Communities and Local Government CommitteeWritten evidence submitted by Blackburn with Darwen Borough Council on behalf of Pennine Lancashire Local Authorities

1. Introduction

1.1 Pennine Lancashire authorities (Blackburn with Darwen, Burnley, Hyndburn, Pendle and Rossendale) welcome this opportunity to present observations and put forward recommendations about the future of private rented housing, which has a profound impact on this area. Blackburn with Darwen has led the submission, representing both the views of this Council and our neighbouring authorities in Pennine Lancashire. Statistics quoted refer to Blackburn with Darwen, but these are reflective of conditions and issues across Pennine Lancashire including Burnley, Hyndburn, Pendle, and Rossendale. In Pennine Lancashire private renting is becoming an increasingly sizeable and important tenure and it is vital that privately rented properties are managed properly by responsible landlords. Councils here are committed to working in partnership with good landlords.

1.2 Our main recommendations also mirror some of those expressed in the Rugg report presented to the previous Government in 2009.

2. Summary and Recommendations

2.1 The submission explains the extent of private rented housing in the Borough and across Pennine Lancashire together with the challenges this brings. The issue of private renting has previously been identified as a key priority for the sub region in the joint Pennine Lancashire Housing Strategy. Our main recommendations for action for the Select Committee to investigate are:-

Better regulation of private landlords.

Tighter regulation of lettings agencies.

Simplified selective licensing schemes.

Longer term tenancies and security.

Impact of welfare reform.

Council funding for regulation of private landlords.

3. Housing Context of Blackburn with Darwen and Pennine Lancashire

3.1 Blackburn with Darwen has a population of 147,500 being the largest of the five Council districts making up Pennine Lancashire which has a total population of approximately 522,000.

3.2 Our housing challenges are vastly different from those of London and the South East. The major housing challenges in this area are caused by the legacy of industrial decline and the preponderance of older terraced housing in poor condition combined with failing housing markets. 27,300 (45%) of the Blackburn with Darwen stock is terraced, a pattern which is repeated in the other Borough areas, much in disrepair and with Category 1 hazards under the Housing Health and Safety Rating System. It was the acceleration of neighbourhood decline and failing housing markets which led to the establishment of the Housing Market Renewal Programme, which was making a vital impact on addressing some of the poorest housing conditions before the Government curtailed the programme.

3.3 In recent years we have seen a significant increase in private renting, primarily in the terraced housing stock. In 2001 6.9% of the stock was privately rented and 70% owner occupied. The remaining 23% was Council or housing association. The 2011 Census shows Blackburn with Darwen having 15.6% of the total stock privately rented with 64% owner occupied. Some neighbourhoods and streets are now over 30% privately rented. Across Pennine Lancashire 7.66% of housing was privately rented in 2001 and this has now increased across the authorities to 14–19% with certain streets having 40% privately rented.

3.4 Failing housing markets, population exodus and difficulties experienced by home owners when trying to sell and by prospective buyers struggling to obtain a mortgage due to low incomes or current mortgage policies of lending institutions, have contributed to the growth in private renting. Many houses are being bought by investors living outside Pennine Lancashire. Unfortunately, this change in tenure patterns have contributed to neighbourhood decline and depressed local housing markets. The reluctance of some landlords to maintain and manage their properties and in some instances their uncaring attitudes have directly contributed to the incidence of tenants’ anti-social behaviour.

3.5 Together all these factors contributing to decline of neighbourhoods have led to a steep growth in empty houses with over 3,440 houses in Blackburn with Darwen empty in October 2012 (5.7% of total stock). Of these over 1,600 houses (2.7%) have been empty for more than 2 years. The number of empty homes across Pennine Lancashire is around 13,500.

3.6 The housing register for Blackburn with Darwen currently stands at 4,300 households with 2,400 having high category housing needs. In 201112 there were 135 households rehoused as a result of becoming homeless, of which 24% were due to private landlords terminating tenancies. Overall, 1,066 households were rehoused by housing association partners. In 14% of these cases homelessness was caused by private landlords terminating tenancies. This pattern is replicated across Pennine Lancashire.

