Communities and Local Government CommitteeWritten evidence submitted by Bob Young

Since the last quarter of the 19th Century successive Parliaments’ attempts to break the link between low income and poor housing conditions in the private rented sector (PRS) have been largely based on shrinkage of the PRS by slum clearance and its replacement by subsidised social housing and grant aided, tax break-assisted owner occupation.

The aim of achieving a comprehensively decent, affordable and accessible private rented sector is therefore novel and, given the scale of the PRS and the challenge of the recession, presents a huge and unprecedented challenge. On the positive side however we have £7 billion per annum of Housing Benefit and a highly developed social housing industry, both of which, if harnessed intelligently to the challenge, could deliver not only a solution to the worst PRS housing but convince financial institutions to have the confidence to underwrite a private rented sector renaissance going forward.

My personal response to the Select Committees areas of inquiry is as follows:

The quality question should be addressed in two parts: a) the quality of the dwelling’s condition and utility (its safety, comfort and convenience); b) the quality of its management (the courtesy, efficiency, attentiveness and responsiveness of the manager).

Over one million private rented homes are seriously substandard in terms of condition and their management ranges from kindly amateurism, through studied ineptitude to downright criminal negligence at the extreme. Most landlords have only one property and no formal training. Most of the rest of the sector—estimated to be a further 2.5 million homes is also largely managed by individuals, much of it the so called “Buy to Rent” output of a decade of house building boom and therefore in much better condition than its poorer counterpart and occupied by less vulnerable and impoverished tenants by and large.

In the absence of anything but scant local authority interest and enforcement, poor condition and poor management is rewarded to the tune of £7 billion per annum of Housing Benefit which is preventing the usual market factors governing price which would normally allow product differentiation and customer choice to dominate. The poor and vulnerable are thus poorly served.

By contrast tenants of the higher end PRS are ineligible for HB and generally enjoy a market which tends to regulate itself through quality, availability and price mechanisms.

A return to the “Qualification Certificate” regime that informed the post war decontrol of rents would help establish order in the poorer end of the PRS, encourage the best landlords and hugely reduce the Housing Benefit bill. A quality related rent control regime in effect. The QC regime encouraged incremental property improvement by rewarding it with incremental rent increases—a something for something approach.

Such a regime could be administered within a global licensing scheme administered, not by beleaguered local authorities but by the industry itself with ARLA, RMA and the NLA taking the lead supported professionally and technically by CIEH, CIH and RICS on commercial terms.

However in areas of market failure such as the Housing Market Pathfinders; in HMO clusters in the larger towns and cities; and in Seaside Towns; more systematic multi-agency neighbourhood intervention will need to be promoted and large scale interim buy in and stock rationalisation by social housing providers progressed, if the worst of the PRS is to be turned around in a timely fashion. Such stock once acquired, improved and properly managed should be sold on into institutional private renting or home ownership downstream as part of a revolving programme of social housing intervention.

Homeless Placements in PRS should only be to decent homes managed by accredited landlords on five year ASTs with retained rights to have priority for an affordable social home on an assured lifetime tenancy at the end of the AST.

ARLA and the RICS should police lettings agencies within a framework of statutory regulation.

January 2013