Communities and Local Government CommitteeWritten evidence submitted by the National Union of Students

NUS (National Union of Students) is a voluntary membership organisation which makes a real difference to the lives of students and its member students’ unions. We are a confederation of 600 students’ unions, amounting to more than 95% of all higher and further education unions in the UK. Through our member students’ unions, we represent the interests of more than seven million students. Our mission is to promote, defend and extend the rights of students and to develop and champion strong students’ unions.

We welcome this opportunity to take stock of the major issues within the private rented sector and contribute to this inquiry. With students remaining a core demographic within this tenure, and many likely to stay in the sector for prolonged or indefinite periods, this is a key area of interest for the organisation and our membership.

We feel that this consultation is timely, given the recent figures provided by the 2011 census which show how the sector has largely grown by default in response to the decline in owner occupation and availability of social housing. In the long term, NUS would like to see the government addressing the issues surrounding this which leave many unable to access options other than private renting which can prove costly and unstable.

However, it is important to acknowledge that for many including many students, the private rented sector is and will remain the only option available or the one best suited to their needs. It is therefore vital that proper attention is paid to the sector and the rights of those operating within it. As it stands, tenants are often disenfranchised, vulnerable, and disempowered in the context of their relationship with their landlord or letting agent.

Response

Quality of private rented housing

1. Property standards in the private rented sector continue to be an issue for many students, particularly in areas with inadequate supply of housing and high housing costs. Many struggle with getting their landlords or letting agents to respond to requests for repairs in a timely fashion.

2. Poor standards of insulation, particularly when combined with fuel poverty can lead to significant health impacts and students often report their landlord or letting agent has failed to respond to the structural issues which have led to these problems.

3. Recent research on young sharers in the private rented sector (predominantly students) found that over 50% of households reported having mould and condensation.1

4. Localised research undertaken by students’ unions indicates a similar picture, with 41.5% of students at Sussex and Brighton universities reporting “extensive mould” was present in their homes. 49% of those who reported the problem to their landlord or letting agent felt that “nothing” was done to resolve the issue.2

5. NUS believe that some increases in regulation on a national level, including landlord registration could result in improved property standards by increasing landlord accountability.

6. NUS believes that well supported local accreditation schemes are the best way to ensure incremental improvements in standards across the private rented sector and that these can complement programmes of enforcement and regulation to deal with genuinely substandard properties and poor landlord practice.

7. The government should play a role in financing and supporting local accreditation schemes to ensure that they are sufficiently resourced to have a meaningful impact on local housing standards. Entirely self-financing schemes are likely to either be under-resourced and inadequate or to push significant cost onto the tenant. Excessive cost is also likely to make them less attractive to landlords.

8. Local authorities need to be sufficiently funded to be able to enforce property standards and take action against rogue landlords. Proactive work also needs to take place to ensure that tenants are aware of their options to hold their landlords to account.

9. Local regulatory initiatives such as additional licensing schemes should offer tangible benefits to tenants which justify the cost they incur to finance their administration, rather than being used to subsidise core council costs.

10. Support should be given to those seeking to establish letting agents as social enterprises which promote improved standards and tenant experiences. Many students’ unions are now pursuing this with significant success.

Rent levels

11. The affordability of housing in the private rented sector remains hugely problematic for many students, with housing costs increasing much more rapidly than student income.

12. According to recent NUS research, over 50% of students agree or strongly agree with the statement “I regularly worry about not having enough money to meet my basic living expenses such as rent and utility bills.”3

13. We would be keen to see the government considering how it might impose some form of rent control in the private rented sector, as we believe that with inadequate supply and current market conditions, rents will continue to spiral beyond the reach of many without such proactive intervention. Building in a link to inflation may provide a means of ensuring that this is not prohibitive to the continued growth of the sector, while ensuring that this is not to the detriment of those who live within it.

14. However, in the long term, it is felt that the only genuine solution to issues around affordability is to increase supply dramatically as this is undoubtedly the critical issues as far as rent levels are concerned. We have yet to see evidence that the government takes this issue as seriously as it should.

15. Rents in private developments of purpose-built students accommodation are of particular concern as, according to the recently released NUS/Unipol Accommodation Costs Survey, a privately provided room of this sort will now cost a student on average £6,309.69 over the course of an academic year—a figure which far exceeds the student loan most will receive.4 In London, the average weekly cost of a room in a private development is a staggering £220.97 or over £10,000 per year which cannot be considered affordable for the vast majority of students.

16. There is concern that local authorities are granting permission to this type of development without concern for the affordability of accommodation provided, due to their desperation to relieve pressure on local housing stock. This is likely to be counterproductive and unsustainable as many of these developments are now operating with voids due to the combined impacts of exorbitant pricing structures and decreasing student numbers.

17. We would like to see a requirement for all private providers of student accommodation to be permitted to develop only when they have entered into a nomination agreement with an institution. This would ensure that provision is more affordable and better aligned with student need.

18. We would also like to see the possibility of introducing affordable room quotas in purpose-built student developments investigated to ensure rent levels do not present an obstacle to access to higher education.

Regulation of landlords

19. NUS believe that some increases in regulation on a national level, including landlord registration could result in improved property standards by increasing landlord accountability and providing recourse for tenants experiencing difficulties with their landlord.

