House of Commons - The Private Rented Sector - Communities and Local Government Committee

The Private Rented Sector - Communities and Local Government Committee Contents

2 Raising awareness, maturing the market

8. If the private rented market is to become more mature, it is important that all parties are aware of their respective rights and responsibilities. During our visit to Germany, which has a very mature market, we heard that there was a clear legal framework, set out in the country's Civil Code, high levels of awareness of this framework amongst landlords and tenants, and easy access to advice and information. In this chapter, we will consider what steps should be taken to reach a similar position in England.

A simpler regulatory framework

9. The first step towards promoting awareness and understanding must be to have in place a clear and easy-to-understand regulatory framework. Our evidence suggested that England does not have such a framework, and concerns were raised about the complexity and sheer amount of legislation relating to private rented housing. Richard Lambert, Chief Executive Officer of the National Landlords Association, was one of a number of witnesses to point out that there were "over 50 Acts of Parliament, and over 70 other pieces of delegated legislation" relating to the sector.[15] Professor Martin Partington, a former Law Commissioner, stated that housing law was "but one example of many of policies being developed over decades, being implemented through myriad legislative enactments, leaving a mass of often unnecessary, certainly over complex legislation that does not work efficiently".[16]

10. The complexity of the regulation led some of those providing evidence to call for a simplification of the law. One, James Spencer, reflecting on his past experiences as a renter, said that he would

recommend an exercise like the Tax Law Rewrite project, which aims to make the law concise and easy to comprehend without changing the substance of the law.[17]

The City of Bradford Metropolitan District Council called for "simplification, the removal of overlaps and the creation of consistency across different pieces of legislation and guidance".[18] Professor Partington referred to a 2006 Law Commission report, Renting Homes, which had argued "that the existing law should be recast". He explained:

Adoption of the Law Commission's recommendations would have created a legal framework that was simpler for both landlords and tenants to understand and more flexible for ministers and officials to operate.[19]

11. Such a simplified legal framework could include the introduction of a standard 'plain language' tenancy agreement. Professor Partington said that the Law Commission's proposals

would have created a system of written tenancy agreements, drafted in plain language, which would have provided an authoritative statement—backed by law—of landlords' and tenants' rights and obligations. The documents could be adapted to accommodate specific individual circumstances; but the basic core of the document would reflect the rules that Parliament has laid down. This would replace the current position where tenancy agreements are often drafted in extremely opaque legal language and do not reflect accurately the rights and obligations contained in legislation.[20]

12. In other areas the Government has shown itself open to a consolidation of regulation. In 2012 Lord Taylor of Goss Moor conducted an external review of planning guidance, aiming to reduce dramatically guidance and make it more accessible and effective.[21] The Government subsequently consulted on and responded to the review's findings, and the process is ongoing.[22] We welcomed this exercise and therefore asked the Housing Minister, Mark Prisk, whether he would take a similar approach and conduct a wholesale review of legislation covering the private rented sector. He said that he was

always happy to talk to industry where we can look at sensible simplification and consolidation of law [...] Like a lot of legislation, naturally it tends to have been in response to a particular event that has driven us as a Parliament to take an action, and then it steadily builds, like a set of barnacles on the bottom of a ship. Occasionally you need to clear that off and have a clear set of rules.[23]

We were pleased by the Minister's willingness to consider a review of the legislation with regards to tenancy agreements.

13. Efforts to boost understanding of rights and responsibilities are unlikely to succeed without a clear legal framework being in place. We recommend that the Government conduct a wide-ranging review to consolidate legislation covering the private rented sector, with the aim of producing a much simpler and more straightforward set of regulations that landlords and tenants can easily understand. As part of this review, the Government should work with groups representing tenants, landlords and agents to bring forward a standard, plain language tenancy agreement on which all agreements should be based. There should be a requirement to include landlords' contact details in tenancy agreements. In subsequent chapters, we identify some specific changes to regulation that should be considered as part of the review. In drawing up our recommendations we have been mindful that the imposition of additional regulations brings with them additional costs which could adversely affect the incentives to provide much needed accommodation.

