Communities and Local Government CommitteeWritten evidence submitted by Citizens Advice

1. Introduction

1.1 Citizens Advice welcomes the opportunity to submit evidence to the Committee’s inquiry into the private rented sector (PRS). This sector has grown rapidly in recent years and conditions within it continue to vary widely, ranging from the excellent to the extremely poor. There are also major issues of affordability, especially for people on low incomes, with Housing Benefit (HB) increasingly inadequate.

1.2 The Citizens Advice service provides free, independent, confidential and impartial advice to everyone on their rights and responsibilities. It values diversity, promotes equality and challenges discrimination. The service aims:

to provide the advice people need for the problems they face; and

to improve the policies and practices that affect people’s lives.

1.3 In the year to April 2012, Citizens Advice Bureaux in England and Wales dealt with over 233,600 HB enquiries (private and social rented sectors); 28,000 enquiries on rent arrears in the PRS; 70,200 enquiries concerning threatened homelessness; and 25,800 enquiries concerning actual homelessness. There were also 137,500 enquiries regarding “private rented sector property”—covering issues such as disrepair; service charges; possession action (other than for arrears); security of tenure; harassment; problems with letting agents; and tenants’ deposits.

1.4 We realise that this inquiry does not embrace the question of supply of accommodation, as this has recently been addressed separately by the Committee. Nevertheless, we think that it should be noted that shortage of supply and associated lack of options are at the root of many of the problems of standards and affordability encountered in the PRS. We worked closely with Lord Whitty’s Housing Voice independent inquiry into affordable homes—which reported1 last September—and found the influence of housing shortage a pervasive theme within the evidence submitted by bureaux and by other witnesses.

2. The Consultation Issues

The quality of private rented housing and steps that can be taken to ensure that all housing in the sector is of an acceptable standard

2.1 CABx across England and Wales received around 10,000 enquiries on repairs and maintenance issues in the PRS last year. Disrepair is a considerable problem and clients often report feeling helpless in getting any action. The effects of poor standards on tenants and their families can affect their physical and mental health, safety and security—and sometimes all of these.

A Berkshire CAB client was struggling to get their letting agency to carry out essential repairs. They had rented for six years during which time they had been excellent tenants and always paid their rent on time. The back garden door lock was broken, making the property unsecured. Someone was sent to repair it, but it still did not lock and a request to have it done again was refused. Then when an engineer came to do the gas safety certificate check, he declared the heating system unsafe and disconnected it. Nothing had been done to rectify this. There was also a serious problem with the electrics and the tenants were sent a bill for £140, the agent alleging that the problem had been caused by them. There was also serious mould in the kitchen and when the tenants complained, they were told to use a spray chemical, the smell of which so pervaded the room that they did not like being in there and instead cooked with a microwave in the sitting room. They found living in the house increasingly difficult but faced a shortage of alternative properties at an affordable price in the area.

[It should be noted that a letting agent was involved in this case—see further comments on letting agents below.]

2.2 Considering what steps could be taken to ensure acceptable standards in the PRS raises the issue of investment. For private landlords there is an important balance to be struck between a return that will render attractive the levels of investment necessary to achieve and maintain good standards; and rents that tenants can afford.

2.3 At the lower end of the quality continuum, standards are also a matter for local authority environmental health functions— and possibly also a matter for regulation (see below). There are two particular difficulties with environmental health interventions:

(a)staff shortages within local authorities, which means lack of time for adequate pursuit of offenders; and

(b)the fear among many tenants that a complaint may result in a retaliatory eviction2—a particular problem given the scant security of tenure afforded by “assured shorthold” tenancies.

2.4 Protection from retaliatory eviction should be a feature of the operation of the PRS, whether as part of a regulatory system or not.3

Levels of rent within the private rented sector, including the possibility of rent control and the interaction between Housing Benefit and rents

2.5 CAB enquiries evidence the challenges many people face in finding affordable accommodation in the PRS.

2.6 Rising rents are a critical factor in the increase in the HB bill. Whilst we accept that HB—and in due course the rental element of Universal Credit (UC)—cannot be expected to meet any rent, however high, limits must take account of the consequences for poverty and hardship.

2.7 CABx are picking up growing numbers of cases where HB cuts are causing serious problems. Our own qualitative research (currently in progress) into the effects of PRS HB cuts as reported by bureaux shows the diverse range of ill-effects. The following table is based on the first 51 cases analysed:

Table

REPORTED EFFECTS OF HB SHORTFALLS [WHERE MORE THAN ONE EFFECT REPORTED, EACH COUNTED SEPARATELY, SO EFFECTS EXCEED NUMBER OF CLAIMANTS]:

Rent arrears	12
Other debt	21
Cutting down other essentials	21
Eviction threatened or in progress4	08
Other homeless risk	13
Homeless (tenancy not found at HB level)	06
Moved/moving to poor-quality accommodation	02
Moved/moving to overcrowded accommodation	01
Children’s access visits jeopardised	02
Seeking cheaper accommodation (not yet found)5	20
Total reported effects	106
Total cases	51

2.8 Stress and anxiety were also frequently mentioned as a consequence of these pressures. There was one reported relationship breakdown.

