Communities and Local Government Committee - Minutes of EvidenceHC 50

Back to Report

Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 11 March 2013

Members present:

Mr Clive Betts (Chair)

Bob Blackman

Simon Danczuk

Mrs Mary Glindon

James Morris

Mark Pawsey

John Pugh

Andy Sawford

Heather Wheeler


Examination of Witnesses

Witnesses: Cllr Simon Blackburn, Leader, Blackpool Borough Council, Tom Gilchrist, Service Manager, Private Housing and Accessible Homes, Bristol City Council, and Cllr Jonathan Glanz, Cabinet Member for Housing and Property, Westminster City Council, gave evidence.

Q252 Chair: This is our fourth evidence session for the inquiry into the private rented sector. Thank you very much for coming this afternoon. Just before we begin taking evidence, members of the Committee need to place on record publicly any interests that they have in this particular subject. I rent out a flat that I own, and that is declared in the Register of Members’ Financial Interests. Shall we go around?

Simon Danczuk: My wife has a small interest in a rented property.

Andy Sawford: I have a small interest in a rented property.

Mrs Glindon: I have a tenant in Westminster.

Bob Blackman: I am the joint owner with my wife of six buy­to­let properties, which is declared in the Register of Members’ Financial Interests.

Chair: Okay, that is the record of our interests in this matter. Now we will move on to the evidence. Just for the sake of our records, could you just say who you are and the organisation that you represent?

Tom Gilchrist: I am Tom Gilchrist. I am a service manager from Bristol City Council.

Cllr Blackburn: I am Councillor Simon Blackburn. I am the leader of Blackpool Council.

Cllr Glanz: I am Jonathan Glanz, and I am the cabinet member for Housing and Property at Westminster.

Q253 Chair: In 2008, Julie Rugg did a review and basically said that the current regulatory framework was not fit for purpose. She said that landlords were openly flouting the regulations, and that we needed a light-touch licensing system with effective redress to improve regulation of the sector. Do you concur with her findings, or do you have a different view? Who would like to start?

Cllr Blackburn: If I may, Chair, I would perhaps disagree with the expression "light-touch". I think we need a much more heavy touch. Dealing with landlords on a large scale, particularly in a town such as Blackpool, requires a great deal of tenacity. There are an awful lot of opportunities under the current framework for landlords to shirk responsibility, if they so choose, and to shy away from the issues that their properties-and some of the tenants within those properties-are causing. The framework that we have at the moment is sufficient, but as I say, it does take an awful lot of tenacity and hard work on behalf of the authority to try to make the current system work. That is probably reflected in the fact that there are still a very small number of local authorities that are pursuing selective licensing.

Cllr Glanz: Our position has slightly changed since the Rugg report, inasmuch as I think there has been some relevant additional legislation around what landlords can and cannot do in various areas, such as environmental health, electricity, gas, deposits, and those kinds of things. I just want to draw the distinction between good landlords, of which we have a large number, and bad landlords. We are lucky in Westminster that we do not have a disproportionate number of bad landlords.

I have a view about them being described as "rogue landlords", which almost is as if they are likeable rogues. It is more appropriate to describe bad landlords as criminal landlords. The legislation that is in place in relation to their obligations to comply with regulations in respect of gas, electricity or the holding of deposits is, in fact, broadly criminal legislation, and therefore their failure to comply with it makes them more appropriately described as criminal landlords.

In Westminster, we use the legislative framework that is there-both criminal and, more broadly, on the environmental health side-and the other legislation to enforce against the very small number of bad landlords that we have. We find that we are able to do that within existing legislative frameworks, rather than by imposing upon the large majority of good landlords additional obligations to comply with the proposals that might arise out of a further regulatory framework, which could come from a compulsory licensing scheme.

Tom Gilchrist: Within Bristol, we are of the opinion that registration of landlords would be a good thing. Certainly from our perspective, we have major problems identifying ownership of properties and land. If landlords had to register their interest in a property, it would certainly make the local authority’s requirements to deal with poor quality accommodation so much easier. Rugg was suggesting a £50 licensing fee. That may be small in comparison to the overall turnover for a licensing property, but I think that that small charge would save local authorities up and down the country an enormous amount of money when having to track down who a property owner actually is. Property ownership, and agent ownership and control, do change quite easily and quite frequently as you are pursuing enforcement­related action. I would certainly be all in favour of a licensing scheme for landlords.

Q254 Chair: Back to Westminster, then, and that contrary argument you just heard. Surely Westminster must have exactly the same problems tracking down landlords when you don’t know who they are and who owns what. When you go for a voluntary accreditation scheme, surely the only people who volunteer are the ones who have got nothing to fear from your officers going around, having a look and trying to take action.

Cllr Glanz: It is quite often the case that people who are actually the good guys in this end up effectively paying for the problems that have been caused by the non­compliant landlords, on whom we think it is more appropriate to concentrate. The problem is, of course, that if you have a scheme there is no guarantee that those people will comply with that scheme. You can say that "£50 is a good investment in order to know who you are dealing with," but you assume that those people who, in the past, have evidenced no willingness to get involved in being open and transparent in relation to their dealings are then going to say that they will comply with this licence, when they are not complying with electricity legislation, gas legislation and all sorts of other legislation. I do not think that there is any natural assumption that they will then go ahead and comply with an additional set of regulations relating to their operation under a licensing scheme.

Tom Gilchrist: Certainly from our perspective-and I suggest this may be replicated in Blackpool-if we come across a property that is not registered, we then know that the landlord is operating without a licence and we can deal with him or the company appropriately. At the moment, the difficulty that we have is in identifying the numbers and the whereabouts of the private rented sector across a city like Bristol. We have a stock size of over 200,000 units, and so being able to identify out of that the 60,000 private rented properties can be difficult. Having to register those units would enable the local authority to identify straight off where, and what, a private rented unit is. If it is not registered and if we receive a complaint from the tenant, we can then focus action in on that particular landlord if they have not licensed the property.

Q255 Chair: Mr Gilchrist and Councillor Blackburn, you are both supportive of selective licensing, but local authorities can do it currently under the existing legislation if they want to. How would a national scheme help you do better what you are already doing under the existing selective arrangements?

