Conclusions and recommendations
Simplifying regulation
1. 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.
(Paragraph 13)
2. 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. (Paragraph 18)
Increasing awareness
3. 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.
(Paragraph 24)
4. 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. (Paragraph 25)
Raising standards
5. Some
local authorities are doing excellent work to raise standards
in the private rented sector, but there appears to be more scope
for sharing this good practice, so that all councils are performing
to a high standard. The Local Government Association should, as
part of its sector-led improvement role, make sure that mechanisms
are in place to ensure all councils learn from the good practice
and take effective steps to improve standards of property and
management in the private rented sector. (Paragraph 30)
6. We are concerned
about reports of reductions in staff who have responsibility for
enforcement and tenancy relations and who have an important role
in making approaches to raising standards successful. Given the
financial constraints that councils face, it is important to identify
approaches to raising standards that will not use up scarce resources.
One approach is to ensure that enforcement arrangements pay for
themselves and help to fund wider improvement activity. Therefore,
where possible, the burden of payment should be placed upon those
landlords who flout their responsibilities. (Paragraph 31)
7. We recommend that
the Government consult on proposals to empower councils to impose
a penalty charge without recourse to court action where minor
housing condition breaches are not remedied within a fixed period
of time, though an aggrieved landlord would have the right of
appeal to a court. (Paragraph 33)
8. We recommend that,
where landlords are convicted of letting property below legal
standards, local authorities be given the power to recoup from
a landlord an amount equivalent to that paid out to the tenant
in housing benefit (or, in future, universal credit). We hope
that such a measure will help to prevent unscrupulous landlords
from profiting from public money. Local authorities should be
able to retain the money recouped to fund their work to raise
standards. To ensure a consistent approach, those tenants who
have paid rent with their own resources should also have the right
to reclaim this rent when their landlord has been convicted of
letting a substandard property.
(Paragraph 37)
Illegal eviction
9. We
do not agree that a statutory duty to have to take steps to tackle
illegal eviction should be placed on local authorities, as it
would be inconsistent with a localist approach. Nevertheless,
it is again important that local authorities learn from each other
and share best practice on tackling illegal eviction. The Local
Government Association should ensure that lessons on illegal eviction
are learnt and disseminated. (Paragraph 38)
10. We are concerned
that the police are sometimes unaware of their responsibilities
in dealing with reports of illegal eviction. We recommend that
the Department for Communities and Local Government work with
the Home Office on guidance that sets out clearly the role of
the police in enforcement of the Prevention from Eviction Act
1977. (Paragraph 39)
Licensing and accreditation
11. The
idea of national licensing has some merit, and such a scheme could
bring a number of benefits, particularly if introduced alongside
an effective system of redress. It is clear, however, that the
Government has not been convinced by these arguments, and we have
some sympathy with the Minister's assertion that a national scheme
could be very rigid. Having tailored local schemes may bring its
own costs, especially for landlords operating across several areas,
but on balance we would prefer to see local authorities develop
their own approaches to licensing or accreditation in accordance
with local needs. The Government's focus should be on giving local
authorities greater flexibility and encouraging the use of existing
powers. (Paragraph 43)
12. We recommend that
the Government bring forward proposals for a reformed approach
to selective licensing, which gives councils greater freedom over
when licensing schemes can be introduced and more flexibility
over how they are implemented. Councils should ensure that the
cost of a licence is not set so high as to discourage investment
in the sector. (Paragraph 49)
13. We recommend that
the Government give local authorities a power to require landlords
to be members of an accreditation scheme run either by the council
itself or by a recognised landlords association. (Paragraph 53)
14. It is important
that local authorities have options and tools to raise standards
in their areas. Three particular options are: (1) greater use
of landlord licensing schemes; (2) compulsory accreditation; and
(3) taking a proactive neighbourhood approach to raising standards.
In each of these cases, given resource constraints, the schemes
have to pay for themselves, and, as far as possible, place the
burden of payment on the unscrupulous landlords, with financial
deterrents for non-compliance. Councils should be given the powers
to impose heavy penalties on those who do not register for licensing
or compulsory accreditation after appropriate notification. Neighbourhood
approaches could be funded by local authorities recouping costs
from landlords whose properties fail to meet minimum standards.
We further recommend that the Government initiate a review of
the fines imposed by the courts for letting substandard properties,
to ensure they act as a sufficient deterrent. (Paragraph 55)
Houses in multiple occupation
(HMOs)
15. We
recommend that the Government conduct a review of the mandatory
licensing of houses in multiple occupation. This review should
consider, amongst other things, evidence of the effectiveness
of mandatory licensing, how well it is enforced, and whether the
definition of a prescribed HMO should be modified. (Paragraph
58)
16. Where there are
community concerns about high concentrations of houses in multiple
occupation, councils should have the ability to control the spread
of HMOs. Such issues should be a matter for local determination.