2.9 It is striking that other debt substantially exceeds rent arrears, which suggests that claimants were prioritising the rent and getting into difficulties elsewhere in their budgets. Especially where the HB shortfall is high, it may not be possible to sustain this avoidance of rent arrears indefinitely, so a different pattern may emerge overall and in a given case as time passes.

2.10 The Government has commissioned a substantial research project into the cuts (since April 2011) to HB in the PRS. This was scheduled to run from Summer 2011 to the end of 2013. An “early findings” report has appeared,6 with a fuller interim report expected by Spring 2013 and final results scheduled for the end of 2013 (likely to be 2014).

2.11 If the DWP-commissioned independent monitoring also shows that there have been substantial adverse personal and social consequences, then the question of rents eligible for HB (and UC) should be revisited by Government, this time from the perspective of tackling poverty and promoting social inclusion.

2.12 The Government’s definition, in contrast, is “up to 80% of market rents”—which many people in many areas would, in fact, not be able to afford.

2.13 We believe that the Whitty Report definition of affordable homes should be adopted as official policy:

“comfortable, secure homes in sound condition that are available to rent or buy without leaving households unable to afford their other basic needs (eg food, clothing, heating, transport and social life)”.7

2.14 In relation to rent controls, there are significant arguments for and against. Landlords’ representatives and some other commentators predict a strongly adverse effect on investment, but against this, tenants’ representatives and yet other commentators argue that a continuing absence of control is rendering the PRS increasingly unaffordable to large sections of the public in some parts of the country.

2.15 It is difficult to come to a definitive conclusion—given the differences between housing markets in different historical periods and countries—without trying it. Certainly, as long as PRS rents are largely uncontrolled, affordability and HB eligible rent limits will continue to pose major problems.

Regulation of landlords and steps that can be taken to deal with rogue landlords

2.16 We think that there is a strong case for regulation of landlords (and letting agents). It needs to distinguish between small/inexperienced/“accidental” landlords and “rogues and cowboys”. There should be advice and training on offer as part of the regulatory framework, as well as an appropriate range of penalties.

2.17 Short of full regulation, there are the options of selective licensing and voluntary accreditation schemes. The problem with any voluntary scheme is that those landlords most in need of attention will be least likely to join. The adverse inference to be drawn from non-membership is unlikely to prove a strong incentive in a market characterised by shortage of supply.

2.18 In Wales, we support the Welsh Government’s commitment to introduce statutory registration and accreditation for private landlords and letting agents as well as increased investment in the PRS, but stress that the forthcoming Housing Bill should also include measures to address the full range of factors affecting the sustainability of tenancies in the PRS—including affordability and security.

2.19 The debate around regulation is sometimes conflated with that around rent control, which can be misleading. Although rent control could be part of a regulatory system that also deals with standards, the latter can, if desired, be uncoupled from the former and the two should not be confused.

2.20 As noted above, local authorities’ limited resources to pursue environmental health breaches constitute a significant problem here.

2.21 Moreover, rogue landlords (as the following case illustrates) are most likely to engage in retaliatory eviction—so protection from this tactic is important..

A bureau in London reported the case of an unemployed couple with two young children who had had a two-year wait for a broken radiator to be repaired. Recently, the client again asked the landlord to repair it and a few days later received a “section 21” notice (whereby no reason has to be given) requiring possession. The client was prepared to negotiate with the landlord about not repairing the radiator in order to not be evicted.

Regulation of letting agents, including agents’ fees and charges

2.22 As with landlords, the standards maintained by letting agents range from the excellent to the entirely unacceptable. It seems seriously anomalous that they are unregulated. We believe that they should be.

2.23 We published research on this issue in 2009,8 illustrating poor standards, opaque and excessive charges and lack of accountability. Since then, we have provided evidence to further investigations by the Resolution Foundation and Which?—work which has confirmed our findings. We have also endorsed and publicised among our bureaux the SAFEagent “kitemark” scheme—a useful step in the right direction, although no substitute for regulation (again, a voluntary scheme will have a limited effect on the worst offenders). The case below from a Hampshire CAB illustrates both the standards deemed acceptable by some letting agents and the often obscure nature of charges.

A couple and their seven year old child had to move out of their home of four years because the landlord was selling it. They went to a letting agent and signed a 12-month agreement but when they moved into the property they found it to be in bad repair and very dirty. They spent two days cleaning the property, including hiring a carpet cleaner. Neither the shower nor washing machine was working and the bathroom window was broken. There was a disgusting smell of musty damp in the kitchen and the waste pipe to the drain was broken or blocked. Someone from the letting agency came to look at the problems but there had been no action by the time the client came to the bureau. The client worked full time. His wife had to spend her days upstairs away from the kitchen smell. Their son has been unwell since they moved in. The client wishes to leave and has paid the agency £459, which he believed was for surrender of the tenancy. He has now been asked for a further £800. He is very upset by this, as it will cause him great financial hardship.

