Communities and Local Government CommitteeWritten evidence submitted by Centrepoint

Summary

While the resettlement of homeless young people into the private rented sector (PRS) can be successful if they receive the right support, research shows that tenancy failures are more than twice as likely among those resettled into the private sector than those moved into social housing.

Centrepoint is therefore very concerned about the impact of increasingly discharging homelessness duties into the private rented sector as it may not be suitable for more vulnerable young people unless tenancy support services for are expanded significantly.

Centrepoint’s experience of resettling young people into the private sector reveals that one of the biggest barriers is landlords’ reluctance to let to housing benefit claimants, and particularly to young people.

This reluctance, combined with reducing LHA rates and rising rents, mean that it is becoming increasingly difficult to find affordable options for young people.

We believe that local authorities therefore need to do more to help vulnerable and low-income households to access suitable tenancies, through the provision of social lettings agencies.

Such schemes allow local authorities to take greater control of tenancies in their area, by setting required standards of quality and tenancy length, and giving them greater scope to allocate tenancies to those in greatest need.

Introduction

1. Centrepoint is the leading national charity working with homeless young people aged 16 to 25. Established 40 years ago, we provide accommodation and support to help homeless young people get their lives back on track. We operate rent deposit schemes both in the North East and in London that support homeless young people to find private rented tenancies and pay the upfront deposit required.

2. Centrepoint welcomes the Committee’s inquiry into the private rented sector. Our experience of working with homeless young people suggests that, while the number moving into private tenancies is growing, those moving into the PRS are more likely to encounter problems. We therefore believe that local authorities need to play a much bigger role in helping low income households to access suitable and affordable private rented tenancies. One of the key ways to achieve this would be through the expansion of social lettings agencies.

Discharging Homelessness Duties in the PRS

3. While the private rented sector can be an appropriate resettlement option for some homeless households, Centrepoint is concerned about a wider group of homeless people being placed in the private rented sector as research has shown that outcomes are often poorer among those resettled into the PRS. Centrepoint was involved in the FOR-HOME study that tracked 400 homeless people for 18 months after they left homelessness services. It found that tenants in the private rented sector were more than twice as likely to return to hostels or the streets as those in social housing (12% compared to 5%). Furthermore, less than half (47%) of private renters were still in their original accommodation at 15/18 months and more than one in four (27%) were without a tenancy (for example were in prison, hospital, a hostel or staying with relatives and friends).1

4. However, the research also highlighted that outcomes in the private rented sector were much better when individuals received intensive support through private rented schemes to help them maintain their tenancies. We therefore believe that greater provision of tenancy support is vital if the private sector is to be a suitable sector for the discharge of homelessness duties for more vulnerable households. Unfortunately, tenancy support services are being cut back in many areas due to budget cuts, and the FOR-HOME study showed that young people were the least likely to receive tenancy support. We therefore urge local authorities to increase the provision of tenancy support for this group as they often have the least experience of independent living.

Levels of Rent within the Private Rented Sector

5. Centrepoint’s experience of resettling young people into the private rented sector suggests that reductions in local housing allowance (LHA) rates has not had the desired impact of reducing rents. LSL Property Service rent data for November 2012 showed the average rent across England and Wales was 3.4% higher than the same month in 2011. The increase in London was even steeper, where rents rose 6.9%. We believe this is because housing benefit claimants represent such a small section of the market, particularly in high demand areas such as London, that landlords would rather let to other groups such as students and young professionals who can afford a higher rent.