Cllr Blackburn: There remain, as you will all know, huge pressures on local authority budgets. I am sure one of your meetings would not be complete without a local councillor turning up and saying, "We need more money," so I will get it in early. The pressures on us are huge. The selective licensing scheme in Blackpool thus far is self­financing. The fees paid by landlords enable us to do the job, and to enforce that scheme. What that does mean, of course, is that the fee is considerable: £750 per unit, which buys the landlord a five­year licence. If you have 100 flats in the South Shore area, you will get a bill once every five years for £75,000. That seems a lot of money, until you realise that if you have 100 flats in the South Shore area of Blackpool, you will receive a monthly housing benefit cheque for somewhere in the region of £49,000.

I think a national scheme enables local authorities to come together and to agree a fee that takes into account local factors and local differences. 70% of housing benefit recipients in Blackpool live in private rented accommodation, which tends to be of a certain age. Therefore the inspection costs, certainly in the initial phase, are quite considerable. I apologise, Chair, because I am not quite sure what the remit of this particular session is, but some sort of national registration and licensing scheme and code of conduct in relation to letting agents would also be hugely helpful.

Chair: We will come on to that in a second.

Tom Gilchrist: I totally agree. Certainly in our area, we are about to commence a discretionary licensing scheme covering both selective licensing, which is for single family houses, but also an additional scheme covering multiple­occupied buildings. That scheme, as the councillor said, is rightly self­financing. The costs in Bristol are actually a lot lower: they are £100 per selective licensing property for good landlords. For landlords who do not come forward, we have swung the pendulum, at the request of landlords during our consultation exercise, and we now will charge them £1,000 if they do not come forward and license their properties.

That scheme was approved and agreed by the landlords that we consulted with. The good landlords were happy to pay a lower fee and comply with the requirements and legal minimum standards, as long as they were aware that we would come down hard on those bad landlords who did not license. Obviously, selective and additional licensing will only happen in specific parts of the city. A national registration scheme would enable us to pick up other properties elsewhere within the city, and if we get a complaint about conditions generally in those other areas, we can then deal with it.

Q256 Chair: Could you not just extend the registration scheme to the city yourself?

Tom Gilchrist: We could do. The difficulty we have got with selective and additional licensing is that they are really restrictive in the way they are described within the legislation. It is very hard to make general areas licensing areas, and for those of us who have been through licensing programmes, they are enormously complicated to declare. There are quite specific legal requirements that have to be met.

Q257 Chair: Could we make it easier, then, so local councils could make those decisions?

Tom Gilchrist: It could be made enormously easier, yes. The issue for us within Bristol is that, for a selective licensing area, we have got to have significant areas where a large proportion of the private rented sector is causing significant problems of antisocial behaviour within the locality. That is actually quite a difficult thing to prove, and to withstand legal challenge.

The other issue with selective licensing is that the area must be suffering from low housing demand. In an area like Bristol-and, I suspect, in Westminster-that is not an issue. We do not have problems of large numbers of empty accommodation, but we do have high housing demand in the City. Being able to find areas in which there are large levels of antisocial behaviour, specifically coming from the private rented sector, is enormously complicated to prove.

Q258 Mark Pawsey: Obviously there is a difference of view between the witnesses on the approach to licensing. I wonder if I could ask you about the nature of the problem. It would be quite valuable for the Committee to know the number of enforcement cases that you deal with, and what that is as a proportion of the stock. As Councillor Glanz reminded us, these are not rogue landlords; they are criminal landlords. What is the nature of the problem? How serious is the problem? How many cases would you bring forward, and what proportion of the stock would that represent?

Cllr Glanz: Westminster, as ever, is atypical of the country as a whole. We have only eight and a half square miles in the centre. We have a very high proportion-probably one of the highest proportions-of privately rented stock in the country. We have, I think, about 50,000 units of privately rented stock, which range from the One Hyde Park approach of extremely high­value properties that are exceptionally well­finished and maintained, to the sort of properties that are perhaps more typical of other parts of London, and, indeed, the country as a whole. As I say, we have that particular issue of great disparity between the sort of stock that is available. However, we have been actively enforcing against landlords who fail to comply. We had, I think, 206 formal enforcement proceedings last year out of about 1,100 inspections.

Q259 Mark Pawsey: That is out of a stock of 50,000.

Cllr Glanz: That is out of a stock of about 50,000, which gives you our level of activity.

Q260 Mark Pawsey: Councillor Blackburn, could you give us your numbers?

Cllr Blackburn: No, I cannot. I do not have the figures before me. What I do know is that the benefit of the selective licensing regime has meant that we have been able to deal with problems much more effectively before they have reached the point of coming to court. At the risk of repeating myself, local authority budgets-in case you had not noticed-are under significant pressure.

Q261 Mark Pawsey: You must have some assessment of how busy your department has been. You told us earlier that it was hard work to make the current system work, but everybody has to work hard; that is the nature of the climate that we exist in at the moment. How many cases are your officers prosecuting each year?

Cllr Blackburn: I do not have the figure, as I think I said a few moments ago, Chair. What I do know is that I have two licensing officers who are almost permanently in court, or in negotiations with the council’s lawyers. You will all know, I am sure, that the legal process of enforcing against the landlord is both difficult and costly. It is not in the benefit of the landlord; it is certainly not.

Q262 Mark Pawsey: I was going to come on to that as a supplementary question. I was just trying to get a measure of the problem. If you are not able to help us with a measure of the problem, I wonder if we might perhaps go on to the next witness.

Tom Gilchrist: Within Bristol last year, we had 1,500 complaints from tenants complaining about housing conditions that we would have responded to. Of these, 450 or 460 legal notices were served on landlords, giving them notice to undertake repair work or improvement work within a certain time period. 19 prosecutions were taken, and we took two simple cautions in 2011-12.

So far this year, we have had 12 prosecutions and four simple cautions. In addition to those, we have had two judicial review cases that have been running around the licensing definitions and the definitions around "fit and proper person", which are poorly defined within the legalities of licensing. Those cases are now running through the legal process. I would say that, on an annual basis, we have about 40 to 50 private rented sector units within the court process, either in court or going through our legal teams on the way to court. Obviously, as they are going through the legal teams, there will be various issues that crop up: perhaps the case cannot be taken forward, or the landlord will undertake the works himself. The number of cases that I have described is the number of cases we take to court each year.

