Communities and Local Government CommitteeWritten evidence submitted by the North West Housing Law Practitioners Association

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;

Levels of rent within the private rented sector—including the possibility of rent control and the interaction between housing benefit and rents;

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

Regulation of letting agents, including agents’ fees and charges;

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

Tenancy agreements and length and security of tenure; and

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

1. The North West Housing Law Practitioners Association is an association of specialist housing lawyers and caseworkers acting for both landlords and tenants in the area of housing law in North West. Issues concerning the private rented sector occur in their everyday practice and members also include surveyors interested in housing conditions in particular in the private rented sector.

2. In these submissions, it is intended to deal briefly in turn with each of the issues proposed to be attended to by the Select Committee.

Condition

3. Experience of practitioners has shown that disrepair and poor housing conditions continue to be a problem in the private rented sector. Although the significant expansion of the sector caused apparently by a combination of the difficulty of obtaining mortgage finance for first time buyers, the decline in the availability of social housing caused by increasing demand and decreasing stock and the easy availability until 2008 of financing for Buy to Let—seems to have concentrated on new build properties or at a part of the market where tenants have a higher degree of bargaining power due to higher incomes—the older housing stock in the North West occupied by tenants on low incomes and reliant on housing benefit are all too often in poor condition. Disrepair cases in the private rented sector are a constant and this may arise from bad landlords refusing to carry out work or employing cheap and incompetent tradesmen to carry out work or landlords who saw letting a property as an easy way to make money but whom have failed to make proper provision to be able to afford maintenance and repair.

4. The current legal framework for enforcing repairs in the civil courts remains technical in that various problems in particular condensation dampness fall, generally, outside Section 11 Landlord and Tenant Act 1985. Another common issue rising to dispute is that fittings supplied by the landlord eg kitchen units do not fall within the implied covenant under Section 11 and it is often not addressed in the tenancy agreement as to who is responsible. Consideration should be given to landlord’s fixtures and fittings being included within the implied covenant.

5. As for public sector enforcement the common problem encountered is that local authority environmental housing teams responsible for enforcing private rented sector standards are chronically under funded and very unwilling to take enforcement action beyond the service of a notice. They are often also not entirely co-operative when tenants seek to enforce their rights in the county court.

6. Those officers also have to deal with a myriad of different statutory powers and consideration might be given to a consolidation of their powers under the Housing Acts and acts concerning Environmental Protection and public health.

7. The impending changes to the availability of public funding to bring claims for disrepair set out in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 whereby funding will only be available in cases where there is a serious risk of harm to the health or safety of the individual or a relevant member of the individual’s family will mean that an increasing burden will fall on local authorities to deal with disrepair. The exclusions in LASPO 2012 are in any event likely to cause substantial dispute as to whether funding will be available as many items of relatively minor disrepair such as a faulty electrical socket will pose a serious risk whilst items of significant disrepair might not cause a serious risk to health.

Rent

8. The decision to repeal the Rent Act 1977 for all new lettings in the private rented sector from 15 January 1989 has indisputably seen a very substantial rise in rents. The effect was a shift from what was seen as landlords subsidising tenants by rents being reduced to remove the element of the rent arising from scarcity to landlords being subsidised by the state by the payment of housing benefit. Recent reforms to housing benefit have apparently had as part of their object an attempt to reduce rents by removing the element of competition from a person who would be entitled to benefit and demand. This appears to be doomed to failure as demand in the private rented sector is so high from groups who might 10–15 years ago have become owner- occupiers at a much earlier stage of their lives and from those no longer with any prospect of obtaining social housing in the near future.

9. Rent control was blamed for causing the decline of the private rented sector but it is likely that there was a multiplicity of causes eg the availability of alternative investments in the 20th century from share ownership being opened up to a much wider class of the population, slum clearance, the desire to move from poor private rented accommodation to new council housing and most of all the vast increase in owner –occupation. The recent reversal of the fortunes of the sector is as much due to the increase in demand to the perceived returns on investment.

10. Consideration should be given to the introduction of more subtle and nuanced forms of rent control such as if landlord registration were to be introduced, rent stabilisation which restricted the amount rents could be increased yearly, registration of the rent payable, reductions in the rent payable due to disrepair, restrictions on making other charges upon tenants to prevent “rent” being recovered in other ways. In principle, there does not seem to be any reason why rent control mechanisms could not be introduced that gave a degree of protection to the tenant and the public purse whilst not preventing landlords from obtaining a reasonable rate of return.

11. Rent control has in the past been shown, however, to be utterly ineffective without there being a degree of security of tenure where the onus for obtaining rent control has been on the tenant eg by applying for a Fair Rent. The same considerations would certainly apply to any new form of rent control unless it was coupled with registration and the creation of a criminal offence of charging above the registered rent. Any form of rent control will also have to see the reintroduction of a ban on premiums.

Landlord Regulation

12. The North West Housing Law Practitioners Association would support the introduction of landlord registration. This would enable action in particular to root out bad landlords by the adoption of “fit and proper person” criteria and also provide regulatory back up for the enforcement of the protection of tenants.

13. Consideration should also be given to a significant stiffening of the penalties under Protection from Eviction Act 1977 especially for evictions involving the use or threat of violence and for it to be a condition of landlord registration that landlords have received training on the law. Many landlords act in ignorance rather than deliberate non-compliance with the law but others anecdotally have treated claims for damages for unlawful eviction as being an occupational hazard to be weighed on a commercial basis from time to time. This is wholly unacceptable.