3.7 For the majority of households seeking social rented accommodation there is virtually no prospect of obtaining social housing. Government housing reforms will not ease this situation, in fact they could make it more difficult. This means that PRS will continue to be the only housing option available to those excluded from home ownership and given low and often insecure incomes this will remain so for the foreseeable future.

4. Challenges of the Private Rented Sector

Poor Management and Maintenance

4.1 In recent years Blackburn with Darwen have received very high levels of complaints about privately rented houses which are directly connected to poor property conditions, poor management or about anti-social behaviour. This rise is inevitably associated with the expansion of private renting, but the Council’s ability to respond to the growing number of complaints has been badly affected by budget cuts leading to cuts in staffing and expertise.

4.2 Advice agencies and housing services nationally including those operating in Pennine Lancashire such as Citizens Advice and Housing Advice, are receiving increasing requests for assistance from private tenants about poor quality or mismanaged PRS housing. Tenant insecurity and the impact of welfare reforms are reducing their capacity to respond to other urgent advice matters.

4.3 Two of the largest problems facing the PRS sector today are the growth in unregulated letting agents, with the concomitant bad practice that is often endemic, and the increase in buy-to-let amateurs or “reluctant landlords” where people either inherit a property or are unable to sell their home and turn their hand to renting it out with little knowledge of their responsibilities as a landlord.

4.4 Experience in Blackburn with Darwen and elsewhere show landlords owning several properties have some of the poorest quality houses and are often the most resistant to carrying out improvements or caring for the interests of their tenants. There are landlords who treat their properties as a business and usually have the knowledge and the financial stability to weather the ups and downs of their sector, but there are other “portfolio” owners who ignore basic health and safety duties.

4.5 However, although one of the single largest causes of “rogue” landlord behaviour is simple ignorance of the laws, rules and procedures that govern a private letting, there are many landlords who are fully aware of the legislation and ignore it when it suits them, often when they are trying to obtain possession quickly. The length of notice they need to legally give tenants, delays in court hearing dates and dates for bailiffs when they are not receiving rent means they often try to obtain possession by making threats. A quicker route to possession in cases of tenants failing to pay rents or committing anti-social behaviour would lead to less threatening and intimidating landlord behaviour.

4.6 In Pennine Lancashire the complete lack of regulation over the lettings sector which manages properties for small scale landlords means that businesses can be set up by people who have little or no experience of managing properties. This is an issue recently highlighted by professional bodies such as the RICS (1). There are lettings agencies operating in the area which lack the professional qualifications, experience of the rental process and understanding of the standards they should be achieving. To overcome this, there needs to be a single regulatory system for letting agents to ensure they are fully accountable. Poor landlord management is closely associated with tenant anti-social behaviour. The result of failing to ensure landlord/letting agent accountability is resulting in an increase in such anti-social behaviour and a concomitant decrease in community cohesion. Already the growth in private renting has seen a pronounced increase in anti-social behaviour and disruption to existing communities.

4.7 Across Pennine Lancashire Councils have been obliged to establish selective licensing areas to require landlords to improve and manage their properties responsibly. In recently declared selective licensing areas over 60% of property, often privately rented, failed to achieve the Decent Homes Standard because they contained category 1 and 2 hazards (2). Such dangerous failings are a threat to health and well-being; these include unsafe electric wiring and appliances, unsafe gas appliances and very poor energy efficiency. A Health Impact Assessment carried out for the local Health Authority and Blackburn with Darwen Council in the Griffin area of the Borough confirmed the close association between poor health of residents’ health and substandard rented housing (3).

4.8 Another detriment of the PRS is the impact that a proliferation of absent landlords has on the sustainability or regeneration of neighbourhoods. It is difficult to attract investors to develop solutions for bringing empty homes back into use in areas where the Council has difficulty securing the engagement of owners. Blackburn with Darwen Council has also been required to adopt Supplementary Planning Documents to better control proliferation of Houses in Multiple Occupation (HMO’s) failing to meet health and safety standards.

