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

About HLPA

The Housing Law Practitioners Association (HLPA) is an organisation of solicitors, barristers, advice workers, environmental health officers, academics and others who work in the field of housing law. Membership is open to all those who use housing law for the benefit of the homeless, tenants and other occupiers of housing. HLPA has existed for over 25 years. Its main function is the holding of regular meetings for members on topics suggested by the membership and led by practitioners particularly experienced in that area, almost invariably members themselves.

The Association is regularly consulted on proposed changes in housing law (whether by primary and subordinate legislation or statutory guidance. HLPA’s Responses are available at www.hlpa.org.uk.

Membership of HLPA is on the basis of a commitment to HLPA’s objectives. These objectives are:

To promote, foster and develop equal access to the legal system.

To promote, foster and develop the rights of homeless persons, tenants and others who receive housing services or are disadvantaged in the provision of housing.

To foster the role of the legal process in the protection of tenants and other residential occupiers.

To foster the role of the legal process in the promotion of higher standards of housing construction, improvement and repair, landlord services to tenants and local authority services to public and private sector tenants, homeless persons and others in need of advice and assistance in housing provision.

To promote and develop expertise in the practice of housing law by education and the exchange of information and knowledge.

The Convenor of HLPA’S Law Reform Group has prepared this communication, with assistance from other members of the Group. The group meets regularly to discuss law reform issues as it affects housing law practitioners. The Convenor of the group reports back to the Executive Committee and to members at the main meetings which take place every two months. The main meetings are regularly attended by c.100 practitioners.

Introduction

The Committee has asked for comments and submissions (not to exceed 3,000 words) on the following 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.

This response addresses these issues in turn:

Quality of private rented housing and steps that can be taken to ensure that all housing in the sector is of an acceptable standard

1. The experience of HLPA members is that there still remains a significant number of properties in the private rented sector which either let in a poor state or which fall into disrepair. In each case, landlords refuse to comply with their statutory obligations relating to the standard and condition of the property.1 A cursory examination of the county court disrepair cases2 will give the committee a range of cases.3

2. There are, in our view, two distinct routes for raising standards in the private sector. The first is a “regulatory” route, discussed in more detail below (eg landlord/agent licensing). The second is to empower tenants to be better able to vindicate their existing rights as regards their properties.

3. There is already a detailed statutory framework governing repairing obligations in the private sector, as set detailed in, inter alia, s.11, Landlord and Tenant Act 1985 and the relevant case law. These rights are, however, rendered nugatory without access to legal advice and assistance in order to enforce them. The Committee will be well aware of the cuts to legal aid made by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and the resulting “legal aid deserts”.4 If tenants cannot access legal aid lawyers then the prospects of being able to enforce their rights is much reduced.

4. The Committee is also invited to consider the problem of “retaliatory eviction” in the context of attempts by tenants to enforce their rights. This occurs when a tenant complains about the condition of his property and, rather than carry out repairs or comply with statutory notices served by the local authority, the landlord serves notice to recover possession.5 As long ago as June 2007, the Citizens Advice Bureau produced a detailed report on this problem.6 The practice has already been condemned by MPs from all parties.7 Legislative intervention to prevent landlords recovering possession in response to a complaint about disrepair would be very welcome.

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

Levels of rent

5. It is anticipated that other submissions will make detailed reference to the current levels of rent in the private sector. Certainly, the Committee will be well aware, even if only anecdotally, of the high rents being charged throughout the private sector.8

Rent control

6. We anticipate that this will be a controversial issue and attract much heated comment. In our view, it is important to remember that there is already rent control for three classes of residential occupier:9

(a)Tenants who occupy property pursuant to the Rent Act 1977, who pay a “fair rent”, which, ultimately, is set by the Rent Assessment Committee.10

(b)Tenants who occupy assured tenancies governed by the Housing Act 1988, who are similarly entitled to apply to the Rent Assessment Committee if their rent is in excess of the market rent.11

(c)We would also suggest that benefits recipients are also subject to de facto rent control:

(i)Local Housing Allowance (housing benefit in the private sector) is already capped so that it is calculated only with reference to the lowest 30% of rents charged in any area.12

(ii)Housing benefit for those under 35 is calculated on the basis that they need only rent a room in a shared house.13

(iii)The “benefit cap” which—until all benefits claimants are “migrated” to Universal Credit, works by reducing housing benefit.14

7. In our view, the welfare reforms outlined at (c), above, make rent control inevitable. By way of example, recent research from Crisis found that only 1.5% of privately rented properties were affordable for the under 35s.15 That figure will only be increased by forcing down rent levels.

8. The case for rent control is also strong in the non-benefit sector. Given the continued increase in rents in the private sector16 and the increasing level of rent arrears in the private sector17 which, in turn, is leading to an increase in possession claims being issued18 increased homelessness,19 there is a pressing case, both for the protection of individuals and in order to make wider savings, for rent control to be extended to bring down the rental levels in the private sector.

9. Rent control is not, of course, a panacea. The reality is that there is a pressing need for more housing—of all tenures20—throughout England and Wales and, in particular, in those areas where rents are highest (eg London and the South East). Rents are high because demand outstrips supply. Unless and until that is remedied, there will be no long-term solution.

Housing benefit and rents

10. Our members have seen no evidence that the housing benefit cuts outlined in para.6, above, have had any impact on reducing rents in the private sector. To the contrary, the evidence at footnote 16 would suggest the rents have continued to increase with no regard to the housing benefit cuts.

Other factors

11. The Committee is respectfully invited to consider not just rent control, but also the wider issues of fees and charges imposed on tenants or would-be tenants by landlords and agents.