Q263 Mark Pawsey: Councillor Glanz thinks that the powers that the local authorities have got are adequate. Mr Gilchrist and Councillor Blackburn, you do not think they are adequate. Please can you tell us why you think the existing powers of the local authorities do not give you more cases of enforcement coming forward?

Cllr Blackburn: At the moment, there is a presumption that tenants will make complaints and will come forward. By and large, we know that the more vulnerable the tenant, the less likely they are to want to try to put their housing in jeopardy, even when that housing is evidently substandard and they themselves are aware that it is not compliant with legislation. The power to go in and inspect is absolutely vital, because we are not able to rely on people complaining, particularly in areas where people are, as I say, especially vulnerable.

I also think there are issues, as Mr Gilchrist has already outlined, in terms of the enormous complexity of demonstrating that an area is right for selective licensing. That is, as has been mentioned, always subject to judicial review and subject to challenge. We have been fortunate, in that our decisions thus far have not been subject to judicial review. I am confident that our case has been strong, but there is a considerable amount of work that has to go into that to demonstrate beyond any reasonable-or even unreasonable-doubt that there is not a problem in the area.

Demonstrating that there is an impact in terms of a lack of demand for housing in the area is particularly difficult, because there is a demand for housing in the area. However, it is a demand for landlords to buy properties and rent them out. There is not a demand for people to buy those properties to live in as family homes; that is very difficult to demonstrate, and currently the guidelines do not make a distinction between the two. It is very much a dark art: I know that, but how I demonstrate that is particularly difficult.

Q264 Mark Pawsey: There is a risk­based system, is there not? You can evaluate risk and take action on the basis that you believe a risk may exist with a particular landlord or a particular area. What additional powers would you like that would enable you to bring standards up?

Cllr Blackburn: I would like to designate the whole of the borough a selective licensing zone, but without investing huge amounts of-

Q265 Mark Pawsey: Without additional powers of enforcement, how would that on its own necessarily help?

Cllr Blackburn: But I was not talking about additional powers of enforcement.

Q266 Mark Pawsey: No, but what additional powers would you like?

Cllr Blackburn: I would like the power to designate the whole of the borough a selective licensing zone.

Q267 Mark Pawsey: Is that it?

Cllr Blackburn: That is not it, but that is key amongst what we would ask for. The Chair has already indicated that we are going to go on to discuss the lettings agencies later, so I do not want to intrude on that now.

Q268 Mark Pawsey: Mr Gilchrist, your authority would like to impose penalties. Tell us how they would work.

Tom Gilchrist: The legal process, by its very nature, is complex and quite difficult. By their very nature, most local authorities are very conservative, with a small "c". They will not take enforcement action unless there are serious problems. The reality is that the prosecutions that we, as a city, tend to take are against the worst of the worst landlords.

Q269 Mark Pawsey: In an ideal world, you would bring forward more.

Tom Gilchrist: Yes, exactly. From our perspective, it is an expensive business going into court, especially where we know that the legislation is not particularly well drafted-as the Housing Act 2004 is not well drafted-around licensing. We can get appeals, and we will get appeals through into the county court and then into the High Court. That in itself wraps up, not only your officers’ time, but your legal officers’ time as well, and that costs an enormous amount of money. If we are successful, and we win those cases through to appeal, we can get our costs back. The two judicial review cases that we have been involved with have been on unlicensed properties that were found two years ago. We have not even got to the magistrates court yet to establish whether they required a licence, and that takes time for local authorities to do.

Q270 Mark Pawsey: How would the penalty charge system that you propose be better?

Tom Gilchrist: Penalty charge notices for simple offences would be so much easier to do. You can give a ticket to a landlord for relatively minor management offences within the house-a broken electricity supply, a broken fire alarm or storage and equipment stored in escape routes-which are going to be fixed relatively quickly. You can serve a fixed penalty charge notice on the landlord. If that can be repaired/resolved within seven days, there is no charge at all.

Q271 Mark Pawsey: So it will act as a warning.

Tom Gilchrist: Exactly.

Q272 Mark Pawsey: Do you not have a warning mechanism currently?

Tom Gilchrist: We do, but what we would do is serve a legal notice. We would give the landlord 21 days. After 21 days, we would have to do another inspection. If there is no work done, you would then serve notice.

Q273 Mark Pawsey: So you just think that the fear of a penalty would get more action?

Tom Gilchrist: Exactly. We have come to use fixed penalty charge notices for energy performance certificates. That has worked enormously well. We serve it on the landlord and we serve it on the owner. If we get the energy performance certificate back within seven days, there is no charge to the landlord and no charge to the owner. That works extremely well.

Q274 Mark Pawsey: You have also got concerns that landlords do not understand the housing health and safety rating system. How can landlords be helped with that?

Tom Gilchrist: The hazard rating system is a really complicated process. We are fortunate in Bristol that we were involved with the national pilots when they were set up in the year 2000. It is a risk-based exercise: you look at a property to identify whether there is a risk there, and what the likely outcome of that risk would be. If somebody falls down the stairs, what would the outcome be? There is quite a complicated mathematical exercise that has to be gone through to establish whether it is a category 1 hazard-a serious hazard-or a less serious category 2 hazard. For most people, that is quite a complicated thing to get your head around, unless you are a professional working in the field. DCLG issued guidance for landlords on the use of the HHSRS some years ago, but it is a really complicated process. By its very nature, it is difficult to understand.

Q275 Mark Pawsey: So would you do away with it?

Tom Gilchrist: No, not at all.

Q276 Mark Pawsey: What would you do?

Tom Gilchrist: The operating guidance by which risk hazards and outcomes for hazards was devised between 1997 and 1999, so the operating guidance is now more than 10 years out of date. That desperately needs to be updated for operating officers. What was an excesscold hazard has changed since the year 2000; things have moved on since then. Property construction techniques have changed. Insulation techniques have rapidly changed. If the operating guidance can be reviewed to meet today’s present standards, and guidance can be given to local authorities, it would enable local authorities to be operating a system that is up to date. At the moment, we are operating with guidance that is some years old.