We therefore consider it appropriate that councils continue to
have the option to use Article 4 directions to remove permitted
development rights allowing change of use to HMO. (Paragraph 63)
17. Universities have
a responsibility to ensure that student housing does not have
a detrimental impact upon local communities. They should be working
with local authorities and student groups to ensure that there
is sufficient housing in appropriate areas and that students act
as responsible householders and members of the community. (Paragraph
64)
Safety standards
18. We
recommend that the Government work with the electrical industry
to develop an electrical safety certificate for private rented
properties. To obtain such a certificate, properties should be
required to have a full wiring check every five years and a visual
wiring check on change of tenancy. Landlords should be aware of
the legal requirement to provide safe installations and appliances.
(Paragraph 66)
19. We recommend that
the Government introduce a requirement for all private rented
properties to be fitted with a working smoke alarm and, wherever
a relevant heating appliance is installed, an audible, wired-up
EN 50291 compliant carbon monoxide alarm. (Paragraph 67)
Regulation of letting agents
20. We
recommend that, as part of its consultation on the redress scheme,
the Government seek views on how best to publicise such a scheme
and what penalties should be in place for those agents who do
not comply. The Government should also explore how the redress
scheme fits alongside existing arrangements for deposit protection.
We further recommend that the redress scheme is accompanied by
a robust code of practice that sets out clear standards with which
agents are required to comply. (Paragraph 74)
21. We recommend
that the Government make letting and managing agents subject to
the same regulation that currently governs sales agents. This
includes giving the Office of Fair Trading the power to ban agents
who act improperly, and making client money protection and professional
indemnity insurance mandatory. (Paragraph
78)
22. Any proposal to
require sales agents to meet minimum professional standards before
they begin trading should also be applied to letting and managing
agents. In addition, if at any point a requirement for sales agents
to be registered with an accredited industry body is to be introduced,
this should be part of a wider framework also covering letting
and managing agents. We recommend that the Government review these
arrangements in two years' time. (Paragraph 78)
Agents' fees and charges
23. We
recommend that the code of practice accompanying the new redress
scheme include a requirement that agents publish a full breakdown
of fees which are to be charged to the tenant alongside
any property listing or advertisement, be it on a website, in
a window or in print. This breakdown should not be "small
print", but displayed in such a way as to be immediately
obvious to the potential tenant. The code should also require
agents to explain their fees and charges to tenants before showing
them around any property. Furthermore, the code should forbid
double charging, and there should be a requirement that landlords
are informed of any fees being charged to tenants. If agents
do not meet these requirements, the fees should be illegal. Finally,
the professional bodies should make a commitment to full, up front
transparency on fees and charges a requirement of membership.
(Paragraph 83)
24. We intend to gather
further information on the impact in Scotland of the decision
to make fees to tenants illegal, and to return to this issue in
2014. (Paragraph 86)
Longer tenancies
25. The
demographics within the private rented sector are changing. No
longer can it be seen as a tenure mainly for those looking for
short-term, flexible forms of housing.
While some renters still require flexibility, there is also
an increasing number, including families with children, looking
for longer-term security. The market, therefore, needs to be flexible,
and to offer people the type of housing they need. The flexibility
of assured shorthold tenancies should be better exploited, and
the option of using assured tenancies should also be considered
where these meet the needs of landlords and tenants. That we are
beginning to see some institutions and housing associations offering
longer tenancies under the current law suggests that we do not
need legislative changes to achieve them. Rather, we need to change
the culture, and to find ways to overcome the barriers to longer
tenancies being offered.
(Paragraph 94)
26. We recommend that
the Government convene a working party from all parts of the industry,
to examine proposals to speed up the process of evicting during
a tenancy tenants who do not pay rent promptly or fail to meet
other contractual obligations. The ability to secure eviction
more quickly for non payment of rent will encourage landlords
to make properties available on longer tenancies. The Government
should also set out a quicker means for landlords to gain possession
if they can provide proof that they intend to sell the property.
(Paragraph 97)
27. Some landlords
are not able to offer longer tenancies because they are prevented
from doing so by conditions in their mortgage. We are pleased
that lenders are considering how such conditions can be removed,
and that Nationwide Building Society is to begin allowing its
borrowers to offer longer term contracts. We urge the Council
of Mortgage Lenders to work with other lenders to ensure that
they quickly follow suit.
Lenders should only include restrictions on tenancy length in
mortgage conditions if there is a clear and transparent reason.
(Paragraph 100)
28. We recommend that
the Government include in the code of conduct for letting agents
a requirement both to make tenants aware of the full range of
tenancy options available, and, where appropriate, to broker discussions
about tenancy length between landlords and tenants. (Paragraph
102)
'Retaliatory eviction'
29. There
is a perception amongst some tenants that if they speak out it
could result in their losing their home. Tenants should be able
to make requests or complain without fear that doing so will lead
the landlord to seek possession. We are
not convinced, however, that a legislative approach is the best
or even an effective solution. Changing the law to limit the issuing
of section 21 notices might be counter-productive and stunt the
market. Rather, if we move towards a culture where longer tenancies
become the norm, tenants will have greater security and also more
confidence to ask for improvements and maintenance and, when necessary,
to complain about their landlord. Moreover, if local authorities
take a more proactive approach to enforcement, they will be able
to address problems as they occur rather than waiting for tenants
to report them. (Paragraph
105)
Rents and affordability
30. Problems
with the affordability of rents are particularly acute in London
and the South East. Although in other parts of the country average
rents and yields are relatively stable, we are still concerned
that some families are struggling to meet the costs of their rent.