HOUSING HEALTH AND SAFETY RATING SYSTEM

14. One particularly complex area of regulation is the housing health and safety rating system (HHSRS) which local authorities use to assess the health and safety risks present within a property. Some local authorities expressed support for the principles behind the HHSRS.[24] Other evidence, however, raised concerns about its complexity. Tom Gilchrist, Service Manager for Private Housing and Accessible Homes at Bristol City Council, said that the hazard rating system was "a really complicated process". He explained:

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.[...] 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.[25]

According to the Private Landlords Survey 2010, 85% of landlords had not heard of the HHSRS.[26] By implication, we can expect levels of awareness amongst tenants to be even lower. Even amongst those who supported the HHSRS, there was a view that the guidance underpinning it should be updated.[27] We also received evidence that the HHSRS was inconsistent with other regulations. Bradford Council pointed out that in some instances planning and building regulations were not consistent with the HHSRS:

It is possible for a housing development to pass through the planning process and comply with Building Regulations and yet contain hazards relating to lighting, crowding and space, noise and falls on stairs. Examples include rooms without windows and the use of 'pigeon' staircases in loft conversions.[28]

15. The complexity of the HHSRS can be illustrated by examining the processes for assessing hazards and carrying out enforcement. When a local authority inspects a property, judgments about hazards are made by reference to those who, mostly based on age, would be most vulnerable to the hazard, even if people in these age groups are not actually living in the property at the time. However, where a hazard exists but the current occupant is not identified as vulnerable to the particular hazard, an improvement notice or prohibition order can be suspended but has to be re-assessed after a year.[29] Such nuances are not straightforward and must be difficult for an individual, part-time landlord to understand.

16. Some evidence called for a new approach to assessing the quality of private rented housing, although views varied about what form this approach should take. Some suggested applying the decent homes standard used in social housing to the private rented sector, or establishing a variant upon it.[30] The campaign group Housing Voice said that

a regular 'MOT' style certificate showing that a property is free of serious hazards and meets a new, minimum decent homes standard would be a major step forward and ensure more homes are fit for purpose.[31]

17. Mr Prisk told us that he had heard "diverse views" about the HHSRS but that it had "not been at the top of the list of the representations I have received". Nevertheless, he said that if the Committee had "heard differently" he would be "more than happy to look at that more carefully".[32]

18. The HHSRS may well be a robust tool to enable professionals to assess health and safety risks within properties, but we are concerned that few landlords (and, by implication, tenants) understand how it works. If we are to expect landlords to provide housing of a decent standard, and tenants to complain if it fails to meet this standard, it is important that there is a straightforward way of assessing whether the standard has been met. The HHSRS does not achieve this purpose. There is a strong case for a clear, easy to understand set of standards that landlords should be expected to meet. We recommend that the Government consult on the future of the housing health and safety rating system and the introduction of a simpler, more straightforward set of quality standards for housing in the sector. The Government should also ensure that planning and building regulations are consistent with standards for the quality and safety of private rented housing.

Awareness and advice

19. Establishing a clear and streamlined legal framework would, then, be a helpful step towards raising understanding. Consideration must also be given to getting the message out about the key points included within the framework. Throughout the inquiry, we heard concerns that landlords and tenants were not sufficiently aware of their respective rights and responsibilities.[33] Grainger plc, a large landlord, told us that "many difficulties arise in the sector because of lack of understanding among all parties" and that "a very real positive impact can be made in the [sector] simply through greater awareness of rights, responsibilities and best practices among landlords, agents and tenants".[34] A number of existing groups, some of which are entirely voluntary, do an excellent job in providing advice to tenants. It is important that all tenants know that sources of advice are available and how they can be accessed.

20. It is not, however, only tenants who need advice and information. Many landlords are also unaware of their rights and responsibilities, including those who may have become landlords accidentally but have chosen to remain in the sector. The Central Association of Agricultural Valuers stated:

There are those who become landlords "accidentally" for an interim period, for example as executors of a will or when managing a property for an elderly relative who has moved into a nursing home and using letting as an interim measure (to ensure the property is occupied over a winter, for example). Any proposals to regulate landlords must acknowledge the position of this group which is less likely than professional landlords to be aware of necessary compliance.[35]

Landlord accreditation schemes (see Chapter 3) play an important role in providing information and education. Most landlords are, however, not part of such a scheme.