We have had a number of cases that have gone through to the Lands Tribunal in London. When you take a case to court through the HHSRS, there is an appeals mechanism that goes into the Residential Property Tribunal. If we win the case there, the landlord has the opportunity to appeal; it goes into the Lands Tribunal in London. We have lost a couple of cases with the Lands Tribunal in London, because the chair has said the operating guidance is too old to have been making decisions on. So the local authorities are trying their utmost to use a piece of legislation that basically needs to be updated.

Q277 John Pugh: I am sorry if I have missed this point. When you were mentioning selective licensing earlier, you said it was a complex process. I was just wondering, while you were saying that, how many times it has actually been contested in practice. What I mean to say is that no one individual landlord needs to think that the blame is being pointed at them particularly, if the area is considered to be an area of social disorder or whatever. Presumably in most cases, when you go through this complex process, you go through it successfully and without it being contested.

Tom Gilchrist: Yes.

John Pugh: So it is complex, but not normally contested.

Tom Gilchrist: No, but that is because it has taken us 18 months from the initial discussion with my executive member through to implementation in April.

Q278 John Pugh: So it takes time and it is complex, but it is doable.

Tom Gilchrist: It is doable, but it just takes a long time to do.

Q279 Bob Blackman: Moving on to the issue of letting agents, which has already been raised once but which we will cover in a bit more detail now, I just want to get a flavour, first of all, for the volume of complaints that you, as local authorities, get about letting agents. Councillor Glanz, how many complaints do you get each year about letting agents?

Cllr Glanz: I do not have an exact figure, but I am not aware of huge numbers of complaints about letting agents. In line with most of the stock that we have, we have letting agents who tend to be national surveyors, who want to comply with the legislation and standards that we would hope everybody complies with. But clearly, there are others that do not.

Q280 Bob Blackman: What about you, Councillor Blackburn?

Cllr Blackburn: We received just over 500 complaints to our quality standards division in the last financial year.

Q281 Bob Blackman: Has that figure gone up dramatically, or has that changed?

Cllr Blackburn: It has been constant at around about the 400to600 figure over the past three or four years. A greater percentage of those complaints are around the bond-holding issue, and around the level of fees that people are being charged.

Q282 Bob Blackman: I am going to come on to that. This is just to get a flavour. Without putting words into your mouth, is it about specific agents? Are a huge volume of complaints about specific agents, or is it generally across the board?

Cllr Blackburn: It is generally across the board. Some are better than others.

Bob Blackman: How about you, Mr Gilchrist?

Tom Gilchrist: I do not have numbers in relation to letting agents that we get complaints about, although the two judicial review applications were through letting agents. Of the prosecutions we have taken-I have got a list here-at least four or five of those are letting agents. Some of those are just awful. They are just poor-quality agents.

The issue with agents that we find in Bristol-and, again, there may be similar problems elsewhere in the country-is being able to establish where the management responsibilities sit with an agent. Is it the landlord’s responsibility to do the repairs, or is it the agent’s responsibility? What we do tend to find with agents is that they will set up an agreement with a landlord, either a verbal agreement or a fairly loose written agreement, but when you go into court, who you then take to court can be really cumbersome and difficult to prove. As a result of that, we tend to take both landlord and agent to court and let them fight it out between themselves as to who is guilty. It sounds awful, but-

Bob Blackman: You have got to get there somehow.

Tom Gilchrist: Yes, exactly.

Q283 Bob Blackman: Coming back to Councillor Blackburn, you, in your written evidence, have suggested that you want a kitemark for letting agents across the country. We have already got ARLA, RICS, two ombudsmen, and the SAFE Agent process. Are you suggesting replacing all of those with a different regime, or are you suggesting another regime on top of it? If you are, does it not all look very confusing?

Cllr Blackburn: Yes, I agree, Chair; it would look very confusing. I think an awful lot of the current regulation that is in place is not particularly effective. It is subject to the same vagaries as we discussed earlier on: the good guys get involved; the people who want to do the job properly will engage, and the people who do not, do not. This is frequently the case with memberships of professional bodies.

A national kitemark could replace a great deal of bits and pieces of regulation that have not proven to be particularly effective. This has been a huge growth area. There has been a huge growth in the number of letting agents and the number of landlords choosing to use them, and they appear to be making the situation worse, rather than better. I agree with Mr Gilchrist’s comment that finding out exactly who is responsible is a minefield for us and our legal teams, never mind for tenants, who I imagine are blissfully unaware of who is responsible for what.

Q284 Bob Blackman: Mr Gilchrist, you were suggesting in your written evidence about controlling fees. Could you just expand on what fees you would like to see controlled, and how they would be controlled?

Tom Gilchrist: As either a tenant or a landlord, when you are walking into a letting agency, there are very rarely any charges up. It has actually come to light this morning-we were talking about this before I left Bristol-that we have got a letting agency that is an ARLA agent, who represents the southwest region. The southwest regional representative for ARLA informally told us, "We have got one fee that we provide to large portfolio landlords, and one fee that we provide to small landlords. But we do not publish them anywhere. Only following discussion with the landlord, once we have established exactly how many properties they have, do we decide what fee we should then charge." The charging of fees by letting agents would be really important, and charging of fees to tenants to secure accommodation would also be extremely important. Some agents charge tenants a fee to put them on their books and to potentially go and find them a property.

Q285 Bob Blackman: Given that the position is that the letting agent’s client is actually the landlord, is it appropriate that the letting agent then charges the tenant a fee for finding them a property?

Tom Gilchrist: Not at all, but some agents do.

Bob Blackman: Yes, we have taken evidence previously on this particular issue.

Tom Gilchrist: The issue for me is that a lot of these fees are not published. If you walk into the local letting agent around the corner here, there will be no list of fees there, for either the tenant or the landlord.

Q286 Bob Blackman: Councillor Blackburn, have you got a view on fees?

Cllr Blackburn: Fees are a significant issue. They vary dramatically from one agency to another, and yet at the same time seem to bear little relation to the size of the house or the income of the people who are applying. The fees would be the same for me to rent a fourbedroom detached house as they would be for someone to rent a one-bedroom bedsit. By and large, there tends to be one level of fees.

