Communities and Local Government CommitteeNotes of the informal meetings with tenants and landlords from Greater London: 8 May 2013

MEETING WITH TENANTS

Members present:	Clive Betts MP (for part of the meeting)
	Simon Danczuk MP
	Mark Pawsey MP
Tenants present:	Ann Ginige
	Josie Greener
	Hugh MacPherson
	Peter Murray
	Rosie Walker

Mr Betts welcomed the tenants and explained the purpose of the inquiry.

The tenants present explained their circumstances and summarised their experiences of being tenants in the private rented sector. These ranged from one who had been a tenant for over 40 years to one who had recently been evicted and was sofa-surfing at friends’ houses while seeking new accommodation. Similarly they had experience of a wide range of properties from the former Crown Estates property and ex-Right-to-Buy housing through conversions to reasonable quality and poor quality housing.

The tenants were asked whether they preferred the private rented sector. One said that it was very suitable for students. Another said that it was suitable but that increasing rents in London might put it beyond those on fixed incomes such as pensioners. Others indicated a preference for social housing, which gave greater security of tenure and owner-occupation.

On length of tenure, there was mixed experiences of assured shorthold tenancies. One tenant commented that they had been entering assured shorthold tenancies for five years and had always moved at the end of the tenancy. On the one hand, it gave tenants flexibility to move at relatively short notice. On the other, a landlord could use the six-month break point to terminate the tenancy if the tenant pressed the landlord to fulfil obligations or as an opportunity to increase the rent.

One tenant had experience of an 18 month assured shorthold tenancy but this was the exception and it had a six-month break provision. Another participant had been in the private rented sector for 17 years and had moved 17 times and had never been offered more than a year. All agreed that tenants who were unaware of their rights, which was the majority, were often taken advantage of by landlords. All agreed that tenants would benefit from concise and easily digestible information on their rights and obligations. Little was available now.

The tenant who had been on the same property for over 40 years had a regulated tenancy. The situation had changed dramatically over the decades. The original owner had lived in the building but on her death it has passed to a charity which has sold it. Subsequently it had been bought unseen and there had been problems establishing the identity of the owner. This was important as those residing in the building needed to know that the owner met their obligations—for example, to ensure that the building was insured.

Concerns were expressed about the sources of advice and remedial action available to tenants. Most local authorities were willing to take housing problems up with landlords. However, in those cases where the authority did little more than write a letter the tenant could be at risk of retaliatory action, including eviction, by the landlord. In other cases where authorities were prepared to follow-up by using, for example, their environmental health powers significant improvements for tenants could be achieved. In some cases local authorities could force a sale to the occupants. Concern was expressed about the closure of legal centres which were a key source of advice for tenants.

Criticism of letting agents was voiced. They had a vested interest in keeping shorthold tenancies to the minimum term as they could collect frequent renewal fees. Many were helpful until tenants handed over fees, at which point assistance stopped. Their fees were not transparent and often the full range of changes was not mentioned at the outset. One participant said that they had seen fees charged by agents that varied from £75 to £250 for the same flats, where the agents were competing for business in a property. The worst could be characterised as operating little more than a protection racket. England should follow Scotland and outlaw fees paid by tenants to lettings agents.

Letting agents also encouraged arrangements to avoid the spirit of the law. The example cited was the case where five people wished to enter a tenancy, they would be advised to put only four names on the tenancy agreement. This had the effect of avoiding registration as an HMO. Letting agents preyed on people’s vulnerability and tenants’ ignorance of their rights. Letting agents’ operations were riddled with conflicts of interest. It was anomalous that business which encompassed both estate agents and letting agents had employees sitting beside each other some of who were subject to regulation—the estate agents—and others who were not—letting agents.

The meeting considered rent levels. It was pointed out that rents in property subject to the pre-1988 [Housing Act] regulatory regime were generally below market levels, though the trade off was that the landlords frequently ignored maintenance of the property. One tenant considered that there should be a happy medium with moderate rent increases in rents matched with a regular programme of work. There was a strong case for having no rent increases if there were works outstanding. One tenant said that when property moved out of the social sector and rent protection ended, rents were often put up above the rate of inflation, though even these increased rents could be below market rents.

Those present were each asked to identify one improvement they would make. The following were suggested.

