report that there has been a big transfer
of people from this sector and low income households are probably
struggling to fund their homes, having gone into owner occupation.
Q285 Chair: Can I pick up the point
that Mr Jones made about HMO regulations and selective licensing?
Are you saying that that in itself has not delivered more decent
homes because the private rented sector is possibly the worst
sector for non-decent homes?
Mr Jones: Our view of mandatory
HMO licensing is that it has brought into regulation, by and large
unnecessarily, whole swathes of student and young professional
type accommodation. It has ended up as a self-feeding, self-serving
bureaucracy and that has distracted local authorities from the
real task of dealing with homes that are not fit.
Q286 Chair: Do you think that local
authorities have been using the money from the regional housing
pot at all in the private sector?
Mr Jones: That is a question we
cannot really answer. We do not necessarily have the experience
of how the funding pots are managed but we do not see any evidence
of that on the ground by and large.
Q287 Chair: Finally, how about monitoring
the target of Decent Homes in the private sector? Do you have
a comment on that?
Mr Butterworth: We were having
a long discussion about this before we came in because we appreciate
the difficulties involved with this. The private rented sector
is generally older stock but better located than social housing.
It has clearly suffered from a lack of investment because a lot
of money has gone into social housing and the amount of grant
monies that went in in the 1980s when housing was subject to a
subsidy was about a billion pounds. If you inflation-proof that
to now and bear in mind that the investment into property is one
eighth of that and none of that is going into the private rented
sector, there is this huge disparity in resources. When you are
looking at decent homes, if the property is staying in the rented
sector the outcome is the same: it is a better property, so ring-fencing
the private rented sector from any funds is rather counter-productive.
That makes life a little bit more awkward and, as Richard has
pointed out, there has been a huge amount of input and time wasting
that has gone on with licensing. There are also the difficulties
with HHSRS, which is okay as an academic exercise but one of the
practical responses in the private rented sector is that the councils
are under a duty to respond to Category 1 hazards and that is
what they are looking at, but they have got 29 categories to look
at when they go in a property.
Q288 Chair: That is the point that
we would like to pursue, that and others.
Mr Jones: May I just come back,
please, on one point on the monitoring? I think it is very difficult
in practice for local authorities to monitor the impact of Decent
Homes in relation to the private rented sector or the private
sector generally because properties can move in and out, individuals
can move in and out, and certainly, talking to local authority
officials, they find it very hard to come up with any meaningful
way of monitoring that.
Mr Butterworth: The discussion
we had earlier, for it to result in some meaningful or tangible
improvement, was about perhaps a use of EPCs before any work and
again afterwards because it is the only simple, cost effective
measure by which you could gather some information on improvements
and it does not matter which sector or who has done it: if there
is an improvement it is a result.
Q289 Alison Seabeck: You talk in
your evidence about the contrast between the Housing Act 2004
and the fact that you felt that was particularly inflexible in
what it was demanding of you, and now the new Housing Health and
Safety Rating System which you think is too much risk based. Clearly,
neither system finds favour. What sort of system would you like
to see introduced in terms of what needs to be done for private
sector landlords?
Mr Jones: I hope we summarised
it in our evidence. The preference, talking to landlords generally,
is that they wish to be told by and large what to do as long as
they feel it is reasonable and cost effective and as long as there
is a facility to go back and have a meaningful discussion with
the authority about alternative ways because there is often more
than one way of achieving a result and the landlord knows the
property often better than the enforcement officer. What we need
to do, I think, is to try and find somewhere in between and we
have suggested in our evidence a form of guidance. We have worked
very closely with LACORS in producing the fire safety standard
because until that document was produced everyone was completely
at sea. The existing fire safety guidance for sleeping accommodation
was far more applicable to hotels and larger buildings. That exercise
means that for a normal risk in a typical type of property there
are now some standards laid down that will effectively deem compliance
not just with HHSRS but licence conditions and the Fire Safety
Order where that is applicable. That has been a massively helpful
piece of work and what we are suggesting is taking that forward.