The regulation of houses in multiple occupation, including the operation of discretionary licensing schemes imposed by a local authority for a category of HMO in its area

2.24 We consider that regulation of HMOs should be an integral part of the regulatory system referred to above. There are particular issues around the HMO market, but it should not be seen as wholly separate. Meanwhile, current licensing arrangements take us only part of the way there. Mandatory licensing is limited in coverage and the use and effectiveness of discretionary schemes is vulnerable to diminishing local authority resources—a constraint which impacts also on monitoring and enforcement in general.

A CAB in the South West helped a single unemployed man who lived with four other tenants in shared accommodation. He has been living there for over two and a half years, but has never received a tenancy agreement, details of which scheme his £265 deposit is protected under, nor the landlord’s full address. Rent was collected weekly in cash. Around July 2012, the client claimed HB, which met the full rent. He notified the landlord of his HB claim, to which the latter objected and threatened eviction if it were not cancelled. The client cancelled his claim and began to build up rent arrears. The landlord then gave him a handwritten note advising he wanted him to leave. The note did not include the landlord’s address, the reason for the request or a date by which to leave.

Tenancy agreements and length and security of tenure

2.25 CABx help with around 6,000 enquiries concerning security of tenure every year and it’s clear that, as illustrated by the case above, the provision of a satisfactory tenancy agreement cannot be taken for granted. This would be an elementary feature of a regulatory scheme.

2.26 Although it seems likely in the above case that the landlord’s hostility to the HB claim derived from a desire to avoid scrutiny of his own activities, there is a much wider problem reported by bureaux of landlords refusing to accept HB claimants as tenants across the PRS in general and in many parts of the country. We believe that such discrimination should not be permitted. Regulation could address this also.

2.27 The very weak security of tenure that prevails in the PRS in the UK is a major weakness. This is, moreover, a growing problem as increasing numbers of families with children, with their particular needs for stability, gravitate towards the PRS as a consequence of lack of access to other sectors.

2.28 As noted above, the current very limited security of tenure in the PRS also facilitates retaliatory eviction.

2.29 The Whitty Inquiry recommended 24 months as the norm for a PRS tenancy.9 This would move us significantly towards a more stable environment for tenants and their families whose support networks, employment, child care and educational arrangements can be seriously disrupted by frequent moves—which, moreover, can entail significant financial costs on each occasion.

How local authorities are discharging their homelessness duty by being able to place homeless households in private sector housing

2.30 The limited security of tenure makes discharging homelessness duties within the PRS an unsatisfactory option, especially if combined with poor standards and/or out-of-area relocation. We agree with the Government that this latter disruption should be a last resort—but recognise that upward pressure on PRS rents, combined with HB cuts and shortage of social housing, is leaving some local authorities with little choice.

2.31 Where the PRS is used to discharge homelessness duties, careful attention should be paid to quality and affordability. Homeless people should not be moved to accommodation that is substandard and/or leaves them below basic benefit rates after paying the rent. Official guidance on homelessness and suitability of accommodation makes these points—but is not always observed.

A London bureau helped a lone parent who had had to leave her previous address because her landlord sold the property. Initially refused help from the homelessness team, she was then placed in very poor quality temporary accommodation, where cold and damp exacerbated her son’s asthma. Eventually, she received a phone call advising that a two-bedroom flat had been found. However, she was required to sign the agreement before being taken to see the property. On viewing it, she found that the walls and carpets were very dirty and that the boiler was located in one of the bedrooms. There was a pile of rubbish in a hallway outside the flat. In spite of her protestations, the housing officer said she had to take the accommodation and had in any case already signed the agreement. She was very distressed and felt she had been made to sign because of her vulnerability.

3. Conclusions

3.1 One issue not directly addressed by the consultation questions is that of advice and advocacy. Tenants facing problems such as those described above need such support, including housing and money advice. Central and local government both need to take this into account in their funding decisions if the PRS is to be seen as a realistic option for people on low incomes—possibly struggling with various benefit cuts—and/or having other vulnerabilities.

3.2 In summary, our main conclusions are that:

There is a strong case for regulation of landlords in the PRS generally and including HMOs; and of letting agents. Advice and training should be available, as well as appropriate penalties.

In Wales, we support the Welsh Government’s commitment to introduce statutory registration and accreditation for private landlords and letting agents as well as increased investment in the PRS. The forthcoming Housing Bill should also include measures to address the full range of factors affecting the sustainability of tenancies in the PRS—including affordability and security.

There should be protection from retaliatory eviction, whether as part of a regulatory system or otherwise.

We believe that the Whitty Report’s definition of affordable homes should be adopted as official policy.

If the independent monitoring shows that there have been substantial adverse consequences arising from HB cuts, then the question of rents eligible for HB (and UC) should be revisited, from the perspective of tackling poverty and promoting social inclusion.

Discrimination against HB claimants in awarding tenancies should not be permitted.

We support the Whitty Inquiry’s recommendation of 24 months as the norm for a PRS tenancy.

If using the PRS to discharge their homelessness duties, local authorities should pay careful attention to quality and affordability.

Central and local government funding strategies for advice and advocacy services should take account of the growing role of the PRS.

January 2013