14. Offences under the Protection from Eviction Act 1977 are prosecuted by the local authority. The ignorance of the law by police officers is very common. When offences under the Act are reported to them almost without exception in the experience of members of the NWHLPA the response is that this is a civil matter. Police officers have also been known to arrest tenants seeking to readmit themselves for criminal damage or a breach of the peace and to stand by when landlords steal tenant’s belongings in the mistaken belief that landlords can still levy distress for rent. It is also far from unknown for them to assist the landlord with the removal of the tenant on the production of a court order (only by enforcement by a bailiff can a court order be lawfully enforced) or a notice under Section 21 Housing Act 1988 and in effect engage in aiding and abetting unlawful eviction. Action is urgently required to ensure that the police are properly trained in dealing with reports of unlawful eviction and should become equally responsible with local authorities for prosecutions.

Lettings

15. Charges by letting agents impose unfair burdens upon tenants in particular high fees for the provision of what are in effect standard form tenancy agreements, for the obtaining of references and other administrative charges. These are often not transparent and are extortionate. It is suggested that there should be a maximum scale for the provision of those services and that charges that do not relate to an express provision such as general administrative charges—that anecdotal evidence has suggested are being used to substitute for deposits to avoid the requirements of the tenancy deposit scheme should be made unlawful.

HMOs

16. It is not proposed to comment on this issue.

Security of Tenure

17. Until recently the private rented sector had been seen a having a subsidiary role in the provision of accommodation. The demographic was seen as being those who were young, transient and living in the sector until they were able to buy their own home. A much smaller group appeared to exist that relied on accommodation in the sector all the time.

18. The current protections for tenants in the private rented sector regarding security of tenure (save for those who historical Rent Act 1977 tenancies or who held assured tenancies due to landlords failing to comply with the notice requirements in respect of shorthold tenancies before 28 February 1997) are non –existent. The only protection is the requirement for a valid Section 21 Housing Act 1988 namely two months’ notice.

19. The private rented sector has now undergone a resurrection due to the lack of availability of mortgage finance and social housing of providing accommodation for families and children. Security of tenure for that part of the population is enormously important for all manner of reasons from continuity of education, to being able to establish links in a community and to general well-being and security. Protection limited to two months notice is no longer fit for purpose. Moreover, even if the courts accept that the limited protections of Article 8 European Convention on Human Rights apply to the private rented sector any protection from the principles of proportionality is likely to be very limited and illusory in the majority of cases as the courts continue to give primacy to the enforcement of property rights over all other considerations save in extreme cases.

20. Security limited to groups of the population, however, is likely to be discriminatory and self-defeating. Security akin to that of an assured tenancy is appropriate. Provisions for starter or introductory periods for such tenancies should be avoided as their scope for abuse in the private rented sector is obvious.

21. Although the proposals as to the two forms of tenure set out in the Law Commissions report “Renting Homes” Cm 6781 2006 have become outdated and overtaken by the passage of time the proposals for simplified tenancy agreements and requirements that such agreements should include details of tenant’s rights akin to the requirements for written statements of terms under the Mobile Homes Act 1983 are sound. Care will need to be taken to ensure, however, that this does not undermine Section 54 Law of Property Act 1925.

Discharge of the Homeless Duty by Private Rented Sector Offers

22. NWHLPA believes that this is a retrograde step. The primary danger is that it will despite the limited protection of the two year reapplication rule for that no longer in priority need create the revolving door of homelessness that was apparent between the Housing Act 1996 and the amendments made by the Homelessness Act 2002.

23. Moreover, it creates a perverse incentive for the authority to deal with the applications of the homeless in an extra statutory manner by encouraging them by means of “homelessness prevention” to accept offers of private rented accommodation on the basis that private rented accommodation is all that they will be offered anyway before accepting an application where such offers, informally arranged, will not be in discharge of a duty accepted and will not therefore have the protections as to quality or location under the Homelessness (Suitability of Accommodation (England) Order 2012.

24. There is also scope for authorities to act in a manner that is discriminatory in deciding which of its Part VII Housing Act 1996 applicants to whom it owes a duty it will provide with an offer of social housing or a private rented sector offer. There are no statutory criteria. There is a particular concern that this will be used to avoid making offers to applicants who are originally from abroad such as EU migrants or those to whom leave to remain has been granted.

25. It is also very difficult to rank the seriousness of consequences of being placed in insecure private rented accommodation rather than social housing for those to whom a full duty is owed and to develop a hierarchy of need. It is difficult to see where the line can be drawn f between say for the pregnant, the vulnerable, the care leaver or families.

26. These provisions also give rise to serious issues about data sharing with landlords; It seems likely that authorities will have to obtain the explicit consent of applicants to data sharing with private landlords. Will authorities ensure that private landlords sign up to confidentiality agreements and will have to show that they have in place robust systems for the protection of private information? Will the local authority treat such private landlords as being subjected to their safeguarding policies? Private landlords are likely to want to know any relevant circumstances before taking on such tenants and there may be incentives for authorities to conceal matters eg anti-social behaviour by children of a family to whom a full duty has had to be accepted because they were overcrowded.

January 2013

Prepared 16th July 2013