12. For example, research from Shelter21 indicates that one in four people renting in the private sector in England felt that they had been “ripped off” by letting agents charging fees for, among other things:

Criminal Record Bureau checks,

credit checks,

unparticularised administration charges,

inventory fees,

unnecessary document copying,

new tenant fees, and

renewal fees.

13. Such fees are unlawful in Scotland (see the Rent (Scotland) Act 1984). There is no analogous protection in England. The Accommodation Agencies Act 1953 operates on the idea that that payment for letting property is made by the landlord not the would-be tenant; tenants are not to be made to pay for looking for accommodation, but the 1953 Act would not catch fees of these sorts.

14. Given that Parliament has already decided—in the 1953 Act—that tenants should not be made to pay for seeking accommodation, the Committee is invited to consider recommending amendments to the 1953 Act so as to outlaw these charges as to ensure that the principle in the 1953 Act is given continued force today.

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

15. HLPA strongly supports the principle of landlord licensing. In outline, landlords and agents would be required to obtain a licence from the local authority where the property is located, confirming both that they are a fit and proper person to act as a landlord/agent and that the properties they are offering for rent are of a suitable standard. This route could also be used to help drive up standards of property in the private rented sector.

16. This sort of regime is already under discussion in Wales. In Proposals for a Better Private Rented Sector in Wales, the Welsh Assembly Government proposed a scheme requiring all landlords to be accredited with the local authority for the area where the property is located. Those who fail to register with the scheme could face criminal prosecution and, if convicted, a fine of up to £20,000. The court would also be empowered to disqualify the landlord from letting property for up to five years. Letting agents would also be required to register with a similar scheme. Failure to do so would be punishable on conviction by a fine of up to £50,000 and disqualification from acting as an agent for up to five years.

17. Such serious penalties would—hopefully—drive rogue landlords out of the sector and, in turn, reward good landlords.

18. There is also an ancillary benefit to such a licensing regime. There is a growing problem with fraudulent lettings, whereby a putative landlord/agent advertises a property for rent (usually, but not exclusively, via the internet); a prospective tenant then contacts the putative letting agent/landlord. A viewing may or may not take place. A tenancy agreement is signed and—importantly—a deposit paid, invariably in cash. When the tenant arrives on the agreed move-in date, he discovers that he has been the victim of a fraud because:

(a)there is already a tenant in occupation under a lawful tenancy agreement; and/or

(b)the agent/landlord had no authority to deal with the property; and, in either event, and/or

(c)it is impossible to get the deposit back as the fraudulent agent/landlord has vanished.22

19. A freely-available data-base of registered landlords and agents would help to prevent this sort of fraud. A register of landlords and agents freely available and searchable would allow a prospective tenant to establish relatively easily whether the person he was dealing with is lawfully entitled to let the property or, at least, a person with an established presence in the area of activity.

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

20. It is difficult to comment on this topic, given the relative paucity of case-law. The Housing Act 2004 makes provision for discretionary licensing regimes (both selective and additional licensing), but, to date, there have only been two judicial review challenges to such schemes, and it is hard to draw firm conclusions from either.

21. Anecdotally, there is wide variation in the approach of local authorities to using these powers and to prosecuting landlords who fail to obtain a licence (whether under the mandatory licensing provisions or the discretionary provisions). In general terms, the magistrates’ courts seem to impose hefty fines on those convicted.23

22. We have some concerns about the operation of Rent Repayment Orders. Part 2, Housing Act 2004, makes provision for licensing of houses in multiple occupation. It is an offence to control or manage an unlicensed HMO (s.61). Where a person has been convicted of such an offence, a tenant may apply to a Residential Property Tribunal for a “rent repayment order”, requiring the repayment of the rent, including any part of the rent that has been paid by housing benefit (see generally, ss.72, 73). The amount to be repaid is such amount as the RPT considers reasonable in all the circumstances (s.74). Similar provisions exist for repayment orders in favour of local authorities where the rent was paid by way of housing benefit.

23. It has proved harder than expected for occupiers to obtain such orders. First, the occupier is restricted in that he can only recover monies paid in the 12 months immediately proceedings his application to the RPT.24 This means that there is an incentive for landlords to delay criminal proceedings, so as to reduce the total amount that they could be ordered to repay.25

24. Further, the need for an occupier to wait for the local authority to act is a significant flaw in the legislation that is crying out for amendment.

Tenancy agreements and length and security of tenure

25. The Law Commission has produced a thorough and considered report on these issues (Renting Homes, May 2006). It proposes a significant simplification in the various forms of tenure and, importantly, model tenancy agreements which would apply in the event that the parties failed to agree a written form of tenancy.

26. HLPA urges the Committee to endorse Renting Homes and to take up the recommendations made in the report. In particular, model (or “default”) tenancy agreements are to be welcomed. Much money and time would be saved.

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

27. It seems to us that this is too early to ask this question. The Localism Act 2011 has made a significant change to homelessness law in both England and Wales, coming into force in England on 9 November 2012. There is, as yet, no commencement date for Wales.

28. Section 148, 2011 Act, allows a local housing authority to discharge its duty by offering the applicant a suitable property26 let on an assured shorthold tenancy from a private landlord. Unlike the current position, where an applicant can refuse an assured shorthold without losing his or her entitlement, refusal of this offer will now bring the duty to an end.

29. It is simply too early to know how this reform is working in practice. As far as we are aware, there has not yet been any judicial decision in a case where an authority used this new power.

30. Unless and until that time, we recommend that the Committee resolve to keep this matter under review and revisit the question in, say, two years time.

January 2013