6. This tough and competitive environment leaves vulnerable young people with extremely limited options. Centrepoint therefore believes that local authorities need to do more to ensure there are affordable properties in their area for those on low incomes. Rent controls are obviously one tool that some local authorities may find helpful, but we believe that the expansion of social lettings agencies could help to deliver affordable lets for those in the greatest need. A model where the local authorities takes out long leases with private landlords and then sublets to vulnerable people is often the most effective as landlords may be more willing to take a lower rent if the revenue is guaranteed for a longer period. However, brokerage schemes could also help to drive down rents if local authorities can provide free or cut-price services as part of the deal, meaning that landlords can save money that they would otherwise have paid to letting agencies. Schemes such as Centrepoint’s rent deposit scheme can play a similar role, including provision of support to both tenant and landlord as required, but local authorities may be able to drive down costs further as they would be able to work with bigger economies of scale.

Tenancy Agreements and Length and Security of Tenure

7. Centrepoint recently conducted research into young people’s priorities for move-on accommodation from hostels. They stated that, after affordability (which 86% said was very important), security of tenure was the most important factor in successful move on (with 85% saying this was very important).2 Shorter tenancies were highlighted as one of their key concerns about the private rented sector. We were therefore pleased to read the London Mayor’s proposals to encourage longer tenancies in the capital, but this proposal needs to be backed up with sufficient powers to enforce this expectation or it is likely to miss those at the margins of the market who are most in need of increased security.

8. Improving security and length of tenure are crucial issues to address, including through initiatives like social letting agencies, but our experience suggests that a more acute issue is that many young people are unable to find any landlords willing to take them on any basis. For example, many landlords refuse to take people on housing benefit. This has become an increasing problem since payment of LHA to the landlord was made possible only if the local authority deems the tenant vulnerable rather than at their own request.

9. Other landlords refuse to take any young people under 25 as they view them as more troublesome tenants. We have also had anecdotal reports that some landlords are refusing to let to young people as they fear that young people may lose their right to housing benefit due to proposals put forward by the Conservatives. Others will only let to young people if they have someone who can act as guarantor. Unfortunately, most of the young people we support do not have anyone who can provide this role, particularly if they have suffered relationship breakdown with their family.

10. We believe that social lettings agencies have a crucial role to play in overcoming these barriers, particularly where subletting schemes are put in place. If a local authority can be the primary leaseholder (and therefore guarantee the rent), they can have more control over the allocation of tenancies. This would allow them to allocate tenancies on the basis of need rather than landlord preferences. Even in brokerage schemes, local authorities could play a greater role in encouraging landlords to accept more vulnerable tenants by offering tenancy support to those at increased risk of rent arrears.

Regulation of Landlords and Letting Agents

11. Centrepoint agrees that greater regulation is needed. While some landlords provide an excellent service to young people, our experience unfortunately has shown that some landlords are failing to fulfil their responsibilities. While accreditation schemes have been successful in some sections of the market, the continued problems in the lower end of the market suggest that more widespread measures are required.

Quality of Private Rented Housing

12. However, in the absence of further regulation, social letting agencies can play an important role in driving up standards. For example, Centrepoint’s rent deposit scheme only works with landlords whose properties adhere to safety and quality standards. If local authority social lettings agencies were able to provide support to a broad enough group of low income households, it could help to drive up standards across the sector by taking business away business from those who are failing to adhere to the same standards.

13. It is also important that local authorities use the full extent of the powers they already have to tackle poor quality properties. To aid this process, it is important for local authorities to work with local voluntary sector and community groups to educate tenants about their rights and encourage more tenants in substandard homes to use existing channels to make sure their landlord adheres to basic requirements.

Conclusion

14. While we recognise the pressure on local authority budgets, Centrepoint believes that local authorities must take a greater role in supporting low-income households to access suitable private rented tenancies. By creating a package of services that landlords can buy into, such as vetting of tenants and arrangement of tenancy agreements, social lettings agencies do not have to come with a huge price tag and are likely to save local authorities money in the long-term by reducing chances of repeat homelessness.

January 2013

1 The FOR-HOME Study: Moves to independent Living (University of Sheffield, 2011)

2 Moving on or just moving out? Resettling homeless young people into independent accommodation (Centrepoint, 2012)

Prepared 16th July 2013