One thing across a variety of different areas that is of specific concern to us is the policy of charging for credit checks. Almost invariably-I assume this is the same elsewhere-if a couple are applying, they both need to pay an application fee, and they both need to be credit-checked. If people are fearful of failing a credit check, or if they cannot afford to pay two application fees, quite often the earner-the person who earns the most money in the household, who sadly in this day and age still tends to be the male in the relationship-will apply for the property on their own. As and when the relationship breaks down, or when there is an altercation, the female in question is not named on the tenancy. She does not officially live there, and has no tenant rights. She is the one who gets moved out. That is a specific concern.

Q287 Bob Blackman: Surely, for the protection of both the landlord and the agent, credit checks are an example of something that should be carried out in order to make sure that someone can afford to pay the rent.

Cllr Blackburn: Indeed, that is absolutely right, and I have no issue with the whole £2 cost being passed on to the tenant. I have an issue with the £2 cost becoming a £50 fee.

Q288 Bob Blackman: Councillor Glanz, in your written evidence, you suggest that no change is required and no extra regulation is necessary. Do you disagree with what your colleagues have said?

Cllr Glanz: No, to a certain extent I would share their concern about inappropriate fees, and certainly a lack of transparency in relation to costs being incurred in relation to anybody entering into a tenancy. I would share the view that those costs, rightly, fall generally to the landlord as opposed to the tenant. There is certainly a lot of evidence to show that unforeseen costs in relation to the preparation of inventories and standard form tenancy agreements are being charged at very high sums of money. There are also other costs, such as bank reference fees as opposed to a more simple credit reference fee. I would share their concern about those kinds of costs not being made clear to tenants.

Q289 Bob Blackman: What about Councillor Blackburn’s idea of a kitemark for letting agents, so that everyone knows that this is a nationally accredited body, rather than, possibly, the vast array of different standards there are at the moment?

Cllr Glanz: Again, I come back to my concern about regulation generally not being something that would necessarily be taken on board by the sort of landlords that are causing the problems that we are largely concerned about. I certainly would favour transparency in relation to fees, and making it clear that people should enter into terms of reference in relation to-

Q290 Bob Blackman: Should there be more action against these rogue landlords that do not register for anything and just carry on?

Cllr Glanz: Yes, and that is where we are looking to concentrate our enforcement arrangements.

Q291 Heather Wheeler: I am really interested in what you do to inform and educate landlords and tenants about their respective roles and responsibilities, and also how you go about getting that information out to hard-to-reach groups. Mr Gilchrist, I wonder whether you could just give us a quick run­down from Bristol’s perspective on that.

Tom Gilchrist: Within Bristol, we do an enormous amount of work around the private rented sector through information, training and advice. I will just quickly run through stuff we do: on a quarterly basis, we do a landlord newsletter, which is up to date with any changes in legislation. That goes out to 4,000 landlords by e-mail or by hard-copy post. We run an annual landlords’ Expo (Exhibition) in Bristol with the west of England local authorities-the other four unitary authorities around Bristol-and that is attended by between 400 and 600 landlords per year. It is the second biggest landlord exhibition that runs in the UK.

We have got a landlords’ manual that is available for operation. Through that, we have also got a landlord proficiency test. There is a small charge-£50-but landlords can then read the manual and sit an online test to make sure they understand the legislative requirements that they, as landlords, must meet. We have an agents and landlords forum that meets twice or three times a year to discuss current regulations and current consultation documents that come out from the Houses of Parliament-to discuss how we are going to respond to those as a collective group.

We run a West of England Landlords’ Panel-which, again, covers the sub­regional aspect of the southwest of England-with the regional representatives of ARLA, South West Landlords, and the Westcountry Landlords Association. They all come together as a group with the representatives of the four local authorities. We do an enormous amount of work with landlords to try to bring them up to speed with what they should be doing to properly manage their properties.

That is where I come back to the point that we only use the legislative provisions that we have got available to us as a last resort. What we want is a good, stable, manageable private rented sector that is well managed by both agents and landlords.

Q292 Heather Wheeler: That was very comprehensive, Mr Gilchrist. Councillor Blackburn, you are very keen on this area-based work. Is the information that you give out and the interaction that you have just in the area-based areas, or is it the whole of the council?

Cllr Blackburn: There is an all-inclusive Blackpool, Fylde and Wyre landlords forum, which the council supports. It is largely similar to that that Mr Gilchrist outlines in terms of communicating and getting the dialogue going, and council officers do support that process. We also, because of the issue that I have outlined earlier about only those landlords who wish to be engaged turning up to these things, have started distributing documents from the forum in the monthly statement of housing benefits that is sent out to every landlord with HB tenants in the town, so there is a mechanism there as well.

In terms of advice and guidance, we are working in the selective licensing area specifically with landlords to help them to understand their responsibilities and what the selective licensing framework is there to achieve. By and large, though, we are focusing on what they can do to support their tenants. As politicians, you will all know that putting the bins out is the single biggest issue that we encounter from those people who we represent. It is vital, for example, that we communicate to landlords how important it is that when a new tenant moves in, they know when to put the bins out. That is one of the common issues.

Q293 Heather Wheeler: That is very interesting. Councillor Glanz, we are particularly interested in the comments that have been made about the work that you do with the Portman Group and Spirit Group. Could you give us some feedback on that, please?

Cllr Glanz: That is a group that looks specifically at residential accommodation above licensed premises. Clearly, we have large numbers of licensed premises in Westminster. Some of the accommodation above them has provided residential accommodation not only for just a landlord, but also, in many cases, people who are working in a pub or a restaurant.

Heather Wheeler: Just to be clear, because not many people were particularly aware of this: the Spirit Group is actually the pubco spirit group, and the Portman Group is to do with the brewers. I must declare an interest, now that has been made clear to everybody. I am reliant on a pension from the brewing industry.

Q294 Andy Sawford: I want to ask in particular about the Local Housing Allowance, which you all gave evidence about. Councillor Blackburn, you suggested that the Local Housing Allowance means that rents are artificially high in Blackpool, because of issues around the coastal properties and so on. Why is the Department for Work and Pensions, in your view, unwilling to look at specific instances such as Blackpool where the LHA can create a problem in terms of rent levels?

