Communities and Local Government CommitteeWritten evidence submitted by the Law Society of England and Wales

Introduction

1. The Law Society of England and Wales is the independent professional body, established for solicitors in 1825, that works globally to support and represent its 166,000 members, promoting the highest professional standards and the rule of law.

2. This submission has been prepared by members of the Law Society’s Housing Law Committee, which is made up of specialist legal practitioners who advise a wide range of clients including local authorities and housing associations. Our interest is in ensuring that existing regulation is enforced and where necessary regulation is refined to ensure that it is effective.

3. The private rental sector has grown dramatically in recent years. In 1994 8% of households were living in privately rented homes; as of 2012 this figure had reached 16%.1 Rental prices have escalated dramatically and continue to increase at double the rate of the average salary. Increases in rental arrears cause problems for landlords, tenants and local authorities. Welfare changes commencing in April 2012 are likely to exacerbate this problem.

4. Regulation has failed to keep up with the changing demands of the housing sector. A disproportionate amount of those renting privately are living in the poorest conditions: 45% of homes in the private rented sector fail to meet the government’s Decent Home Standard, meaning that the property exhibits at least one Category 1 hazard. As more people enter private rented accommodation these problems are likely to escalate.

5. We encourage the government to examine the recent intervention by the Welsh government into the private rented sector. Similar action should be taken in England to enforce legal requirements, which will help both landlords and tenants.

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

6. Category 1 hazards exist in 45% of private rented sector properties, compared with 30% of homes in owner occupation and 27% of social rented homes.2 These hazards are defined as presenting serious risks to the tenant including, death, poisoning, loss of consciousness and burns.

7. Landlords have statutory obligations relating to the standard and condition of the property which involves a duty to deal with category 1 hazards and a discretionary duty to deal with category 2 hazards.3 Often tenants fail to raise complaints or landlords refuse to comply and these statutory obligations remain unenforced.

8. Retaliatory evictions have been recognised as a problem by Citizens Advice4 Shelter5 and by MPs from all parties. Legislative intervention to prevent landlords recovering possession in response to a complaint is essential. Local authorities need to inform landlords of their responsibilities and empower tenants to raise claims against their landlords where necessary. Information should be provided to tenants to enable them to assess whether the property falls below the acceptable standard. Such information should make it clear that properties with category 1 hazards are uninhabitable.

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

9. Median rents are increasing at twice the rate of average salary.6 Rental prices are becoming unaffordable, the number of tenants falling into rent arrears is rising significantly and repossession of homes and homelessness is becoming more common.7

10. Currently, the Local Housing Allowance (housing benefit provided to individuals renting properties in the private sector) is calculated in reference to the lowest 30% of rents charged in any area. From April the government will adjust housing benefit allowance in line with the Consumer Price Index rather than in line with local rents. Unless welfare reforms operate in line with rent control this will cause shortfalls between benefit payments and levels of rents, leading to unaffordable tenancies, rent arrears and homelessness.8 Available evidence indicates that rental prices will continue to rise despite cuts to welfare.9

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

11. As the private rental sector grows the problems with unregulated landlords will increase. 12% of privately renting households have experienced significant problems with their landlords in the past year.10

12. It is essential to distinguish “rogue” landlords from those who lack sufficient information to perform their role effectively. Currently two thirds of local authorities engage with the private rental sector to promote landlord accreditation and training schemes. This has proved an effective way of educating well intentioned landlords. The Law Society believes that such schemes help local authorities to prevent disputes, evictions and homelessness.

13. The Law Society supports a system for landlords which requires them to obtain a license from the local authority confirming that they are acting as a landlord and that the property is in a suitable condition to be let. A similar licensing scheme is currently being considered in Wales. Under “Proposals for a Better Private Rented Sector in Wales” the Welsh Assembly has proposed a scheme requiring all landlords to apply for accreditation within their local authority. Some local authorities are operating self regulated landlord accreditation schemes; at a time when resources are limited this could be an effective alternative to formal accreditation schemes.

14. It is crucial that there are penalties for landlords who are unwilling to comply. If enforcement mechanisms are too lenient, local authorities will not pursue them. Under the Welsh Assembly proposals, landlords who fail to comply with the proposed scheme could face criminal prosecution, a ban from letting property and fines up to £20,000.

15. The Law Society believes that a licensing scheme will help local authorities to communicate with willing landlords and enable them to improve their contribution to the local housing market whilst reserving suitable enforcement mechanisms for those who fail to comply.

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

16. The Localism Act brought about significant changes in the way that local authorities are able to discharge the main homelessness duty. The provisions came into force in England on 9 November 2012 and therefore it is too early to assess how the changes are working in practice.

17. We remain concerned that where a homeless individual refuses private sector accommodation the local authority’s main statutory homelessness duty will end. The problems with the private rental sector will disproportionately affect those at the lower end of the socio-economic scale as their accommodation options are reduced. Those in class C2DEs are twice as likely to take no action against landlords over disrepair or harassment than those in class ACC1s.11 The Law Society recommends that the implementation and effectiveness of statutory homelessness duties should be carefully reviewed at the end of 2013.

1 The Housing Report, Shelter, November 2012.

2 Communities and Local Government. English Housing Survey Headline Report.

3 s.8, Landlord and Tenant Act 1985, s.11, 1985 Act.

4 The Tenant’s Dilemma, CAB, June 2007.

5 Shelter: Asserting authority: calling time on rogue landlords.

6 A better deal towards more stable private renting, Shelter, September 2012.

7 Rental arrears on the rise, National Landlords Association, 27 July 2011.

8 The Impact of Welfare Reform Bill measures on affordability for low income private renting Families, Shelter/CIH, March 2011.

9 http://www.insidehousing.co.uk/tenancies/private-sector-rents-rose-by-05-in-april/6521884.article, http://www.bbc.co.uk/news/business-19288208

10 Communities and Local Government. English Housing Survey Headline Report.

11 You Gov Survey, Shelter, Calling Time on Rogue Landlords, September 2012.

Prepared 16th July 2013