Another area where I personally worked with Hull City Council
in trying to produce some guidance in terms of excess cold. That
is quite a difficult exercise and that really needs to be taken
forward. Falls are another area where one can have some straightforward
guidance because landlords do not understand the complexities
of HHSRS. I think often local authority enforcement officials
are still very nervous of this untried scheme but if you can have
some guidance that is reasonably flexible that would help answer
that particular problem.
Q290 Alison Seabeck: It is interesting
you talked about cold because there are some very clear arguments
around cold homes, but it is not clear enough for your members
to be able to carry forward and make the necessary changes and
improvements to their properties.
Mr Butterworth: We would like
to think that our members are generally decent landlords and compliant
and will not need targeting. I would just like to make the point
that there are only 1,600 environmental health officers in the
country. They have a huge workload to carry out and we feel that
licensing has placed huge burdens on them and taken them away
from checking on the lower end of the sector where they need to
engage with the poorer properties that do tenants a disservice,
do property in general a disservice and landlords in particular
by giving them a bad reputation. Our proposal for this is accreditation
whereby landlords agree to aspire to a set of standards which
they sign up to, they become self-regulating and agree with these.
The quid pro quo for this would be that landlords would
be taken out of the licensing network because they have shown
that they do know what they are doing; they have undertaken some
training and they are willing to provide decent standards. This
allows much more effective targeting of local authority resources
to everybody's benefit and takes a lot of the burden of unnecessary
cost of administration off the largely compliant bulk of the market.
Q291 Alison Seabeck: When you talk
about "the largely compliant bulk of the market", what
sort of percentage would you put on that within your sector?
Mr Butterworth: I suppose the
easiest way to monitor that is that various things have been done
that indicate an over 90 per cent satisfaction ratio from tenants
with their property. It is very high and therefore a lot of people
are happy with their rented accommodation, and particularly if
they are in a decent property or a more modern property I do not
think we need concern ourselves with checking it for cold or for
any of the Category 1, 2 or other hazards under HHSRS. It is clearly
the poorer property stock that, although it may be well located,
needs to be monitored more carefully.
Q292 Alison Seabeck: And those are
the properties that are often the coldest, the most damp, the
less thermally efficient, and yet you have concerns about some
of the thermal efficiency standards. You think they are too demanding.
Any comment on that?
Mr Jones: I do not think we said
they were too demanding. I think we were looking at the issue
of flexibility.
Q293 Alison Seabeck: It is described
as problematic in cost terms as well.
Mr Jones: Cost is a significant
factor, as always. It is about resources, because if you have
a smaller, older property (which by definition is more difficult
to treat) and you are receiving an average rent then the capital
cost involved in upgrading that property means there is really
no discernible benefit to the landlord frequently because the
benefit of cheaper electricity bills will fall to the tenant,
so it is going to take a long time for the market to differentiate
between properties that have been treated and those that have
not, and therefore you have got considerable capital cost relative
to the return on the property. That is the important thing.
Q294 Alison Seabeck: Have you done
any work with tenants' organisations to look at whether or not
some sort of co-payment arrangement might be something you could
pursue, because, as you say, the tenant is potentially a net beneficiary,
but also you avoid things like condensation and everything else
that goes with that.
Mr Butterworth: When these things
have raised their head with various other committees or in London,
tenants' organisations do not want to contribute to anything because
they think that the tenant pays the rent and that should cover
just about everything within that. The only fair principle to
consider with this is that it is the consumer who benefits and
therefore the consumer must pay, and that ignores the tenure of
the property, whether it be owner occupied or whatever, and I
appreciate the danger of concentrating on the private rented sector
which is only one eighth of the market. That must be dealt with
in the same way as the owner occupied sector. You do not want
to tie up resources in small pockets of property here and there
when, if you are going to cut carbon emissions, you need to have
an impact on the whole of the market, and therefore if you target
it via the consumer you are going to have a much bigger impact
and have some results much more easily and cost effectively.
Q295 Chair: So are you suggesting
doing it through the utilities?
Mr Butterworth: I think that is
the only fair way. We have picked up on this at length as well.
It is back to resources: how are resources best harnessed. There
is no point in isolating bits of property here and there or using
the private rented sector, which is only one eighth of the property
in the country, when your big carbon reduction targets are going
to come from owner occupied. If you put private rented property
in with owner occupied and have improvements available to the
whole sector rather than just concentrating all subsidies in the
social sector, it is really irrelevant to the end result. If you
are looking for results you are looking for carbon reductions
and it does not matter which sector it goes into providing you
get the carbon reductions at the end of the day.