Cllr Blackburn: I wish I knew. We did seek to resolve this in early conversations around a City Deal for Blackpool. We were sent away and told to be bold, radical and innovative, but to remain within the existing funding envelope. We came up with the idea of taking local control of the Local Housing Allowance, because we believed that we could deliver substantial savings on it. It took all of 15 minutes for a civil servant to check with the DWP, ring us back, and tell us that when they said "bold and radical", they did not mean that bold and that radical, and that the DWP money was not something that was up for grabs through the City Deal. Members will note that Blackpool is not currently part of a City Deal. I do not know, but I wish they would.

Q295 Andy Sawford: Are you currently actively pursuing this? Is this a conversation that you are continuing to drag out?

Cllr Blackburn: It was made fairly clear to us that there was not a great deal of point continuing to have it. We will continue to lobby, make the case, and demonstrate that we feel that that money could be much better spent and it could support the housing infrastructure and the people living in those houses in a much better way than just handing money over to landlords every month. But I don’t think they are listening.

Q296 Andy Sawford: Councillor Glanz, you have the opposite problem in Westminster, from your evidence.

Cllr Glanz: We do.

Q297 Andy Sawford: How many people do you estimate have been forced to move from Westminster as a result of the Local Housing Allowance cap?

Cllr Glanz: When the housing caps were first introduced, we estimated with a fair degree of research that we had 5,200 families in accommodation that was above the caps at the time. What is interesting is that many of those had actually come into Westminster comparatively recently, because under the previous arrangement, people were encouraged to take accommodation at levels that could have been significantly higher than the caps currently are. We had many stories about people living in St John’s Wood at £2,000 a week, etc. More particularly we had a large number of people who were in accommodation who had moved in specifically to take advantage of that previous arrangement.

Having said that, the number has reduced for a range of reasons. One of these is that some people have actually been successful, with the support of our Housing Options Service, in negotiating down the rentals that were previously charged under the arrangements that were in place. When we agree to provide support through a discretionary housing payment, for instance, we will do so against the background of a negotiation with the landlord to reduce the sum of rent that is being paid for the property as a whole. We have had some significant degree of success on that, particularly where the previous arrangements had been out of kilter with the market at the time.

At the same time, of course, the market has moved onwards and upwards generally. We do indeed have some of the most expensive real estate in the country, if not the world, within these eight square miles. We have found that the pressures in relation to being able to find homes for people within those caps has now become very intense indeed, to the extent that in most cases it is unrealistic for people to expect to continue to be housed within the Westminster City boundary.

Q298 Andy Sawford: Would it be fair to take from both your comments that, in different ways, you would both welcome a greater degree of localism? Councillor Blackburn has been clear on that, but what about you, Councillor Glanz? Would you benefit from a greater flexibility and power in respect of localism?

Cllr Glanz: Yes. It would certainly help us to address the concerns that we have around the spike that we are dealing with at present, because the national numbers that were put in place are the right thing for the country as a whole, but inevitably have caused us some very specific issues in terms of finding accommodation for people within Westminster. An element of flexibility, in relation to the rent being equated more closely to a percentage of market rents within the area, might have given us some flexibility in dealing with the issues that we face. We still have significant numbers of people who are still in accommodation that is over the maximum and are being supported through discretionary housing benefit-

Q299 Andy Sawford: I am just aware of time, Councillor Glanz. I think that was a yes?

Cllr Glanz: Yes.

Q300 Andy Sawford: I had one other question, and I know there are others. Will welfare reform, such as the introduction of the household benefit cap, impact on rent levels? Perhaps Councillor Blackburn could answer.

Cllr Blackburn: Yes, it will. There will be many different impacts from the changes that we will see later on in the year. The move to paying only the single room rate for people under the age of 35 creates all sorts of problems when you are actively seeking to move away from houses in multiple occupation, because that is driving people towards houses in multiple occupation. A move to universal credit will ensure that people are forced out of the more expensive areas. There is not a huge, affluent middle class in Blackpool, but such as there is, it is around the outside of the town; there is a band. People will not be able to afford to live in that band. They will then be pushed into the already deprived inner areas, and there will be an even more stark contrast between the centre of the town and the more affluent outer part of the town as a consequence.

Andy Sawford: Mr Gilchrist, you’re nodding.

Tom Gilchrist: Yes. That is one of the reasons for us declaring the licensing area in the centre of Bristol. The reality, we believe, is that the area currently is used for predominantly families in receipt of LHA. We suspect that landlords will move those families out, end tenancies, and fill the accommodation with single people under 35 and convert properties into small, multiple­occupied units, therefore increasing their rent levels. As LHA drops, obviously, the landlords’ income stream from a family will reduce. Obviously, if he can fill a property with four or five single people, his income can go back up again. That in itself will create all sorts of problems in an inner-city area. We are certainly extremely concerned about high concentrations of single people into a locality, and all of the associated potential problems that that may cause.

Another issue we have got is that we are really concerned about the benefit cap for larger families. Within the city, we have a significant number of households with more than four children. This benefit cap is on the four children. Those families will be unable to be housed in certain parts of the city, and that, I suspect, will result in us having overcrowding where they reduce their accommodation sizes.

Q301 Andy Sawford: Councillor Glanz-briefly, if you would-do you foresee a similar scenario in Westminster where family accommodation may be pushed further out? Do you anticipate the same effects in Westminster as in Blackpool or Bristol?

Cllr Glanz: We are certainly seeing a ripple effect. I think it is realistic to expect that that will go from central London-not just Westminster, but other central boroughs-through the outer boroughs and possibly beyond, given the pressure that there is on trying to find accommodation within the cap.

Q302 Simon Danczuk: I want to ask about homelessness. Councillor Glanz, you state in your submission that homeless households may be placed some distance from Westminster. I am currently reading a book called "Dr Johnson’s London". It is a non­fiction book. It talks about London in the 1750s, and it talks about districts in London paying other areas to take the poor off their hands. Do you not think there are some parallels between what was happening in the 1750s in Dr Johnson’s London and what you are doing in Westminster now?

Cllr Glanz: I think there are a number of parallels in relation to what has happened historically in London. I was not aware of the 1750s example, and I would be interested to go away and have a look at that. But more recently, certainly after the war, people moved out of central London. They were encouraged to do so, whether it was to garden cities or whether it was through schemes such as that of the London Borough of Newham, which built housing for Newham residents outside Newham. Certainly, the City of London has historically built housing for its residents outside the City boundaries. As I have said before, as the prices move on, I think it is inevitable that central London boroughs will have to look at ways in which the requirements of people presenting as homeless within those boroughs are accommodated slightly outside their boroughs, or even outside London, depending on where we end up with the market.