RAISING AWARENESS

21. We heard a number of suggestions for how awareness of rights and responsibilities could be increased. KIS Lettings, an agency based in the North East, suggested that

every tenant is provided with a mortgage or insurance policy style Key Fact Sheet outlining in Plain English what they can expect, by law, from their tenancy and what their landlords should expect from them in return, along with advice about pathways of arbitration and redress.[36]

The National Private Tenants Organisations said that all tenants should be issued with a "tenancy information pack" based on that introduced in Scotland.[37] Andrew Cunningham, Chief Executive of Grainger plc, saw merit in a Government publicity campaign, saying that "the Government manages to publicise smoke alarms, breathalysers and changing to digital TV, so I am sure it can publicise landlord and tenant relationships.[38]

22. The Dispute Service Ltd suggested that there was a particular case for greater publicity around deposit protection requirements. It observed that when The One Show ran a small item on deposit protection, there was a "huge spike" in calls to the service's contact centre and those of other deposit protection schemes, which it said showed "powerfully the impact which wider publicity can have on consumers".[39]

23. Mr Prisk declared himself "a strong believer that an effective market works when, in the broadest sense, the consumer understands exactly what their rights are". He added that the Government had "published guidance already in this field, and it is something where we have said to the industry that we would be happy to support an industryled scheme to get this across".[40]

AWARENESS AND ADVICE: CONCLUSION

24. The Minister is right to say that the industry—the various member organisations and regulatory bodies—has an important role to play in making landlords and tenants aware of their rights and responsibilities. Given the diverse range of providers within the sector, however, it may be difficult to identify a single sector body that can take the lead. We therefore consider that there is merit in a publicity campaign led and funded by the Government. We recommend that, once the review of the legislative framework we have called for is completed, the Government, working with tenants', landlords' and agents' groups, establish and help to fund a publicity campaign to promote awareness of tenants' and landlords' respective rights and responsibilities. Our recommendation for a wholesale review of the regulation in the sector provides the obvious platform on which to base a publicity campaign.

25. As part of this publicity campaign, there is merit in requiring tenancy agreements to be accompanied by a fact sheet for tenants, giving a clear statement of their key rights, what they can expect from their landlord, and where they can go to seek advice or raise concerns. Indeed, we consider that a similar document should be provided to landlords. This could be distributed by lenders to those who apply for a buy-to-let mortgage, and by local authorities and landlord organisations. We recommend that the Government bring forward proposals for the introduction of easy-to-read key fact sheets for landlords and tenants, and consult on the information these sheets should contain. The sheets could include links to further information available online. As a minimum, the sheets should set out each party's key rights and obligations, and give details of local organisations to whom they could go for further advice and information. This fact sheet should be included within the standard tenancy agreement we propose earlier in this chapter.

16 Ev 128, para 2.7 Back

17 Ev w42, para 4 Back

18 Ev 259, para 1.4 Back

19 Ev 130, para 3.13 Back

20 Ev 130, para 3.14 Back

21 Department for Communities and Local Government, External Review of Planning Practice Guidance: Report submitted by Lord Matthew Taylor of Goss Moor, December 2012 Back

22 Department for Communities and Local Government, Government response to the external review of government planning practice guidance consultation and report, May 2013 Back

23 Q 705 Back

24 See, for example, Ev w142 [Thanet District Council], Ev w242, para 10 [Stockton-on-Tees Borough Council]. Back

25 Q 274 Back

26 Department for Communities and Local Government, Private Landlords Survey 2010: Tables, Annex 7.2; see also Q 451 and footnote [Richard Blakeway]. Back

27 Ev w242, para 10 [Stockton on Tees Borough Council]; see also Ev 266, para 20 [Leeds City Council], Ev 144 [Local Government Association]. Back