20. Any additional regulation should be targeted at the poorest landlords and try to avoid penalising good landlords or subjecting them to excessive bureaucracy.

21. While we believe that national funding and support for regulation would be the most cost-effective way of ensuring a robust system, we also believe that no system of regulation will be effective without sufficient funding for proactive and stringent enforcement on a local level.

22. In order to ensure that tenants are empowered to expect decent management standards, any regulation should also be accompanied by work to improve tenant knowledge of the rights and responsibilities of both themselves and their landlords as set out by legislation.

Regulation of letting agents

23. We believe that regulation of letting agents should be a priority for the government, given the evidence of widespread malpractice in the sector. The discrepancy between the regulation of letting agents and estate agents is unjustifiable and leaves tenants vulnerable to exploitation, as well as being damaging to the reputation of those letting agents who voluntarily adhere to prescribed standards through affiliation to a sector body.

24. Regulation should be comprehensive and meaningful to ensure consumer confidence and improved tenant satisfaction, as well as improving the perception of the sector in wider society.

25. We would like to see a model similar to that recently introduced in Scotland, whereby letting agents are only permitted to charge deposits, with all other fees banned.

26. Without regulation, some letting agents are able to exploit prospective tenants’ desperation in an overcrowded marketplace to charge a complex array of fees, many of which are not anticipated by the tenant and these can therefore lead to significant hardship. In addition to this, these fees are rarely transparent and are often significantly inflated in relation to the costs they claim to cover (eg booking fees which stretch to several hundred pounds). Some may also be non-refundable even if property is not secured (even where this is not the fault of the tenant). This can be a huge setback for those looking to find accommodation.

27. Regulation of letting agents should also include a requirement for a minimum standard of training to ensure a sufficient level of competency and again promote consumer confidence.

28. There should be an independent and impartial complaints resolution service for tenants and landlords who are not satisfied that their issues have been resolved adequately by their letting agent.

Regulation of houses in multiple occupation

29. We understand the role that regulation of houses in multiple occupation has to play where this addresses the standards of accommodation and the health and safety issues which can be specific to this type of property. It is, however, important that local authorities are equipped to be properly enforce these standards in order for this regulation to be meaningful.

30. We are concerned by the impact of planning restrictions aiming to control the growth of HMOs, particularly in towns with large student populations. Article 4 Directions have been implemented by a large number of local authorities and we believe that these serve to restrict supply of shared housing in these areas. Shared housing of this sort represents the most affordable option for many, beyond just students, who live in the private rented sector, often due to lack of alternative.

31. This is particularly of concern given the recent restriction of housing benefit to the shared room rate for those up to the age of 35 which is likely to increase demand for this type of accommodation.

32. Often the implementation of Article 4 Directions is driven by the political agenda of small, but vocal segments of communities, rather than being part of a joined-up and coherent approach to local housing need. This is illustrated by the fact that documentation relating to Article 4 Directions often directly contradicts what is stated in local Strategic Housing Needs Assessments; these often state that demand for HMOs is likely to grow and recognise the role this housing plays in supporting young people and a mobile workforce.

33. We would like to see the government review the impact Article 4 Directions have had on affordability, supply and community cohesion as we believe that not only have these measures failed to address the problems they set out to, but they have exacerbated and created other issues. For further details on this, see our contribution to the recent Housing Voice report on the affordable housing crisis.5

34. Additional licensing schemes relating to HMOs should offer tangible benefits to tenants that justify the cost that is inevitably passed on to them from the landlord.

35. Additional licensing schemes should not cover issues which can be addressed through other means. Such issues commonly included in licensing schemes include anti-social behaviour and waste disposal. Often the content of such schemes penalise and typecast those living in HMOs rather than proactively addressing these issues where it actually occurs.

36. It is understood that this may be due to lack of funding available for local authorities from other sources to address such issues, but it is not fair to effectively place this cost on those least able to pay it based in a perception that they are responsible for the issues at hand.

37. Overemphasis on issues such as these within local licensing schemes can also result in a failure to address genuine issues relating to property standards and landlord behaviours.

Tenancy agreement and security of tenure

38. NUS believe that a requirement for all tenancies to be in written form would ensure greater transparency and understanding between landlords and tenants by ensuring that there is a clear record of the legal agreement between these parties.

39. We acknowledge that security of tenure is a major issue for many in the private rented sector, including many students, and agree that improving this should be addressed by the government.

40. We also believe that any policy change to initiate an improvement in this area would need to build in adequate flexibility for those who need to be more mobile, such as many students and migrant workers.

Conclusion

NUS believe that some increases in regulation may improve standards in the private rented sector, but that this can only work if local authorities are properly equipped to actively improve standards locally. This should be both through enforcement activities against non-compliant landlords and through local accreditation schemes. These require governmental investment to ensure that they are robust, sustainable and worthy of consumer trust.

It is felt that regulation of letting agents must be prioritised to ensure that there are minimum standards that tenants can expect, as well as transparency on the fees charged and tenants’ rights in relation to these.

Rental costs in the private sector, particularly in London, are of genuine concern and are likely to have an impact on prospective students’ ability to access higher education at the institution of their choice. The government needs to establish a coherent plan for increasing supply (including bringing empty homes back into use) in order to meaningfully address this.

January 2013