Q296 Alison Seabeck: Would not a
landlord though benefit if there was some sort of system that
could flag up that his or her property was particularly energy
efficient and therefore bills were really low and that you had
almost a rating system? Of course, you should have an energy rating
anyway, but is that not a selling point and therefore you put
more on your rent for this?
Mr Butterworth: This strikes close
to home because I personally build property for sale as new as
well and I know from the market that people have no interest whatsoever
in paying for energy. It is something they are very unwilling
to do. If we look at Germany, properties are discounted where
they are not adequately energy efficient and this is something
that has happened over a period of 15 years. Since we stopped
our investment in wind farms there has been a lack of interest
in energy efficiency in this country. That has not been replicated
on the continent and they are getting big dividends now in lower
carbon emissions because people have an interest and an input
into the efficiency of their homes.
Q297 Mr Turner: Just going back to
the accreditation scheme that you were talking about, can you
tell us what barriers you think there are to setting that up?
Mr Butterworth: We have a scheme.
Mr Jones: Local authorities have
had these various accreditation schemes for some time. The problem
is filling in the gaps, and we are working to address this at
the moment; we are in the process of launching our own accreditation
scheme. Also, we are finding increasingly that local authorities
which have been operating these schemes for some time are facing
insufficient resource problems but, more importantly, see themselves
as conflicted in the sense that they are the regulatory authority
as well as the authority that is trying to help the private rented
sector. I think many of them would feel more comfortable if there
was some distance between themselves and the administration of
these schemes, albeit they would continue to play an important
part in helping facilitate the schemes. That is the first point
to make. The second point is that local authorities at the moment
are only able to offer limited concessions for membership of the
schemes. It may be taking what is otherwise trade refuse to the
local tip and being able to dump it without having to pay charges
or car parking, all very small-scale stuff, useful but small scale.
What we are suggesting is a much more radical move whereby effectively
you could move the compliant landlord, who would be pre-vetted,
out of the local authority control into an accreditation scheme.
Accreditation schemes in themselves would need to be approved
and accredited and we are working with ANUK[1]
who are looking at this whole issue to get a basic standard of
accreditation schemes so as to ensure general confidence in them.
Particularly if accredited landlords were to be taken out of things
like HMO and selective licensing this would be the way forward,
that would give a massive opportunity for a move over to much
more self-regulation.
Q298 Mr Turner: You said in your evidence
that enforcement activities are concentrated on compliant landlords.
Can you give us some evidence of that? Can you not only give us
some evidence but also say why you think that should be?
Mr Butterworth: Inevitably, the
softest targets are those that are semi-compliant because they
tick the most boxes and are the people who show the most results.
Rented housing is governed by 80 Acts of Parliament and many of
these have become redundant because the powers are not used and
most of the powers they have under the 2004 Housing Act were already
in existence so were just re-packaged. There was a big political
will for this but it has provided very little benefit, so now
you have got large numbers of licences issued, which has become
an end in itself, and effectively so far licensing is just a fine
on landlords who are pretty well compliant anyway. It is making
no inroads into the non-compliant and the poorer properties, which
is a source of great angst to the decent landlords who have signed
up and paid the fees and a source of great amusement to those
who pay nothing and cock a snoop as per normal. They are a very
small minority, I hasten to add, but they are more difficult to
engage and that is where efforts should be concentrated.
Q299 Chair: Do you have hard and
fast documentary evidence that that is so? Can you demonstrate
in certain areas that there has been no improvement as a result
of licensing in the worst HMOs?
Mr Jones: Yes, I can answer that,
although it is a developing field. It is very interesting that
the Government have so far not published the Building Research
Establishment's research in this area even though they have been
pressed to do so. I am based in Leeds and Leeds is the largest
single local authority licensing HMOs. It has some 2,700 licensed
HMOs of which, interestingly, about 125 are bed-sits. What has
happened, and I can write to you with the up to date statistics
if you wish—
1 ANUK is Accreditation Nationwide UK which is an umbrella
group for accreditation schemes. Back
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