Q303 Simon Danczuk: But you have a responsibility for these people, don’t you?

Cllr Glanz: Indeed, and we accept that responsibility.

Q304 Simon Danczuk: Why should Rochdale, or any other town, take responsibility for these people?

Cllr Glanz: We provide a million jobs in Westminster, so should we be responsible to everybody in relation to the jobs that we provide here? What we cannot do, in eight square miles, is to provide homes for everybody that might want to come and live here. At the current time we do not have the stock, and we are discharging our responsibility in a responsible way by looking at where people can be accommodated close to London, and/or close to Westminster, where they can maintain links through commuting on good lines of communication, in a way that many, many people who work in London and live outside do on a regular basis.

Q305 Simon Danczuk: In your submission, you admit that homelessness is increasing, but you appear to be opposed to any further regulation. What do you think needs to change for Westminster to enable them to look after their own poorer people?

Cllr Glanz: As I said, at the moment we have an insatiable demand of people coming to Westminster, many of whom have very little connection, and certainly no long­term connection, with Westminster. The idea that the streets of the West End are paved with gold is something that, I think, will continue to attract people. We have major transport hubs within Westminster where people arrive, whether it is at the bus station in Victoria, or at Paddington railway station having come from Heathrow, and in some cases present themselves soon after arriving in the city, asking to be housed in the city, and we are not able to do so with the current housing stock available to us within the eight and a half square miles.

Q306 Simon Danczuk: What is the furthest that you have placed homeless people from Westminster?

Cllr Glanz: At the moment, we have placed people on the south coast of the UK.

Q307 Simon Danczuk: Where would that be, for example?

Cllr Glanz: We have put people in, I think, Bognor Regis, and certainly on the north coast of Kent. That has been in discussion and by agreement with people who have either got family connections there, or who have said that they would be quite happy to do so. We are not banishing people.

Q308 Simon Danczuk: That would be in the sort of coastal towns that Cllr Blackburn is grappling with. Let me just ask another question. Don Foster, the Minister, says that placing homeless households in three­star and four­star hotels is unacceptable and a waste of taxpayers’ money. Have you stopped doing that now?

Cllr Glanz: As I said, we have a spike of people who have presented in Westminster, and we have had to find accommodation for them where we owe them a duty to do so. That has been quite difficult to achieve. Although we have doubled our efforts to find self­contained temporary accommodation both within Westminster and close by Westminster, the number of people who have presented has gone up from about 30 families a month to over 100 families a month.

We have not, in such a short period, been able to find sufficient accommodation. We are still faced with the prospect of occasionally having to use bedandbreakfast accommodation as emergency accommodation. The corollary to that is that the housing benefit bill for Westminster has reduced by £14 million a year. Therefore, although there is currently a spike of people presenting, we anticipate that that will come down as the legislation runs through the various lease renewals and tenancy renewals. At a certain point, hopefully in the not too distant future, the number of people who are currently in emergency accommodation will also come down very significantly.

Q309 Simon Danczuk: So you are still using hotels for homeless households?

Cllr Glanz: We are currently using them, because we have more demand than we can cope with in the short term within Westminster, or within self-contained accommodation nearby.

Q310 Simon Danczuk: Are you not able to build anything?

Cllr Glanz: We are building homes in Westminster.

Simon Danczuk: No, I don’t mean homes. I mean accommodation for homeless households.

Cllr Glanz: We are building all sorts of homes within Westminster, which includes all sorts of affordable accommodation and social homes. We continue to build those, but we cannot build them quickly enough to deal with the spike that has presented itself.

Q311 Simon Danczuk: Just finally, Tom, how does your homelessness prevention fund work?

Tom Gilchrist: The homelessness prevention fund is used to prevent people ending up in bedandbreakfast accommodation, and to stop the local authority having to discharge its functions. It was initially set up in 2004. At the time, we received a grant from DCLG-or DPM, as it was then-because our B&B bill was £3 million a year. In effect, we basically provide housing advice and assistance to use the private rented sector before somebody statutorily presents to the council. In effect, we use the fund to pay deposit bonds; rent in advance; and a whole range of other things-even including spot purchases where there is some damage and the landlord wants to evict the tenant, to keep them in the private rented sector unit. Every year, we take on about 350 units-predominantly it is landlords who have got reasonable quality accommodation, because it is all inspected beforehand to make sure it meets minimum standards-to LHA claimants. We have currently got six or seven people in B&B at the moment. We do not have a B&B problem.

One issue that we have as a city is that this is a discretionary fund that we use. We use £250,000 a year. The tenant pays the money back. This is the other thing: we get about 40% or 50% back from the tenant where we are paying rent in advance. By doing so, we are actually cutting our B&B bill. But that is the sort of fund that is under threat of local government cuts-general cuts across the General Funds. In the forthcoming year, 2013-14, that was going to be cut, and we had to put up quite a defence to keep that in place for one year. But that is the sort of really good practice that is operating across the country, that needs to be encouraged by this Committee-because this saves local authorities a fortune in B&B costs.

Q312 Mrs Glindon: Does the assured shorthold tenancy meet the needs of those that are looking to the private sector as a long­term housing option?

Cllr Blackburn: No, it does not, nor, if I may make so bold, do I feel it meets the needs of landlords either. Transience is a huge problem in Blackpool, and that is not just transience in and out of the borough: people coming, and then going again when they realise that our streets are most certainly not paved with gold. It is transience within the borough. It is families and individuals moving every time the gas bill arrives, or every time a bailiff turns up at the door, and moving around within the town. Because of our dysfunctional housing market, it is possible to do that. You can pitch up in any part of central Blackpool with £50 in your back pocket and a bin liner full of clothes, and you will find somewhere to live. There is no long­term security, either for landlord or for tenant. The introduction of longer­term secure tenancies would be a huge benefit because that then starts to strip out some of the risk associated with streets full of rented properties, in the fact that, for whatever reason, at the end of a six­month period, people either choose to leave or are asked to leave.