4.9 The belief that poor quality accommodation and uncaring landlord attitudes are seriously contributing to population churn and destabilisation of communities was confirmed locally by a recent (September 2012) by a study in Blackburn with Darwen, completed by the Centre for Local Economic Studies(4).

4.10 Selective licensing of areas with high levels of privately rented properties can be a useful tool. but the procedure is open to challenge by landlords, some of whom are clearly reluctant to recognise their duties. It is recognised Councils should make a robust and transparent case for selective licensing, but given the tendency by landlords and lettings agencies, supported by landlord organisations, to oppose selective licensing there is a need to further standardise guidance and procedures over designation of areas and the grounds for challenge.

Need for Longer Term Tenancies

4.11 Instability in the sector leads to tenants paying higher rents because of uncertainty of tenure, landlords recovering costs of vacancies and letting agency fees.

4.12 2011–12 figures for the number of households rehoused in Blackburn with Darwen show that a high percentage of homeless households lost their last settled home when a private rented short-term tenancy ended. The lack of stability brought about by these tenancies and the need to move home when they end often compounds the disadvantage already experienced by the affected households. In families with school-age children educational attainment suffers because the house move may necessitate a change of school or a larger journey to remain at the same school and may lead to reduced attendance. The CLES report (4) on migration patterns in Blackburn along with many other reports (5) highlights the impact of high turnover on schools and social cohesion.

4.13 Evidence from Shelter (6), the RICS and from local authorities’ own experiences suggests that landlords’ returns and business operations are enhanced by longer tenancies. Greater stability brought about by longer term tenancies will substantially reduce landlord costs by avoiding voids, cutting out letting agent fees and making rental income more predictable. For tenants longer term tenancies would ease difficulties over managing their personal budgets and would avoid the need to pay a further bond/deposit as they moved to a new tenancy. A possible incentive could be to offer regulated landlords tax concessions when they let on longer term tenancies.

Welfare Reforms

4.14 Welfare reforms are having a detrimental effect on the health and wellbeing of private tenants who claim Housing Benefit, whether in work or not, yet tenants have little, if any, opportunity, to improve their personal situation. Like elsewhere in the country (7) they have little option other than to remain living in cold and unsafe housing fearing any complaints they make may lead to eviction or higher rents. Feelings of insecurity are heightened by trying to live on a small budget, contributing to increased levels of stress and anxiety. Families feel increasingly isolated from local community life. Debt damages relationships with families and friends as they cannot afford to socialise. They lack confidence to find work and for those with a job, it is difficult to concentrate at work. This is both a Pennine Lancashire and a wider national issue.

4.15 Across the country the public purse is paying out massive amounts of money to fund rents on houses which are failing basic standards.

4.16 Currently the Borough has 4,900 live claims from people who are living in private rented accommodation, which is roughly 9% of residents in the borough. The Council currently pay out £376,200 a week in Housing Benefit to private tenants equating to £19,560,000 during 2011–12 for tenants living in private rented houses which are supposed to offer decent housing conditions (n.b. these figures exclude people living in Hostels). Linking the payment of benefit to the condition of privately rented housing would ensure that the public purse is not being used to provide income for landlords who do not comply with minimum standards.

Impact on Council Resources

4.17 The necessity to intervene is growing while at the same time Council resources needed to respond to the issues discussed are already over stretched. If it continues this situation will lead to greater risks to health for tenants and the overall reputation of the PRS. General existing enforcement powers work, but they are very time consuming and costly. Some of the Pennine Lancashire authorities no longer have the capacity to carry out statutory responsibilities and this has been made worse by the continuing expenditure cuts. Greater regulation, higher standards and better management would reduce costs to Councils and other agencies. However, cost cutting by many Councils in the North West is leading to amalgamation of teams, the resultant loss of specialist housing officers and the decline of relationships with landlords that have been built up over many years. Dilution of expertise and the requirement to deal with what may appear to be more immediate problems has led to a decline in the ability to respond to complaints in the private rented sector and a lack of enforcement. This combination of factors will inevitably lead to continuing decline of neighbourhood in which the private sector is on the increase.