Repeal section 21 of the Housing Act 1988 which allows a landlord to gain possession without the need to give a reason.

Regulation of letting agents.

All landlords should be required to meet basic, minimum standards.

MEETING WITH LANDLORDS

Members present:	Clive Betts MP (for part of the meeting)
	James Morris MP
	John Pugh MP
	Heather Wheeler MP
Landlords present:	Richard Best
	Erik Alexander
	Graham Howell
	Iain Beaton
	David Evans

Heather Wheeler welcomed the landlords and explained the purpose of the inquiry.

The meeting considered licensing of landlords. The point was made that it would be onerous and it was impossible to apply standards across the board. It was suggested that a process of levelling-up should take place: increasing standards and regulation for rogue landlords while decreasing them for reputable and compliant ones.

On the question of whether regulation was a nuisance or a barrier to investment, one participant gave the example of Thanet where HMOs were not viable due to the council’s licensing requirements. The HMO sector was subject to onerous rules and the interpretation of them varied from council to council. Another participant gave the example of putting three separate front doors on an HMO. This meant being charged three different sets of council tax. The local authority subsequently sought to charge for 20 sets of council tax based on the number of flats in the building. Given that the landlord’s rent included council tax the landlord said this would have put him out of business. His tenants would have sought cheaper accommodation. Participants suggested that capping rents would create more HMOs and lower property values. Regulation controlling the length of tenure would also prompt many landlords to get out of the market.

One participant described a particular problem with “rogue” landlords who operated outside the already heavily regulated system-often preying on the vulnerable tenants who were unable to find accommodation through legitimate means (for instance, because they had poor references or no work history). These rogues would always be outside the system, however it was regulated. Legitimate and good landlords could therefore be exposed to more regulation for no real benefit while those targeted remained outside the net.

One participant explained how in his area he got 20% off his £5,000 HMO licensing fee by being be accredited through a three-day course every three years. Another participant commented that further regulation was a solution looking for a problem. Energy Performance Certificates were considered nonsensical by one participant who called for deregulation before any further regulation. It was agreed that increased fines for rogue landlords would work, but an accreditation scheme would not.

One participant, commenting on the measure in the May 2013 Queen’s speech requiring landlords to ascertain whether their prospective tenant was a legal immigrant, said it was ridiculous to ask landlords to police migration status. One solution suggested was a register of tenants, with legitimate tenants having a certificate. This, it was argued, would get decent landlords off the hook and uncover rogue landlords with uncertificated tenants. A new set of rules was also needed which applied nationally and across housing sectors.

A further suggestion was the state should act as guarantor of rents. One participant said that would be a start and encourage landlords to take on local authority tenants. Another said, however, that any such scheme would be intrinsically impossible as, when a tenant’s circumstances changed, it would be unreasonable to ask a local authority to guarantee their rent.

It was noted that people typically rented for about two years. In flats in south London people were staying more than two years—the problem being there was nowhere else for them to go. People on the coast tended to stay longer. In London people were more mobile, switched jobs regularly, were younger and often moved when they got married.

One landlord cited a tenant who “preferred vodka to rent” and the difficulty of evicting him. Only when the locks were changed and the tenant tried to kick in the door were the police able to take him away.

The majority of participants agreed that paying housing benefit directly to tenants (direct payments) was causing problems. It was noted that paying rent directly to the landlords of vulnerable tenants was not mandatory. The system was opaque and many landlords did not know how direct payments would work. Some were having to help their vulnerable tenants fill in applications to opt out of direct payments otherwise they said they would never see the money.

There were now many obligations on landlords. Arguments over damage to properties were very difficult to resolve, as they involved calculating the current value of damaged goods. That was one good reason for keeping up rents and writing off damage.

Landlords were generally happy to use letting agents. The main problem was agents not telling tenants about changes to terms and conditions of their tenancies.

One participant said he was happy to take tenants from the council housing waiting list as they were worth a lot in the long term. Most boroughs ran landlord forums. He said that he was working hand in glove with local authorities. They found him properties to acquire among other things and, he said, created his business from start to finish. The authority was commercially minded as it knew he would come back for more prospective tenants. He said that tenants placed by local authorities did not mess about as they did not want to become intentionally homeless. His view was not shared as others present were reluctant to engage with those on the housing register. The issue came back to direct payments and the problem of receiving rent.