We do not, however, support rent control which would serve only
to reduce investment in the sector at a time when it is most needed.
We agree that the most effective way to make rents more affordable
would be to increase supply, particularly in those areas where
demand is highest. (Paragraph 110)
31. There is no
perfect way to set rent, but, where longer tenancies are being
established, linking increases to inflation or average earnings,
or voluntarily agreeing a fixed uplift each year merit consideration
and could provide tenants and landlords with a degree of stability,
though over time mechanisms may emerge as, for example, in the
commercial property sector. Tenants', landlords' and agents' groups
should encourage their members to discuss these options at the
outset of a tenancy. Existing arrangements for setting and increasing
rent are often arbitrary and uneven, and reflect the immaturity
of the market.
(Paragraph 113)
Placement of homeless households
in the private rented sector
32. We
welcome the Government's use of secondary legislation to clarify
when accommodation is unsuitable for homeless households. We expect
councils to pay full regard to this order and to ensure that homeless
households are only placed in suitable accommodation. Given that
many of these households will be vulnerable, councils have a particular
responsibility to ensure that the properties they are placed in
are free from serious health and safety hazards. We recommend
that, as a matter of good practice, local authorities should inspect
properties before using them for the placement of homeless households.
(Paragraph 117)
33. All agree that,
wherever possible, councils should be placing homeless households
within their local area (unless there are particular circumstances
that mean it is not in the households' interests). It nevertheless
appears inevitable that councils in areas with high rents, London
in particular, will place homeless households outside the area,
including in coastal towns. Before any placement, there should
be a full discussion with the receiving authority and the prospective
tenant and information about the household and its ongoing needs
should be shared. The Government should consider making this a
statutory duty.
(Paragraph 121)
34. We were pleased
to hear of positive examples of work to support homeless households
in the private rented sector, including the establishment of social
letting agencies and the development of private rented sector
access schemes. We encourage the Government to work with local
government, the charity sector and industry bodies to ensure best
practice is shared and lessons learned. (Paragraph 122)
Local housing allowance
35. We
recommend that the Government take immediate steps to allow councils
to apply for a variation of broad rental market area boundaries
where anomalies occur. (Paragraph 125)
36. We recommend that
the Government conduct a wide-ranging review of local housing
allowance (LHA). This review should assess whether there is greater
scope for local flexibility
over the setting of LHA rates and the boundaries of broad rental
market areas. Local authorities could be incentivised to reduce
the housing benefit bill by being allowed to retain any savings
for investment in affordable housing.
(Paragraph 125)
Data quality
37. We
recommend that the Government establish a small task group of
key organisations and academics to consider how data relating
to the private rented sector can be improved and made more readily
available. In addition, we encourage the National Audit Office
to contribute to an effective evidence base about the sector and
to draw upon our recommendations when developing studies on housing
related topics. (Paragraph 128)
Tax
38. We
recommend that the Government, in reviewing the regulation covering
the private rented sector, set out proposals for greater co-ordination
between the tax authorities and those regulating the private rented
sector. (Paragraph 131)
Increasing supply
39. We
welcome the introduction and expansion of the Build to Rent Fund.
The Government should take steps to ensure that the fund makes
a net addition to new housing, as well as
speeding up the delivery of those homes already in the pipeline.
(Paragraph 138)
40. It remains to
be seen how much impact the guarantee scheme for the private rented
sector will have in delivering additional new homes. The policy
may be well-intentioned in its aim to encourage organisations
to have more confidence to invest in the sector, but
the Government needs to measure results. We invite the Government
in its response to our report to update us on the number of applications
it has received for the private rented sector guarantee scheme,
and to provide an estimate for the number of additional homes
it expects the scheme to deliver. If there is any doubt that the
scheme is going to deliver the homes required, we recommend that
the Government rapidly explore other options for the use of the
resources identified. (Paragraph 142)
41. We welcome the
establishment of the task force to promote and broker investment
in build-to-let development, and are pleased that the task force
is already in operation. It is important that this task force
does not become another quango but quickly delivers on its objectives.
We invite the Government, in its response, to set out the progress
made by the task force in its first few months of operation. This
update should quantify the amount of additional investment brokered,
and the number of additional homes it would deliver. (Paragraph
144)
42. Efforts to
promote high-quality build-to-let development have commanded significant
amounts of government attention and resources. One of the main
arguments in favour of this approach is that it will lead to improved
choice, quality and affordability across the whole of the private
rented sector. It is too early to assess the impact, but a key
part of the evaluation of these measures must be the impact they
have on the sector as a whole. If, in a year's time, there is
no evidence of this broader effect, the
Government must reconsider its strategy and look to other measures
to boost supply across the sector as a whole.
(Paragraph 148)
43. There is an
urgent need to boost supply across all tenures of housing. We
recommend that the Government revisit the Committee's report on
the Financing of New Housing Supply, and set out proposals to
implement those recommendations it initially rejected.
(Paragraph 150)
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