5. Main Recommendations

5.1 A national system of landlord registration

Social landlords are regulated through the HCA and a similar independent regulation is required for the private rented sector. There are many other examples, such as in public health and consumer protection, where regulation helps protect standards and public safety. A national system of landlord registration would have wide ranging benefits for landlords, tenants and the taxpayer. These include improving understanding of landlord and tenant responsibilities; promoting a better reputation for the private rented sector; improving standards and providing a system of redress for tenants. It would also improve the function of the National Rent deposit schemes. We fully support ways of promoting landlord accreditation, such as through national landlord organisations, but accreditation has to be distinguished from compulsory regulation. Accreditation is discretionary and many landlords see little benefits of membership. The schemes run by the national landlord associations are open to abuse and are self-regulating. Inspections are not carried out to properties nor do landlords have to provide addresses of the properties they rent out. They are meant to carry out training on-line, but this in itself is open to abuse.

5.2 Tighter regulation of lettings agencies

Improving the standards and behaviour of private letting agencies is essential. A Code of Practice similar to that required for estate agents or banks, with an independent complaints procedure, is necessary. Acceptable standards should be recognised by a “kitemark” standard which provides a quality and safety certification.

5.3 Simplified and standardised Selective Licensing schemes

Licensing of neighbourhoods and HMOs are effective tools. We welcome the Government’s previous decision to delegate final designation approvals, but there is a need for further guidance to standardise designation procedures to give greater clarity to both local authorities and landlords. This will assist local authorities in preparing robust and transparent evidence and reduce the ability of landlords to resist selective licensing intervention when action is clearly necessary.

5.4 Longer term tenancies and tenant security

We propose that standardised, and written tenancy agreements and licences are necessary together with a requirement for longer term tenancies. This will help give tenants greater security and stability and will aid their ability to budget. In turn this will give landlords more certainty over income and business planning.

5.5 Welfare Reforms and direct payment of housing related benefit

The Government’s welfare reforms will have a massive impact on individuals and families on low income and will certainly drive up homelessness. This will have a direct impact on the PRS where those on low income are heavily dependent on housing benefit and private renting. Monthly benefit payments to people unused to budgeting and direct payment of housing-related benefits to tenants rather than landlords will lead to landlords not receiving their rents and this in turn will lead to more illegal evictions as landlords will be reluctant to wait for the courts to obtain possession legally. Direct payment of rent is often the only way to ensure landlords will let to tenants in receipt of benefit. Permitting the continuation of direct payment linked to house condition would be a far more effective way of securing the continuation of a supply of housing for those in receipt of benefit.

5.6 Council funding for regulation of private landlords

We ask the Select Committee to take account of the impact of Government cuts on the ability of Councils to undertake statutory enforcement of housing standards against unscrupulous landlords offering poor quality housing. Some of the enforcement costs should be recovered from landlords through licensing, but there also has to be better financial support for Councils to assist effective local regulation in recognition of the continuing growth of private renting.

Pennine Lancashire Councils

January 2013

References

1. RICS (November 2012). Consumer Letting survey

2. Blackburn with Darwen Housing Stock Condition Survey 2009

3. M.E.L. Research (2011). Griffin Renewal Area Health Impact Assessment.

4. Centre for Local Economic Strategies (September 2012). Churn: Exploring and investigating the reasons for migration out of, into and within Blackburn with Darwen.

5. Bailey N. and Livingston, M. (2007) Population turnover and area deprivation. Joseph Rowntree Foundation.

6. Shelter (2012). A better deal-towards more stable private renting.

7. Public Health Alliance (October 2012). Poor homes. Poor health-to heat or eat...

Prepared 16th July 2013