Tom Gilchrist: Certainly from a Bristol perspective, we do believe that a flexible 12­month tenancy should be the minimum for tenancies. We do, however, understand that landlords, where they have a difficult or disruptive tenant, should have the right to terminate that tenancy, very much like an introductory tenancy in the social housing sector. We do believe there should be good reason: if a landlord has good reason to evict a tenancy, even if they have got a 12-month minimum tenancy, they should be able to do so.

As Councillor Blackburn said, I wholly endorse the need for increasing the length of time for assured shortholds from six to 12 months as a default across the board. Where landlords are prepared to give longer periods of tenancy, they have to be incentivised. Certainly part of the homeless prevention fund work that we do is to pay more money to the landlords if they will give a two or three­year tenancy to families, to try to enable them to get into school and to put down roots. However, we would certainly recommend a 12­month tenancy as a default.

The other issue for us is the requirement that landlords should be required to have a tenancy of some sort. We are assuming here that all landlords provide an assured shorthold six­month tenancy. Vast numbers of landlords do not even provide that. It is a shake of a hand and an exchange of money, and that is problematic in the extreme. If you are looking to try to improve the agent in the rental market, a requirement to have a statutory minimum tenancy-however long it is, be it six months or 12 months, although we would prefer 12-and actually having something in writing that a tenant should sign before there is an exchange of a rental payment, would certainly be much easier to prove from our perspective.

Cllr Glanz: I think that the assured shorthold tenancy does provide flexibility for many of the people who come into the central London market. It allows people who are studying or here on a work placement, or whatever, to know where they stand. There is an argument that longer­term, longerperiod tenancies are attractive to both landlords and tenants in cases where people are looking at accommodation that is perhaps more suitable for families and people that have got issues in and around schools.

Having said that, although most of the tenancies granted would normally be one­year tenancies with, sometimes, a six­month break clause, many tenants in Westminster stay for considerably longer than that time. We have got many tenants in the private rental sector who have been there for five, 10, 15 or 20 years by agreement with landlords, who appreciate having a good and responsible tenant and are therefore happy to extend the periods. There may be an opportunity where we have got institutional investment looking to become involved in the private rental sector. They could perhaps be encouraged to have longer tenancies, for two, three, four, or five years, as part of an approach to that which would provide more stability for people at a certain stage in their housing journey.

Q313 Mrs Glindon: Councillor Glanz, you have mentioned the institutional investment into the private rented sector. What is Westminster as a council doing, or what has Westminster done, to attract that kind of investment?

Cllr Glanz: We have been in discussions with a number of institutions who have expressed an interest in becoming involved in that particular market. One thing that is clear is that they want the continuity and certainty of the rental income, and therefore that the longer­term commitments are, as I say, attractive to them. It is also worth saying that the shadow of previous interference in relation to rents that took place some decades ago still puts a concern in some institutions’ minds as to whether they are going to be able to maintain that, or whether they might find themselves in a position where they agree a rent and then that rent is somehow altered through some kind of rent control. That has certainly been seen in this country historically, but is something that we would not be in favour of, because of the potential adverse effect it could have in relation to encouraging those institutions to get involved in the market in the same way as they are in many other European countries.

Q314 Mrs Glindon: What role would you see social landlords playing in the private rented sector in the future, Councillor Glanz? Are there any examples in Westminster of social landlords?

Cllr Glanz: Yes, absolutely. For many years, we have had buildings that have been provided through organisations like Peabody, and Octavia Hill, I believe, started her work in Westminster. We have a long tradition of social homes being provided by organisations and institutions of that kind. We also have well represented within Westminster the great estates, such as the Grosvenor Estate and the Portman Estate, who have expressed an interest in becoming involved in homes that would be available at significantly less than market rents, in order to provide for the particular need. I think they share the view that maintaining mixed communities within the centre of London, and the centre of cities generally, is part of the lifeblood of the city. The ability of people to live close to where they are working and contribute to their communities is recognised, not only by Westminster City Council, but also by those institutions. We would certainly encourage them to explore that and find ways of making accommodation available to people to fulfil those roles.

Q315 Chair: Finally, Councillor Blackburn, could you speak a little bit about what Blackpool have been doing using planning policy to try and keep homes as family homes, rather than having them become HMOs? Perhaps you could say a little bit about what you have been doing there, and how successful or difficult it has been.

Cllr Blackburn: Absolutely, Chair. This started some 10 years ago, in a specific area of Blackpool-the Talbot and Brunswick area, which happens to be where I represent-where there was a particular issue around terraced houses being subdivided into flats. We introduced in, I believe, 2005 a supplementary planning guidance for that particular area. It stated that, first, there should be no further subdivision, and secondly, that in any new development there should be a maximum 15% of any property developed that was one­bedroom flats. One-bedroom flats are a particular bugbear in Blackpool. It assumes that people have no friends or family who may wish to come and stay with them. Blackpool attracts people who are looking for something which they currently do not have, whether that is a job or whether it is a community, a family, or a group of friends. For somebody new to an area to live in a one­bedroom flat really does hobble them from the start, in terms of building networks and relationships and developing friendships.

Potential reforms that would allow subdivision of properties-which I believe are being suggested at the moment in order to stimulate the housing market, and against which we have lobbied quite hard-I do not believe would be helpful. Likewise, I do not think that converting retail properties into accommodation would be helpful. Not just in Blackpool, but I would imagine in all town and city centres, we have got a really difficult fight on our hands in planning terms to preserve the character of a city centre as largely a retail environment and a site that drives employment forward. We would want to lobby very hard against the conversion of retail properties, because I want to try and retain the characteristics of that area.

Very briefly, Chair, if I may, in more general terms, we were discussing outside, before we were brought in to you, the length of time that any planning policy takes to achieve, and the amount of consultation that there has to be. Under the current consultation framework, it is enormously difficult to get our draft local plan-which is currently in the 73rd phase of the consultation period-to reflect the Blackpool that I hope we will see towards the end of its life once the selective licensing scheme and all of our other reforms in the private rented sector have happened. If we do make the changes that we want to make over the next decade, I fear that we will have a local plan that says one thing and an actuality that is completely different.

Chair: That is a very interesting point to finish on. Thank you all very much for coming this afternoon and giving evidence to us. It is appreciated.

Prepared 16th July 2013